Seylan Bank-dumped Lanka Ashok fame shareholder director Saliya Perera passes away

Director and single largest individual shareholder of Lanka Ashok Leyland Plc’s Saliya Perera on Sunday night passed away in a private hospital after being admitted for a heart ailment.

Daily FT learns that Perera, a self-made entrepreneur and investor, got a heart attack and was rushed to the hospital, and all efforts to resuscitate him failed.

A father of two children who are overseas, Perera has been low profile though highly connected. Described as a good friend for everyone, Perera after leaving a high flying career at AirLanka, built his original wealth by supplying sand to build the World Trade Centre in Fort, followed by as a transport contractor for Holcim. Thereafter he focused fully as an investor whilst he was also an advisor to Jeevan Kumaratunga when the latter was the Minister of Sports.

Perera, recently came into limelight when Seylan Bank on 15 February force sold a 12% stake in Lanka Ashok held by him to recover dues. Perera has been a longstanding shareholder in Lanka Ashok originally with 27.85% stake amounting to one million shares. He was appointed to the Board last year.

The 12% stake sale by Seylan Bank, at Rs. 1000 per share, lower by Rs. 650 or 21% from its last closing price on 21 January had demoralised Perera, who however had previously undergone a bypass surgery. At the time of his death the balance stake of 15.85% stake was still under his name.

Illiquid Lanka Ashok’s all time high price was Rs. 4,300 achieved on 21 October whilst it closed 2010 at Rs. 4,050. This was despite its net asset per share being only Rs. 329. In 2009/10 financial year up to the first nine months, the highest was Rs. 1,500 and the lowest and closing price was Rs. 1,345.

Seylan’s exact exposure to Perera by granting credit/margin trading facility couldn’t be confirmed but some speculated it could have been around Rs. 400 million. Whilst the market faulted the Bank for selling the stake at such lower price analysts said when the block was put up for sale there weren’t any immediate buyers.

The big block of 449,500 shares at Rs. 1,000 was also done after 15 other trades starting from Rs. 1,525 and coming down to Rs. 1,200. The selling broker may have sold down to reach a pre-determined price. The block was eventually purchased by Perpetual Capital for Rs. 449.5 million.

On that day (15 February), a total of 465,500 shares of Lanka Ashok changed hands via 101 trades for Rs. 479.4 million, and closed at Rs. 2,383.30 down by Rs. 650 or 21.4% whilst its intra-day highest was Rs. 2,500. Yesterday Lanka Ashok closed at Rs. 2,650, down by Rs. 216.70.

Lanka Leyland owns 41.7% stake in the Company along with 27.85% by Ashok Leyland.

In the first nine months of 2010/11 financial; year, Lanka Ashok’s revenue was Rs. 7.7 billion, up by 311% whilst profit from operations swelled by 800% to Rs. 1.1 billion. Net profit after tax amounted to Rs. 707.8 million as against Rs. 1.5 million in the first nine months of 2009/10 financial year. Total assets doubled from Rs. 1.38 billion in 2009/10 end 3Q to Rs. 3.47 billion a year later. Earnings per share were Rs. 195, up from 42 cents in the previous financial year.

Lanka Ashok Leyland was incorporated in 1982 as a Public Limited Liability Company and started its operations in 1983 as a Joint venture between Lanka Leyland Ltd. (a wholly owned company of Government of Sri Lanka) and Ashok Leyland Ltd India, to carry out the business of importation of Ashok Leyland commercial vehicles in knock down condition or fully built and carry out assembly operations, repair and service, body building on chassis and other developments to progressively develop ancillary industries locally.