caught in black and white
Finance and Planning Ministry,
The Secretariat, Colombo 01.
Group of Companies
of non-performing facilities and
granting of fresh facilities - People's Bank.
The facilities granted to the Dasa Group of Companies by the
People's Bank have been transferred to the non-performing category
and the position as at 31.12.98 is as follows.
of the Borrower
Accrued Int. as
as at 31.12.98
at 31.12.98 at
Dasa Textile mills Ltd.
S. D. Gunadasa
Lanka Textile Mills Ltd
Synthetic Textile Mills Ltd
bank approved proposals for rescheduling of the above facilities.
However, these proposals could not be implemented due to the delay
in fulfilling the required conditions by the company. Thereafter,
several discussions were held with the company requiring the
repayment programme but no satisfactory progress was made.
a meeting was held at Temple Trees on September 19, 1996 chaired
by Your Excellency to finalise a repayment programme relating to
the said facilities. The decisions arrived at this meeting were as
Action should be taken by the UDA to return the 22 acre land at
Peliyagoda and the property at Borella junction to Chairman, Dasa
Group of Companies, Mr. S.D. Gunadasa.
The total interest due on the company be written off by the bank.
The company should pay at least 10% of the loan capital to the
bank. It was suggested to sell the property at Borella after
receiving it back from the UDA to raise funds for this purpose.
The outstanding loan balance after paying 10% as stated above
should be rescheduled by the bank in consultation with the
The company should be issued with fresh garment export quota by
the Industrial Development Ministry and facilitate with all
necessary assistance to revive the production line and the
The land at Borella referred to in para 2(i) above has been
divested in the company as per the Gazette extraordinary
notification no. 1027/15 of May 15, 1998. However, since the
company has not taken action to pay the 10% of non-performing
outstanding as stated under para 2 (iii) above, the bank could not
implement the proposed rescheduling programme.
As the company did not respond positively to implement the
rescheduling programme agreed upon at the meeting held at Temple
Trees on September 19, 1996 the bank served letters of demand on
September 2, 1998. On receipt of the letters of demand, the
company has come forward once again to negotiate with the bank,
for a repayment programme. Accordingly, another discussion was
held at Temple Trees on October 7, 1998, chaired by Coordinating
Secretary to the President, Mr. Sarath Gonagala and in consequence
the company has requested the following by their letter dated
October 7, 1998.
A loan facility for the purpose of paying 10% of the capital
outstanding as agreed at the meeting on September 19, 1996 against
the mortgage of the property.
To write off all accrued interest upto date, on the loan
Granting of fresh bank facilities to revive the closed-down and
existing business operations and.
Rescheduling of the balance outstanding i.e. 90% of the
nonperformance outstanding at a concessionary rate of interest.
above requests were considered by the board of directors of the
bank and it was decided to refer the matter for Your Excellency's
attention, in view of the following:
In terms of the agreement signed between the government of Sri
Lanka and the People's Bank in 1998, fresh facilities cannot be
considered for customers whose facilities are in the
If a loan is granted to repay 10% of the capital outstanding in
order to meet the required condition for rescheduling the
non-performing facilities, it cannot be considered as a repayment
by the borrower.
Granting of fresh facilities as requested by the company will be
subject to single borrower exposure limit of the bank, which is Rs.
1,025 m. The total group exposure presently stands at Rs. 844.5 m.
Moreover the bank cannot consider fresh facilities due to the poor
performance of the company.
The forced sale value of the properties already mortgaged to the
bank as security for these facilities is Rs. 870 m. The property
situated at Borella which is to be mortgaged has been valued at Rs.
115 m. The bank considers facilities upto a maximum of 50% of
forced sale value of the property under normal circumstances and
60% under special circumstances.
In view of the foregoing, we seek a directive from Your
Excellency, in the capacity of Finance Minister, in terms of
Section 42 A of the People's Bank Amendment Act No 61. of 1980, in
regard to the request made by the Dasa Group of Companies.