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JKH short-listed for Chennai Container terminal project

Final bidder to be made known soon:

John Keells Holdings (JKH) was short-listed with 40 other listed global giants who bid to build a container terminal at Ennore, Chennai in July 2008, Lanka Securities (Pvt) Ltd sources said.

Industry sources said with the short-listing of JKH among other four major construction companies out of 40 other bidders, JKH is likely to obtain the contract to construct the project with Indian Rs 13 billion to handle 1.5 m TEUs. The final bidder for the project will be made known shortly, sources said.

If clearance for the project is received it would be the largest land reclamation undertaken in the country and will result in the creation of the proposed Colombo Port City.

However, work on the project is very slow and still in the documentation stage.

JKH’s biggest revenue comes from handling this sector in Sri Lanka. If this contract is awarded to JKH they will be able to manage the entire port in Chennai, which will bring substantial revenue to the company, Lanka Securities (Pvt) Ltd., sources said.

The company is also in the process of strengthening its presence in the Northern and Eastern parts of Sri Lanka as construction activities have begun.

The company recorded a substantial 44 per cent Year on Year decrease in its third quarter 09 net profit to Rs.764.9 million, resulting in a 19 per cent Year on Year decrease in its 1-3Q08 net profit to Rs.2,609.9 million.

This is mainly due to the non-recurring charges (additional taxes and write offs) related to the Supreme Court order on Lanka Marine Services (LMS).

However, the decrease in 3Q 2009 can be directly attributed to the loss of revenue from LMS with the application of a different business model.

One off charges related to LMS in 1-3Q 2009 amounted to Rs.904 million which consists of Rs.186 million relating to additional customs duty, write offs and costs associated to vacating the port premises; Rs.46 million for stock losses; Rs.519 million on additional taxes and Rs.153 million for payment to employees.

The group revenue decreased 16 per cent Year of Year to Rs.9,307.3 million in 3Q 2008 and recorded a marginal 7 per cent Year on Year growth in 1-3Q09 to Rs.31, 122.4 million.

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