May 07, 2012 (LBO) – Profits of Taj Lanka Hotel Plc, a unit of India’s Taj Hotels and Resorts Ltd, plunged 87 percent to just 6.7 million rupees in the March 2012 quarter due to exchange losses from a dollar loan. Taj Lanka’s revenues rose 6 percent to 450 million rupees in the December quarter and gross profits rose 25 percent to 142 million rupees from a year earlier, but finance costs rose 400 to 66.5 million rupees.
In the year to March 2012, revenues rose 19 percent to 1.64 billion rupees and cost of sales rose only 9 percent to 1.16 billion rupees, allowing gross profits to rise 55 percent to 475 million rupees.
But finance costs rose 371 percent to 97.5 million rupees. The hotel’s cashflow statement showed a foreign exchange loss of 71.9 million rupees, during the past year.
Sri Lanka’s rupee is pegged to the US dollar but it fell from around 110 to 130 levels over the past year as the Central Bank engaged in heavy sterilized sales of foreign currency and kept interest rates down.
Sri Lanka has a so-called soft-peg with the US dollar where the Central Bank tries to control both the exchange rate and interest rate, triggering periodic balance of payments crises, when credit growth, – espe