KEELLS’ ELECTRIC SHOCK: The Rs. 22 Billion BYD Bungle That Could Bankrupt Sri Lanka’s Blue-Chip Giant
*How 1,000 Detained Chinese Cars Have Triggered the Biggest Corporate Crisis Since the Easter*
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*They called it the future. John Keells Holdings, Sri Lanka’s most venerated conglomerate, trumpeted their partnership with Chinese electric vehicle giant BYD as a game-changer that would revolutionize island transport while padding their already bulging coffers. Today, that future lies rotting in customs sheds at Colombo Port, where nearly 1,000 gleaming electric cars sit as silent witnesses to what may become the most spectacular corporate blunder in Sri Lankan business history.*
*The scandal? A seemingly innocuous discrepancy in motor capacity declarations that has triggered a potential Rs. 22 billion financial tsunami—enough to sink even the mighty Keells empire.*
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THE DECEPTION UNRAVELED
The story begins with a simple question that no one at John Keells CG Auto—the company’s automotive arm—seemed willing to answer honestly: Just how powerful are these BYD motors?
According to shipping documents obtained by this investigation, John Keells declared the imported vehicles as having 100-kilowatt motors, attracting an excise duty of Rs. 2.4 million per vehicle. But here’s where the plot thickens—these same vehicles typically roll off BYD’s Chinese production lines with 150-kilowatt motors, which would have attracted a crushing Rs. 5.4 million in excise duties.
The difference? A staggering Rs. 3 million per vehicle. Multiply that by 1,000 detained cars, and you’re staring at a potential additional tax liability of Rs. 3 billion—money that John Keells may now be forced to cough up, along with penalties that could dwarf even that astronomical figure.
*”This isn’t a simple mistake,” fumes a senior customs official who spoke on condition of anonymity. “This is systematic under-declaration of motor capacity to evade taxes. We’re talking about potential tax fraud on an industrial scale.”*
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THE KEELLS KINGDOM IN CRISIS
For a company already drowning in Rs. 179 billion of debt—yes, you read that right—this BYD debacle couldn’t have come at a worse time. John Keells Holdings, the darling of the Colombo Stock Exchange, has been desperately trying to service interest payments that consume nearly every rupee of their operating profits. Their interest coverage ratio stands at a pathetic 0.8 times, meaning they barely earn enough to pay the interest on their massive borrowings, let alone repay the principal.
Now, with up to Rs. 15 billion worth of BYD inventory locked up in customs limbo and facing potential additional tax demands of Rs. 3-5 billion, the company’s cash position has gone from precarious to potentially catastrophic.
*Industry insiders are whispering about the unthinkable: Could Sri Lanka’s most prestigious conglomerate be headed for bankruptcy?*
The numbers are stark and unforgiving:
– *Total potential crisis cost:* Rs. 12-22 billion
– *Current cash position:* Rs. 15.1 billion (before crisis)
– *Annual revenue at risk:* Rs. 16-28 billion
– *Working capital locked up:* Rs. 10-15 billion
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THE CHAIRMAN’S GAMBLE
At the center of this unfolding disaster is John Keells Chairman Krishan Balendra, scion of one of Sri Lanka’s most powerful business dynasties. It was Balendra who personally championed the BYD partnership, describing it as a “compelling opportunity” that aligned with the group’s environmental, social, and governance (ESG) commitments.
*”We saw electric vehicles had a very promising future,” Balendra declared at the BYD launch ceremony. How those words must taste bitter now.*
The partnership with China’s BYD and Nepal’s Chaudhary Group was supposed to position John Keells at the forefront of Sri Lanka’s green transport revolution. Instead, it has become an albatross that threatens to drag the entire conglomerate into the depths of financial ruin.
Sources close to the company reveal that Balendra personally signed off on the aggressive expansion plans, including:
– Investment in multiple showrooms across the island
– Charging stations at Keells Super outlets
– Service centers in major cities
– A ambitious target of 5,000+ vehicle sales
*All of it now hangs in the balance.*
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THE CUSTOMS COUP
The detention of the BYD vehicles wasn’t a random customs check—it was the result of a months-long investigation triggered by whistleblowers within the automotive industry who had grown suspicious of the declared motor capacities.
*”The same BYD models being sold in Singapore and other markets come with 150kW motors, but somehow the Sri Lankan versions were declared as 100kW,” reveals a customs investigator. “That raised red flags. Big red flags.”*
The investigation has uncovered a web of documentation that suggests the under-declaration may have been systematic across multiple shipments. If proven, this could constitute criminal tax evasion, with personal liability extending to company directors.
The implications are chilling:
– *Criminal charges* against executives
– *Massive financial penalties*
– beyond the tax shortfall
– *License revocation* ending the automotive venture
– *Reputation destruction* affecting other Keells businesses
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THE RIPPLE EFFECT
The BYD crisis isn’t just about cars—it’s threatening to unravel John Keells’ entire business empire. The company’s various sectors are interconnected in ways that amplify any shock to the system:
*The Transportation Sector:* Already reeling from US tariffs that could cost Rs. 6-9 billion annually, now faces the complete collapse of its newest and most promising division.
*The Retail Empire:* Keells Super, the crown jewel of Sri Lankan retail, had invested heavily in EV charging infrastructure. Those investments are now stranded assets.
*The Leisure Business:* Hotels across the chain had planned to electrify their vehicle fleets using BYD cars. Those plans are in tatters.
*The Financial Services Arm:* Nations Trust Bank and Union Assurance had exposure to auto financing for BYD vehicles—money that may never be recovered.
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THE DEBT BOMB
Perhaps most terrifyingly, this crisis comes as John Keells is already struggling under the weight of crushing debt obligations. The company faces:
– *Rs. 73 billion* in immediate debt obligations (due within 12 months)
– *Rs. 18.4 billion* in annual interest payments
– *Rs. 15.1 billion* in available cash (before the BYD crisis)
With the BYD debacle potentially consuming Rs. 12-22 billion, the company could find itself unable to service its debt obligations—a scenario that would trigger cross-default clauses across its entire borrowing portfolio.
*”They’re walking a tightrope over a financial abyss,” warns a prominent investment banker. “One wrong step, and it’s game over.”*
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THE POLITICAL DIMENSION
What makes this scandal even more explosive is its timing. As President Anura Kumara Dissanayake’s government grapples with US trade tariffs and economic recovery, the last thing Sri Lanka needs is its flagship conglomerate imploding due to alleged tax evasion.
The BYD partnership was held up as an example of Sri Lanka’s pivot toward sustainable development and closer ties with China. Now, it threatens to become a symbol of corporate recklessness and regulatory failure.
Sources within the government reveal growing concern about the broader implications:
– *Foreign investor confidence* could be shattered
– *China relations* may be strained if the BYD deal collapses
– *Tax collection efforts* could be undermined if major corporations can under-declare duties with impunity
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THE SINGAPORE CONNECTION
Particularly damning is evidence that BYD has deliberately produced lower-powered versions of its vehicles for specific markets to comply with local regulations. In Singapore, BYD sells a 100kW version of its Atto 3 model to meet Category A certificate requirements, proving that the technology exists to legitimately produce lower-powered variants.
*This raises the crucial question: Did John Keells order legitimate 100kW vehicles, or did they conspire to mislabel 150kW cars to evade taxes?*
The answer could determine whether this is a regulatory misunderstanding or criminal fraud.
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THE COVER-UP BEGINS
As news of the detention leaked, John Keells has gone into full damage-control mode. A carefully worded statement from JKCG Auto claims: “There are different vehicles with different performance made by BYD. This model is available not only in Sri Lanka but also in countries like Singapore and Nepal. And the configuration is done by the manufacturer.”
*But industry experts aren’t buying it.*
*”If BYD configured these specifically as 100kW vehicles for Sri Lanka, where are the technical specifications? Where’s the documentation proving these aren’t simply 150kW motors with software limitations?” demands automotive consultant Ravi Yatawara.*
The company’s refusal to provide technical documentation has only fueled suspicions that they have something to hide.
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THE HUMAN COST
Beyond the corporate drama lies a human tragedy. Thousands of Sri Lankan customers who placed deposits for BYD vehicles—many of them middle-class professionals investing their life savings—now face an uncertain future. Some paid deposits of Rs. 500,000 or more for cars they may never receive.
*”I sold my old car and took a loan to buy a BYD,” says frustrated customer Pradeep Fernando from Colombo 7. “Now they’re telling me the car is stuck in customs and they don’t know when I’ll get it. What am I supposed to do?”*
The potential for class-action lawsuits is growing, adding another billion-rupee liability to John Keells’ mounting problems.
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THE INTERNATIONAL EMBARRASSMENT
The BYD scandal has also become an international embarrassment for Sri Lanka. The island nation, desperate to attract foreign investment and rebuild its economy, now finds itself in the spotlight for all the wrong reasons.
Chinese media have begun reporting on the “Sri Lankan tax problems” affecting BYD, while industry publications question whether other markets should review their own BYD import procedures.
*”This puts a cloud over all Chinese vehicle imports to Sri Lanka,” warns trade analyst Dr. Sirimal Abeyratne. “It could damage our relationship with a crucial economic partner at the worst possible time.”*
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THE WIDER IMPLICATIONS
The John Keells-BYD scandal exposes deep flaws in Sri Lanka’s import oversight mechanisms and raises uncomfortable questions about corporate governance at the highest levels of Sri Lankan business.
If a company of John Keells’ stature and reputation could allegedly engage in systematic tax evasion, what does this say about corporate culture across the island?
The scandal also highlights the dangerous concentration of economic power in the hands of a few conglomerates. John Keells’ potential collapse wouldn’t just affect shareholders—it could trigger a broader economic crisis affecting:
– *Thousands of employees* across multiple sectors
– *Supplier networks* dependent on Keells business
– *Banking sector* exposure to Keells debt
– *Stock market confidence* in Sri Lankan corporates
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THE ENDGAME
As this investigation goes to print, John Keells Holdings stands at a crossroads. The company has several options, none of them palatable:
*1.Fight the tax assessment* and risk criminal charges and business closure
*2. Pay the additional taxes* and face potential bankruptcy
*3. Negotiate a settlement* that could still cost billions
*4. Exit the automotive business* entirely, writing off massive investments
Each path leads through a valley of financial destruction that could claim one of Sri Lanka’s most storied business empires.
*Industry observers are already speculating about fire-sale asset disposals, emergency rights issues, and even the breakup of the conglomerate.*
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THE RECKONING
The John Keells-BYD scandal represents more than just a corporate crisis—it’s a reckoning for an entire system that has allowed connected businesses to operate with impunity while ordinary citizens bear the burden of taxes and economic hardship.
For too long, Sri Lankan conglomerates have enjoyed cozy relationships with regulators, favorable treatment from banks, and the benefit of doubt from investors. The BYD debacle may finally shatter those comfortable arrangements.
*”This is a watershed moment,” declares corporate governance expert Dr. Parakrama Dissanayake. “Either we enforce the law equally on everyone, or we admit that we have one rule for the powerful and another for everyone else.”*
As Krishan Balendra and his lieutenants huddle in emergency meetings, plotting their company’s survival, thousands of shareholders, employees, and customers wait anxiously for answers.
The empire that took decades to build could crumble in months. And it all started with a simple question about motor capacity—a question that John Keells Holdings apparently couldn’t answer honestly.
*The electric revolution they promised has become an electric shock that may prove fatal.*
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THE BOTTOM LINE
**What happens next will determine not just the fate of John Keells Holdings, but the integrity of Sri Lankan capitalism itself. If the mighty can fall this far this fast, no one is safe.*
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*EDITOR’S NOTE:* *John Keells Holdings was contacted for comment but had not responded by press time. The company’s stock price has fallen 8% since news of the BYD detention became public.*
www.economynext.com/sri-lanka-customs-detain-around-1000-byd-evs-in-motor-capacity-probe-233141/
