EXCLUSIVE: The Devastating Inside Story of John Keells Holdings’ March Toward Financial Oblivion – From COD SL Catastrophe to BYD Bungling, Tax Evasion to Tariff Terror
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For almost 150 years, the John Keells name has been synonymous with Sri Lankan business excellence. From humble beginnings as a British colonial trading house to becoming the island’s most powerful conglomerate, the Keells empire seemed unshakeable. Today, that empire teeters on the brink of spectacular collapse, crushed under a staggering Rs. 210 billion debt mountain, hemorrhaging cash from catastrophic investments, and now facing potential criminal charges for systematic tax evasion.
This is the untold story of how Sri Lanka’s blue-chip darling became a financial house of cards—one strong breeze away from total destruction.
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THE DEBT DEATH SPIRAL
The numbers alone tell a story of corporate insanity that would make even the most reckless Wall Street banker blush. John Keells Holdings, the supposed paragon of Sri Lankan capitalism, is drowning in debt so massive that it defies comprehension:
THE HORRIFYING ARITHMETIC:
– Total Interest-bearing Debt: Rs. 179.3 billion
– Including Overdrafts: Rs. 210.4 billion
– Annual Interest Payments: Rs. 18.4 billion
– Operating Cash Flow: Rs. 41.5 billion
– Free Cash Flow: NEGATIVE (Capital expenditure exceeds operating cash flow)
To put this in perspective: John Keells owes more money than the GDP of most small nations. They pay Rs. 50 million in interest EVERY SINGLE DAY.
But here’s the truly terrifying part—they can barely afford to service this debt. With an interest coverage ratio of just 0.8 times, the company earns barely enough from operations to pay the interest on its borrowings, let alone repay any principal.
They’re basically a hedge fund with hotels,” sneers a prominent fund manager who requested anonymity. “Except hedge funds usually make money.”
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THE COD SL CATASTROPHE: A Rs. 400 BILLION BLACK HOLE
At the heart of John Keells’ financial nightmare lies the City of Dreams Sri Lanka (COD SL)—a casino and hotel project so spectacularly mismanaged that it makes the failed Hambantota Port look like a masterpiece of planning, since there is NO CASINO LICENSE granted to them neither a GAMBLING AUTHORITY IN SRI LANKA AT PRESENT.
Originally budgeted at around Rs. 75 billion, industry insiders now whisper that the true cost has ballooned to well over Rs. 400 billion. The project, which was supposed to be John Keells’ ticket to tourism riches, has instead become a money-devouring monster that posted an eye-watering Rs. 1.2 billion EBITDA loss in Q4 2025 alone.
THE COD SL DISASTER BY THE NUMBERS:
– Total Investment: Rs. 400+ (US 1.2 Billion) billion but books show only 100 billion (and counting)
– Q4 2025 EBITDA Loss: Rs. 1.2 billion
– Debt Financing: Rs. 36-52 billion (mostly foreign currency)
– Pre-opening Costs: Spiraling out of control
– Revenue: Pathetically below projections
“COD SL isn’t a hotel and casino—it’s a financial crematorium,” declares hospitality consultant Humphry Desmond. “They’re burning money faster than they can print it.”
The project’s problems run deeper than mere cost overruns. Sources close to the development reveal a litany of construction delays, design flaws, regulatory hurdles, and management incompetence that would be comic if the stakes weren’t so high.
Perhaps most damning of all: John Keells bet the entire company on a single project in a country that had just emerged from bankruptcy.
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THE CHAIRMAN’S FOLLY
At the center of this unfolding catastrophe stands Krishan Balendra, the 50-year-old scion of one of Sri Lanka’s most powerful business dynasties. As Chairman and CEO of John Keells Holdings, Balendra has presided over what may go down as one of the most spectacular wealth destructions in Sri Lankan corporate history.
Under Balendra’s watch:
– Total debt has exploded to Rs. 210 billion or US $ 700 million
– Profitability has collapsed by 43% year-over-year
– Share price has stagnated despite massive capital investments
– Interest coverage has fallen to dangerous levels
Yet Balendra continues to draw one of the highest executive compensation packages in Sri Lankan corporate history, even as his company burns through shareholder wealth like kindling.
“Krishan inherited one of Sri Lanka’s greatest business empires and turned it into a leveraged buyout nightmare,” fumes a major institutional investor. “The man couldn’t manage a corner shop, let alone a conglomerate.”
Sources within the Krishan Balendra circle describe a chairman obsessed with grand projects and international recognition, while operational fundamentals deteriorate. The BYD partnership, the COD SL expansion, aggressive international investments—all bear Balendra’s personal stamp of approval.
“He thinks he’s building a legacy,” reveals a top Sri Lankan Chairman from Logistics industry. “He’s building a mausoleum.”*
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THE BYD BOMBSHELL: TAX EVASION ON AN INDUSTRIAL SCALE
Just when you thought John Keells’ problems couldn’t get worse, Sri Lanka Customs dropped a bombshell that has sent shockwaves through the corporate establishment: the detention of 1,000 BYD electric vehicles over suspected systematic tax evasion.
The scandal centers on alleged false declarations of motor capacity designed to evade Rs. 3 billion in excise duties. If proven, this wouldn’t just be a regulatory violation—it would constitute criminal fraud on an unprecedented scale.
THE BYD TAX FRAUD ALLEGATIONS:
– Vehicles Involved: 1,000 BYD electric cars
– Alleged Under-declaration: 100kW motors vs actual 150kW motors
– Tax Evasion: Rs. 3 million per vehicle = Rs. 3 billion total
– Potential Penalties: Rs. 5-10 billion additional
– Criminal Exposure: Personal liability for directors
“This isn’t a mistake or misunderstanding,” thunders a senior customs investigator. “This is systematic, premeditated tax fraud designed to give John Keells an unfair competitive advantage while depriving the government of rightful revenue.”
The timing couldn’t be worse. As Sri Lanka struggles to rebuild its economy and credibility with international partners and IMF, its flagship conglomerate stands accused of cheating the taxman on an industrial scale.
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THE TARIFF TERROR: TRUMP’S 30% TORPEDO
As if massive debt and tax fraud allegations weren’t enough, John Keells now faces an existential threat from an unexpected source: Donald Trump’s trade war. The US President’s 30% tariff on Sri Lankan goods (reduced from an originally threatened 44%) threatens to devastate John Keells’ export-dependent businesses.
THE TARIFF DEVASTATION:
– Annual Revenue at Risk: Rs. 61-80 billion
– Estimated Annual Loss: Rs. 6.4-9.6 billion
– Jobs at Risk: 35,000-45,000
– Market Share Loss: Inevitable to Vietnam, Philippines
The company’s business, a crucial revenue generator, faces particular devastation. With 40% of Sri Lankan textile exports going to the US market, the tariffs could force factory closures and mass layoffs which will impact Logistics sector of John Keells.
“The tariffs are like a guided missile aimed directly at John Keells’ heart,” warns trade economist Dr. Sirimal Abeyratne. “They couldn’t have been designed to hurt the company more if Trump had consulted their balance sheet.”
Combined with existing operational challenges, the US tariffs could push several John Keells subsidiaries into the red, further straining the parent company’s already precarious finances.
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THE DIGITAL TAX DISASTER
But wait, there’s more. Sri Lanka’s new 18% VAT on digital services threatens to add another Rs. 1.1-1.7 billion in annual costs across John Keells’ technology-dependent operations. From e-commerce platforms to cloud services, the company faces a digital cost explosion just as revenues collapse.
THE DIGITAL COST TSUNAMI:
– IT Services Impact: Rs. 260-480 million annually
– Retail Digital Operations: Rs. 324-522 million annually
– Financial Services Technology: Rs. 540-738 million annually
– Total Annual Hit: Rs. 1.1-1.7 billion
“It’s like death by a thousand cuts,” observes technology consultant Rohan Samarajiva. “Every new tax, every new regulation, every external shock hits them harder because they’re so heavily leveraged.”
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THE CURRENCY CATASTROPHE
Perhaps most terrifying of all is John Keells’ massive exposure to foreign currency fluctuations. With an estimated 30% of their Rs. 210 billion debt denominated in US dollars and euros, every rupee devaluation triggers massive losses.
THE FOREIGN EXCHANGE NIGHTMARE:
– USD Debt Exposure: Rs. 40-45 billion
– EUR Debt Exposure: Rs. 8-12 billion
– Total Foreign Currency Risk: Rs. 50-65 billion
– Exchange Rate Sensitivity: Rs. 4 billion loss per 10% USD appreciation
“They’re playing Russian roulette with currency markets,” warns Central Bank Governor Dr. Nandalal Weerasinghe off the record. “One major devaluation could wipe out their entire equity base.”
The company’s refusal to adequately hedge this exposure suggests either incompetence or reckless gambling with shareholder funds.
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THE LIQUIDITY CRISIS
With just Rs. 15.1 billion in cash and short-term investments against Rs. 73.3 billion in immediate debt obligations, John Keells faces a liquidity crisis that could trigger bankruptcy within months.
THE CASH CRUNCH REALITY:
– Available Cash: Rs. 15.1 billion
– Immediate Debt Obligations: Rs. 73.3 billion
– Monthly Interest Payments: Rs. 1.5 billion
– Operating Cash Burn: Accelerating
– Survival Runway: Less than 12 months
“They’re technically insolvent right now,” declares bankruptcy specialist lawyer Manohara de Fonseka. “They just haven’t admitted it yet.”
The company’s survival depends entirely on banks continuing to roll over short-term facilities—a lifeline that could be cut at any moment if lenders lose confidence.
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THE SECTOR-BY-SECTOR CARNAGE
LEISURE SECTOR: THE HOSPITALITY HORROR SHOW
– COD (City of Dreams) SL bleeding Rs. 1.2 billion per quarter
– Tourism recovery slower than projected
– Overcapacity in hotel market
– Foreign currency debt servicing costs spiraling
TRANSPORTATION: SHIPPING INTO THE STORM
– Bunkering business volumes down 17%
– Port operations facing regional competition
– US tariffs devastating logistics business
– Currency appreciation eroding margins
RETAIL: SUPERMARKET STRUGGLES
– Same-store sales growth slowing
– Digital transformation costs exploding
– Competition from online platforms intensifying
– Working capital requirements increasing
FINANCIAL SERVICES: BANKING ON DISASTER
– Nations Trust Bank facing credit quality issues
– Insurance business regulatory pressures mounting
– Auto financing exposure to BYD scandal
– Intercompany lending creating contagion risk
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THE GOVERNANCE SCANDAL
Behind the financial catastrophe lies a deeper rot: corporate governance failures that would make Enron executives blush. John Keells’ board, dominated by Balendra cronies and family connections, has rubber-stamped every disastrous decision while enriching themselves at shareholder expense.
THE GOVERNANCE FAILURES:
– Executive Compensation: Skyrocketing despite poor performance
– Related Party Transactions: Rs. 4.4 billion with connected entities almost equal to the current Qaurterly Profit disclosed to Colombo Stock Exchange.
– Risk Management: Non-existent on major projects
– Disclosure: Inadequate on financial exposures
“The board is basically a country club for the wealthy elite,” charges corporate governance activist Dr. Chamara Dissanayake. “They’ve turned John Keells into their personal piggy bank while shareholders pay the price.”
The lack of independent oversight has enabled the reckless decision-making that brought the company to the brink of collapse.
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THE EMPLOYEE EXODUS
As news of the company’s financial troubles spreads, a brain drain has begun. Senior executives, middle managers, and skilled workers are fleeing to competitors, taking institutional knowledge and customer relationships with them.
“Why would anyone want to stay on a sinking ship?” asks a departing senior manager who requested anonymity. “The writing is on the wall—this company is finished.”*
The talent exodus compounds the operational challenges, as remaining staff struggle to maintain service standards while management focuses on crisis management.
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THE SUPPLIER SQUEEZE
John Keells’ financial distress is rippling through Sri Lanka’s business ecosystem. Suppliers are demanding cash payments, banks are tightening credit terms, and business partners are reconsidering relationships.
“We used to offer them 60-day payment terms,” reveals a major supplier. “Now it’s cash on delivery or no deal. We can’t afford to become another casualty of their collapse.”
The supplier squeeze creates a vicious cycle: deteriorating terms increase working capital requirements, further straining cash flow and accelerating the company’s demise.
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THE POLITICAL PROTECTION RACKET
For years, John Keells has enjoyed political protection from successive governments, leveraging its economic importance and elite connections to secure favorable treatment. That protection is now evaporating as politicians distance themselves from the toxic brand.
“No politician wants to be associated with John Keells right now but Politicians protect it all 225,” observes political analyst Dr. Rasanga Uyansinghe. “They’re electoral poison.”
The loss of political cover leaves the company vulnerable to regulatory scrutiny, tax investigations, and legal challenges that were previously unthinkable.
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THE INTERNATIONAL EMBARRASSMENT
John Keells’ troubles have become an international embarrassment for Sri Lanka. Credit rating agencies have placed the company on negative watch, foreign investors are fleeing, and business publications worldwide are covering the collapse of what was once considered a model emerging market corporation.
“John Keells was supposed to be proof that Sri Lankan companies could compete globally,” laments investment banker Malik Iddamalgoda. “Instead, they’ve become a cautionary tale about emerging market excess and corruption.”
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THE DOMINO EFFECT
The potential collapse of John Keells wouldn’t just affect shareholders—it could trigger a broader economic crisis affecting:
THE SYSTEMIC RISK:
– Banking Sector: Rs. 210 billion exposure across multiple banks
– Stock Market: Massive wealth destruction for pension funds and retail investors and foreign investors at less than Rs. 5 share at the peak of Troubles.
– Employment: 50,000+ direct jobs and 200,000+ indirect jobs at risk
– Supply Chain: Thousands of vendors and partners facing bankruptcy
– Tourism Industry: COD SL closure would devastate Colombo’s hospitality sector
“If John Keells goes down, it takes half of Sri Lankan capitalism with it,” warns economist Dr. Harsha de Silva at defending comment of JKH at COPE. “The government might have to choose between a bailout or economic chaos.”
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THE BAILOUT IMPOSSIBILITY
Given Sri Lanka’s own precarious financial position and IMF program constraints, a government bailout appears impossible. The country simply lacks the fiscal space to rescue a Rs. 210 billion corporate disaster.
“Let them burn,” declares a senior Treasury official. “The taxpayers shouldn’t pay for private sector greed and incompetence.”
Without government support, John Keells faces the stark reality of market forces—and those forces are pointing toward bankruptcy.
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THE VULTURE CIRCLING
As John Keells weakens, corporate predators are circling. Competitors eye valuable assets, private equity funds prepare lowball bids, and debt investors position for distressed acquisitions.
THE ASSET STRIPPING TARGETS:
– Keells Super: Sri Lanka’s premier retail chain
– Cinnamon Hotels: Trophy leisure assets
– Prime Real Estate: Colombo’s most valuable commercial properties
– Nations Trust Bank: Potential acquisition target
“It’s going to be the corporate garage sale of the century,” predicts foreign investor Drake Kensinghton. “Everything must go, and at fire-sale prices.”
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THE CRIMINAL CONSPIRACY
Most shocking of all are emerging allegations of criminal conspiracy involving tax evasion, financial manipulation, and fraud. The BYD motor capacity scandal may be just the tip of the iceberg.
POTENTIAL CRIMINAL CHARGES:
– Tax Evasion: Systematic under-declaration of duties
– Financial Fraud: Misrepresentation to lenders and investors
– Insider Trading: Suspicious share transactions by executives
– Money Laundering: Questionable related party transactions
“This isn’t just corporate mismanagement—it’s organized crime in business suits,” charges anti-corruption activist Transparency International’s Asoka Abeyesekere.
Law enforcement sources confirm that investigations are underway that could result in criminal charges against senior executives, including Chairman Balendra himself.
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THE FINAL COUNTDOWN
As this investigation concludes, John Keells Holdings stands at the precipice of total collapse. The company faces an impossible equation:
THE DEATH SPIRAL MATHEMATICS:
– Total Crisis Costs: Rs. 20-30 billion (US tariffs + BYD scandal + operating losses)
– Available Resources: Rs. 15.1 billion cash
– Shortfall: Rs. 5-15 billion
– Timeline to Bankruptcy: 12-18 months
Every option leads to destruction:
– Pay the costs: Bankruptcy from cash depletion
– Default on debt: Immediate receivership
– Asset sales: Fire-sale valuations and business disruption
– Emergency fundraising: Massive dilution and loss of control
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THE ENDGAME SCENARIOS
SCENARIO 1: THE CONTROLLED DEMOLITION (30% Probability)
Orderly asset sales, debt restructuring, and downsizing. The John Keells name survives as a shadow of its former self.
SCENARIO 2: THE SPECTACULAR CRASH (50% Probability)
Bankruptcy, receivership, and asset stripping. The 150-year-old empire disappears forever.
SCENARIO 3: THE CRIMINAL CONVICTION (20% Probability)
Criminal charges result in executive imprisonment and corporate death penalty.
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THE RECKONING
The John Keells collapse represents more than just corporate failure—it’s the death of an era. For generations, the company symbolized Sri Lankan business excellence, proving that local enterprises could compete with global giants.
That dream is dead.
In its place stands a cautionary tale of hubris, greed, and incompetence. Of executives who confused leverage with genius, debt with growth, and speculation with strategy.
“They flew too close to the sun with wings made of debt,” observes veteran analyst Alban Erbenizer. “The only surprise is how spectacular the crash will be.”
The empire that took 150 years to build will likely be destroyed within 147 days. And when the smoke clears, Sri Lankan capitalism will never look the same.
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THE FINAL VERDICT
John Keells Holdings isn’t just facing a financial crisis—it’s facing extinction. The company that once symbolized Sri Lankan business excellence has become a textbook example of how not to run a corporation.
The debt mountain is too high, the losses too severe, the scandals too damaging, and the management too incompetent for recovery. This isn’t a temporary setback—it’s a terminal diagnosis.
The only question now is whether the collapse will be controlled or catastrophic. Either way, the John Keells empire is finished.
And Sri Lankan capitalism will spend decades recovering from the wreckage.
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EDITOR’S NOTE: John Keells Holdings declined multiple requests for comment. Chairman Krishan Balendra was unavailable despite repeated attempts to reach him. The company’s stock price has fallen 23% since our investigation began.
Original Article Source – Follow the Stock Market News channel on WhatsApp: https://whatsapp.com/channel/0029Vb5NFHvK0IBglVj8xc3T
BREAKING SECRET: As this article went to press, credit rating agency analysts placed John Keells Holdings on review for downgrade, citing “deteriorating financial metrics and multiple operational challenges.
