LOLC Group (LOLC), the premier blue chip conglomerate, concluded another financial year on a high note as per the results for the year ended March 31, 2020.
LOLC posted an impressive Rs.19.8 billion Profit after Tax (PAT) for the year in comparison to Rs.19.6 billion PAT in the last year, becoming the most profitable listed entity in Sri Lanka for two consecutive years. In a short span of time, LOLC has truly emerged as a “Sri Lankan global player” having operations in over 10 countries.
While the Group performance was affected by local externalities, such as the Easter Sunday attack, the subdued economic growth and the political instability in FY19/20 that resulted the company to record dips in the net interest income and hikes in impairment charges, LOLC has been able to enjoy its stellar performance largely based on the earnings stemming from its overseas financial operations and the gain on a bargain purchase of Rs. 5.4 billion from the acquisition of the largest sugar production plantation company in Africa. Moving forward, LOLC is well set to realise the financial synergies generated from the PRASAC divestment through realigning the capital position of the Group.
Established 40 years ago, LOLC has spearheaded the Small & Medium Enterprise (SME) lending and microfinance revolution in Sri Lanka and the region. Excelling on a national level, LOLC has now established itself as a leading microfinance institution in the countries which it operates.
With its financial strength and the perfected micro finance business model in the region, the Group is now well-positioned to expand its operations beyond Asia to the African continent where a substantial opportunity lies in serving a large Bottom of the Pyramid population. Overseas expansion has not only offered LOLC diversified revenue streams with increased financial stability, but also has added resilience with a well-spread risk profile.
LOLC already made its debut to Africa by acquiring a microfinance bank in Nigeria in October 2019 and by starting LOLC Finance Zambia as a green field project. In FY 2020/21, LOLC will focus on consolidating its existing businesses while pursuing promising investments in Africa and Asia for long-term value creation.
The Group announced the board’s decision to sell its 70% stake in PRASAC to the South Korean KB Kookmin Bank for a consideration of $603 million in January 2020. LOLC received the relevant regulatory approval in March 2020 and concluded the transaction on April 13, 2020. PRASAC claims $3.3 billion in assets, $2.7 billion in portfolio, $1.8 billion deposits and $133 million Profit before Tax (PBT) for the 12 months ending March 2020.
Despite the sale of PRASAC, LOLC still has a foothold in the fastest growing Southeast Asian country via LOLC Cambodia, the fourth largest Microfinance Institution (MFI) in terms of portfolio size. The company has recorded an impressive performance with a 57% YoY growth of its earnings to conclude the year.
The group owns 97% of LOLC Cambodia that has an asset base surpassing $1 billion, a gross loan portfolio of $857 million, a deposit base of $501 million and a recorded profit of $34.6 million. With its superior process efficiencies and the right product mix, the company now leads the industry in terms of profitability.
Venturing into Myanmar in 2013 as a greenfield operation, LOLC Myanmar Microfinance Company Limited has now become the third largest among the 176 MFIs in the country with an asset base of $109 million, a portfolio of $77.8 million, and a growing deposit book of $13.8 million. LOLC Myanmar has seen an exceptional performance in FY2019/20 with over 94% YoY growth in loan book, total assets and deposits.
In 2017, the Government of Pakistan and the Sultanate of Oman invited LOLC to take up the major shareholding of their joint venture – Pak Oman Microfinance Bank, in recognition of LOLC’s outstanding contribution to the microfinance community. The Group ventured into Indonesia in 2018, acquiring the controlling interest in PT Sarana Sumut Ventura (SSV), expanding its global footprint. SSV is now well-placed to capture the industry potential in a country that has a massive Micro, Small & Medium Enterprises (MSME) market and over 100 million Bottom of the Pyramid population.
Tapping into other neighbouring emerging markets, LOLC invested in the Philippines through LOLC ASKI Finance and LOLC Bank Philippines (a thrift bank) in 2019. These entities collectively account for $11.8 million loan portfolio. In the year under review, the Group made its first finance sector investment in the African region by acquiring a controlling stake of FinaTrust Microfinance Bank in Nigeria, the country with the largest population in Africa.
Today, with the financial sector representation in eight countries along with promising investments in Asia and Africa in the coming years, LOLC has successfully established itself as a strong global financial conglomerate. With this standing, the Group is poised to be a global financial catalyst with a multi-currency, multi-geographic microfinance and SME platform in the future.
In spite of the challenging and unexpected external shocks, LOLC Finance PLC (LOFC) continued to hold its market leadership position amongst the Non-Banking Financial Institutions (NBFIs) in the country with an asset base of Rs.192 billion, a portfolio of Rs.134 billion and deposits of Rs. 99 billion. The company posted Rs. 3.9 billion PAT in the year under review. LOFC as the leading impact lender, holds the largest pool of Development Finance Institutions (DFIs), guiding their respective development goals for Sri Lanka.
The capital and the wide array of technical assistance provided by these DFIs through LOFC have transformed the grass root levels of the economy. Continuing the Group’s legacy of expanding strategic international alliances, LOFC signed a loan agreement with Swedfund, the Swedish Government’s Development Finance Institution to promote financial inclusion and gender equality.
In a statement about the annual performance of the Group, Group Managing Director/CEO Kapila Jayawardena said, “2019/20 has been a difficult year due to externalities affecting most industries, but we are pleased with our strong performance this year, with a Group PAT of Rs. 19.8 billion which is largely contributed by our strategic foreign ventures. With this standing, we are proud to be the most profitable listed entity for the second consecutive year. With a timely global expansion strategy, well diversified revenue streams and a dynamic workforce in place, we will ambitiously look forward to stride ahead with consistent performance during these turbulent times.”
CEAT Kelani boosts earnings of local rubber industry
CEAT Kelani representatives conducting training for rubber suppliers.
Increased production to meet local demand has enabled CEAT Kelani Holdings to increase its monthly purchases of natural rubber in the domestic market by as much as 35 per cent by September, the country’s leading tyre manufacturer has disclosed.
The company, which sources all of its natural rubber requirements locally, said its purchases in September 2020 alone would reach 500 tonnes (500,000kgs), generating Rs 150 million in revenue for Sri Lankan producers in areas such as Kegalle, Kalutara, Ratnapura and Monaragala.
In the pre-pandemic months of December 2019 to February 2020, CEAT Kelani’s purchases of rubber averaged 366 tonnes a month, generating average monthly revenue of Rs 107 million for local suppliers, the Company said.
“One of the major reasons for CEAT Kelani’s existence in Sri Lanka is the availability of natural rubber, and we have always been focussed on maximising local value addition,” the company’s Managing Director Ravi Dadlani observed. “With our ramping up of production in response to the temporary import restrictions imposed by the government, our contribution to local natural rubber producers has increased sharply, by as much as 40 per cent in value terms in just seven months.”
Increased production of truck, bus, radial and two-wheeler tyres by CEAT, while supporting the government’s efforts to conserve foreign exchange through import substitution, would also help local industry achieve the ‘V’ shaped post-pandemic recovery that is expected of it, Dadlani said.
CEAT Kelani engages with a base of nearly 30 dealers for the purchase of natural RSS rubber and interacts with them on daily basis. Besides daily procurement transactions, the Company imparts knowhow to the dealers to help them improve the quality of RSS grades. “We periodically audit dealers’ operations and help them maintain high quality standards,” Mr Dadlani added. “As a result many of our dealers are now recognised as “CEAT approved NR dealers.” This recognition not only helps them to be consistent suppliers to CEAT Kelani, it also helps them to establish themselves as quality suppliers of RSS grades to rest of the local industry.”
CEAT’s ramping up of production of truck and bus tyres since the start of the pandemic-linked lockdown has resulted in the Company now producing 100 per cent of the segment’s requirements and enabled the government to make a saving of Rs 11 billion a year in foreign exchange. The Company has also achieved an 85 per cent increase in the production of tyres for the ‘two-wheeler’ segment over the past three months; enabling a further saving of Rs 350 million a year through import substitution.
CEAT Kelani can currently produce two million tyres annually across multiple categories, and an addition of a further 200,000 Car and Van Radial tyres is imminent with new machinery being installed, pending the arrival of foreign technologists to commission the additional capacity.
Notably, CEAT Kelani Holdings has kept the prices of its tyres unchanged since December 2019 to support customers and the economy, despite the additional investments made in increasing capacity and an increase in market prices due to demand.
CEAT Kelani Holdings is considered one of the most successful India – Sri Lanka joint ventures in the manufacturing sector. The joint venture’s cumulative investment in Sri Lanka to date totals Rs 8 billion, inclusive of Rs 3 billion committed in January 2018 for expansion of volumes, technology upgrades and new product development. The company’s manufacturing operations in Sri Lanka encompass pneumatic tyres in the radial (passenger cars, vans and SUVs), commercial (Bias-ply and radial), motorcycle, three-wheeler and agricultural vehicle segments.
Dialog Axiata introduces ‘Couple Blaster’ with unlimited calls and SMS
Dialog Axiata PLC announced the launch of Sri Lanka’s Best Couple Plan ‘Couple Blaster’ facilitating all Dialog mobile customers with Unlimited Calls and SMS between two numbers for as low as Rs. 123 (including taxes) per month. The unique feature of this plan is that only one user needs to activate it for both users to enjoy the benefit of unlimited calls and SMS.Dialog Mobile postpaid customers can activate the package and register the couple number by dialling #171#. Dialog Mobile prepaid customers can activate the package by reloading Rs. 123 and register the couple number by dialling #171#. The couple number to be registered can either be a Dialog mobile prepaid or postpaid mobile connection. Mobile postpaid customers will have the freedom to change the couple number as and when they require for a fee of Rs. 100, for each change made. Prepaid mobile customers can change the other registered number free of charge, once every month.Understanding the emergent consumer needs, the ‘Couple Blaster’ package acts as an ultimate accompaniment to the Unlimited YouTube, Facebook and WhatsApp plans being offered by Dialog’s ‘Blaster’ range for all the digitally savvy youth who rely on relevant, accessible and affordable Voice, SMS and Data plans. This latest addition is testament to the company’s commitment to facilitate over 15 million of its customers.
Sampath Bank supports medical research with special loan
Nanda Fernando, Managing Director, Sampath Bank PLC (3rd from right) hands over the agreement to Dr. Nihal Abeysinghe, President-Elect, College of Community Physicians of Sri Lanka (CCPSL), where several other senior officials were present.
Extending its support to the field of medical research during this global pandemic proactively, Sampath Bank joined hands with the College of Community Physicians of Sri Lanka (CCPSL) to offer a special low interest loan to Postgraduate Medical Officers in Public Health.
The Bank is offering loans of up to Rs.1 million at a fixed rate of 8.5% p.a. for the first year and a floating rate of 9% p.a. for the remaining period of the loan, for up to 7 years, with a grace period of up to 12 months.
This loan is aimed at supporting Postgraduate Medical Officers with the costs associated in their research at the University of Colombo’s Post Graduate Institute of Medicine. They can obtain this facility without any personal guarantee by simply providing an undertaking from their employer to remit their salary or the loan instalment amount to the account.
Nanda Fernando, Managing Director, Sampath Bank PLC handed over the formal agreement in this regard to Dr. Nihal Abeysinghe, President-Elect, College of Community Physicians of Sri Lanka at the Sampath Bank Head Office premises in the presence of representatives from Sampath Bank and the CCPSL
“At Sampath Bank, we have always taken pride in recognising the intelligence, originality and inventiveness of our fellow Sri Lankans and are committed to powering the nation’s research and development efforts. Inspired by the passion and dedication of the countless heroes from across Sri Lanka’s healthcare sector, especially during this pandemic, we sought to extend our support to them. As part of this, we are delighted to support them with their research through a special loan for Medical Officers engaged in Postgraduate studies in Community Medicine at the Post Graduate Institute of Medicine, University of Colombo. We look forward to seeing more pioneering medical research coming from our country in the future,” said Nanda Fernando, Managing Director, Sampath Bank PLC.
“We are grateful to Sampath Bank for offering concessionary loans to Medical Officers pursuing in Postgraduate studies in Community Medicine at the Post Graduate Institute of Medicine, University of Colombo. Coming at a time when there is a heightened need for medical research and education, this will go a long way in helping them with their research. We look forward to seeing other disciplines in postgraduate medical studies availing similar benefits for their courses too,” said Dr. Nihal Abeysinghe, President-Elect, College of Community Physicians of Sri Lanka.
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