Kanrich Finance Limited (KFL) has been directed to settle its public liabilities in full within the period from 26.12.2022 to 28.02.2023 in terms of the Finance Business Act, due to continuous capital deficiencies faced by the finance company.
The Monetary Board of the Central Bank of Sri Lanka had issued this directive as a measure to strengthen the Non-Bank Financial Institutions Sector under the ‘Masterplan for Consolidation.
The aforesaid direction was issued in the best interest of depositors and promissory note holders of KFL, subsequent to securing measures to have adequate funds available for KFL to fully settle its public liabilities and further directing KFL to exit from the finance business after such settlement, CB said.
Accordingly, KFL will take necessary actions to settle the entirety of public liabilities with interest accrued up to 26.12.2022 at agreed upon interest rates.
All depositors and promissory note holders of KFL are requested to avail this settlement plan and claim their funds prior to 28.02.2023.
Ina latestet development Nation Lanka Finance PLC (NFL) has stepped into amalgamate with Kanrich Finance Ltd. under the Master Plan for Consolidation of Non-Bank Financial Institutions.
NFL said the company has received the approval of the Monetary Board of the Central Bank for the move aimed at meeting the deficit of the Capital Adequacy requirements.
The NFL will be the surviving entity and is required and expected to complete the Amalgamation process with the relevant approvals on or before 31 March 2023.
The NFL requires Rs. 2.5 billion to comply with regulatory requirements. At present existing capital funds as at 31.03.2022 is Rs. 413 million. It concluded a Rights Issue of Rs. 1.1 billion recently.
V.R. Ramanan owns 55.5% stake in NFL and U.H. Dharmadasa holds 9.6% along with related party Ceyoka Ltd., (8%) and H.K.J. Dharmadasa (6.5%). The NFL has 13,728 shareholders.
The Securities of the company were transferred to the Watch List as per the Enforcement Rules of the CSE on 29 September 2020; 7 September 2021 and 9 September 2022, due to the emphasis of matter on going concern contained in the Independent Auditor’s Reports in the Financial Statements for the years ended 31 March 2020, 2021 and 2022.
The emphasis of the matter on going concern was expressed by the Auditors due to adverse impact on the profitability of the company as a result of continuous restrictions imposed on the company consequent to non-compliance with the minimum Core Capital requirements laid down by the regulatory authority.
The company requested to the, Securities and Exchange Commission of Sri Lanka (SEC) to grant an extension to resolve the aforesaid matter (i.e. emphasis of matter on going concern) and accordingly SEC granted 05 extensions up to 31 December 2021; 31 March 2022, 30 June 2022, 30 September 2022 which has been further extended until 31 December 2022.
As at 30 September 2022, retained loss of NFL was Rs. 964 million up from Rs. 545 million as at 31 March 2022. Assets amounted to Rs. 8 billion and liabilities were Rs. 7.7 billion. For six months ended 30 September 2022, NFL reported a net operating loss of Rs. 416.7 million as against a loss of Rs. 198 million a year ago.
