By: Staff Writer

February 08, Colombo (LNW): The operating environment for the Sri Lankan finance and leasing company (FLC) industry is expected to continue to stabilise, following the inflation and interest rate shocks over the past two years, Fitch Ratings said yesterday.

It noted that the easing inflation and interest rate pressures should provide steadier conditions for the FLC sector performance.

“Some headwinds linger, as higher taxes will continue to weigh on household finances in 2024. Investor confidence will also take time to recover. Nonetheless, we expect the economic activity to improve in FY25 as GDP growth recovers,” the rating agency said.

Fitch shared its take on the local FLC sector in the rating action commentary of Asia Asset Finance, a 72.9 percent-owned subsidiary of India-based Muthoot Finance Ltd (MFL, BB/Stable).

Fitch ratings gave the entity a first-time rating of ‘A+(lka)’, with a stable outlook.Its core business is in gold-backed lending, similar to its parent. Asia Asset Finance has a small market share of 1.6 percent of the total FLC industry assets.

Fitch Ratings said Asia Asset Finance’s rating reflects its expectation that MFL would provide extraordinary support to its subsidiary, if required.

The agency said it believes MFL has the financial ability and incentive to provide support, given its majority shareholding, record of capital infusions and strategic and operational alignment in its subsidiary’s core product – gold-backed loans.

“This is counterbalanced by Asia Asset Finance’s small size and contribution to MFL, limited brand sharing and different operating jurisdiction,” it said.

Asia Asset Finance’s business model aligns with MFL’s core product of gold-backed loans, following its transition from vehicle financing and unsecured loans. MFL has a clear influence on Asia Asset Finance’s business strategy and maintains oversight of execution at the board level.

The shareholder also appoints three non-executive directors on Asia Asset Finance’s eight-member board and has seconded an employee to head its gold-loan internal audit team. Nonetheless, some differences remain due to the entities’ separate jurisdictions and local market practices.

Adequate Ordinary Capital Support: MFL has provided adequate and timely capital support to Asia Asset Finance since it acquired the company in 2014.

 It infused around LKR400 million in 2019 to support the subsidiary’s business growth. A further LKR413 million was infused in 2021 to meet the increased minimum regulatory capital requirement of LKR2.5 billion for Sri Lankan FLCs, ahead of the stipulated compliance deadline.

By: Staff Writer

February 08, Colombo (LNW): Socomec India, part of France based leading global specialist in Low Voltage (LV) power management, yesterday unveiled its ambitious expansion plan.

The Chennai headquartered French powerhouse is set to venture into the markets of Sri Lanka, effective immediately.

Termed as ‘Greater India,’ this strategic move consolidates into a unified business entity, marking a significant milestone for Socomec India and opening up new opportunities for business growth.

Socomec India Regional Managing Director Meenu Singhal said: “Our commitment to meeting the evolving energy needs with innovative power solutions in the Asian market remains unwavering.

Engineered in Europe and proudly manufactured in India, our products are poised to make a substantial impact in the markets of Sri Lanka and Bangladesh.

This expansion solidifies our dedication to the ‘Make in India’ initiative, with India serving as a pivotal hub for Socomec’s strategic growth in the Asia Pacific region.

Our adherence to global quality standards positions us to navigate this journey with ease. We look forward to building lasting partnerships and empowering businesses with sustainable and efficient power solutions, further strengthening Socomec’s position as a trusted leader in the industry.”

With a recent Euro 5 million investment by Socomec Group in the Indian market to enhance manufacturing capacity, the goal is not only to meet local demands but also to cater to exports to Sri Lanka and Bangladesh.

Socomec India is energising the country through its innovative power solutions, including uninterrupted power supply, power switching, and monitoring solutions.

 Leveraging cutting-edge technology, these products are tailored for data centres, manufacturing and process industries, healthcare, infrastructure, commercial buildings, and renewable energy.

With a focus on local presence, these product categories will now be available in the Sri Lanka and Bangladesh markets. With this expansion, Socomec India aims to double its revenue in these regions within the next three years.

To fortify this ambitious growth plan, Socomec announced the appointment of Suhard Amit as the General Manager, tasked with steering the company’s initiatives in the emerging markets of Sri Lanka and Bangladesh.

Amit, with a distinguished career spanning over 25 years in diversified market segments, brings a wealth of expertise to the role, positioning him as a key driver of Socomec’s strategic endeavours in these dynamic markets.

As Socomec India embarks on this exciting journey of expansion, the company remains dedicated to delivering excellence and innovation in power management.

The commitment to sustainable solutions and superior quality will not only benefit businesses in Sri Lanka and Bangladesh, but also contribute to the overall development of these regions.

 This move contributes to the broader South Asian Association for Regional Cooperation (SAARC) initiative, promoting economic cooperation and regional integration. The ‘Greater India’ vision positions Socomec as a catalyst for cross-border trade and cooperation within the SAARC nations.

February 08, Colombo (LNW): In a recent update on fiscal performance, Finance State Minister Ranjith Siyambalapitiya announced a notable surge in state revenue, marking a 25 per cent increase in January following the implementation of a Value Added Tax (VAT) adjustment.

The revenue for January 2024 reached Rs. 274 billion, surpassing the anticipated figure of Rs. 219 billion.

Highlighting specific departmental achievements, Minister Siyambalapitiya noted that the Customs Department exceeded its designated target of Rs. 114 billion by recording Rs. 121 billion, representing an 11 percent surplus.

Similarly, the Excise Department surpassed its revenue goal of Rs. 12 billion by generating Rs. 14 billion in revenue.

Additionally, the Inland Revenue Department significantly outperformed expectations, recording Rs. 114 billion against a target of Rs. 88.9 billion.

Addressing concerns about potential price hikes due to the VAT adjustment, Siyambalapitiya highlighted that January’s inflation rate stood at 6.4 per cent, with food inflation at a modest 3.3 per cent.

He attributed this to the exemption of essential commodities from VAT, effectively mitigating price increases in this sector. Non-food inflation was reported at 7.9 per cent.

The Minister emphasised that the rise in state revenue will have positive implications for the entire populace, indicating broader economic stability and prospects for development.