NEW IPO's-Multi finance company
he Multi Finance Company will be listed on the Colombo Stock exchange before June 30, said a spokesman for the Entrust Group. The Entrust Group recently ventured into the business of financing by acquiring The Multi Finance Company Limited, a Central Bank regulated finance companny.
This is related to multifinance.
MFL is of the smallest registered finance companies in Sri Lanka, accounting for 0.21 percent of the industry’s assets as of September 2009.
"MFL’s major shareholder, Ceylinco Shriram Securities Holding, had been renamed Entrust Ltd after the Ceylinco crisis," Ram Ratings said.
"In addition, Entrust has sought new shareholders to distance itself from the Ceylinco franchise. In this regard, Entrust is expected to be taken over by Pacific Trust, upon obtaining the court’s final approval in the near future."
MRL's asset quality is improving asset from of regular monitoring and stronger recoveries. Its gross non-performing-loan (NPL) ratio had eased to 1.94 percent to the financial year ending March 2009 from 10.20 in 2008.
Ram says the ration is better than its peers and it has eased further to 1.54 percent by end-September 2009, supported by an increase in loans following internal growth an acquired hire purchase portfolio.
However, loan-concentration risk remained with MFL’s top 10 loans accounting for 27.82 percent of its credit portfolio. "While we acknowledge the strides that MFL has made in improving its asset quality, the Company has yet to demonstrate its ability to preserve its credit quality on a larger scale," Ram Ratings said.
"On a related note, MFL’s performance has remained weak, burdened by hefty overheads."
Ram said while a one-off value added tax expenses had led to a pre-tax loss of 4.34 million rupees in 2009 financial year, heavy overheads had continued to take a toll on profits during the first nine months of the financial year ending March 2010.
MFL’s traditionally high cost-to-income ratio (78.67 percent at end September 2009) remained weaker than those of its similar rated peers.
"While margins are expected to uplift the Company’s performance in the short term, a sustainable improvement in its financial performance is yet to be evinced," the rating agency said.
Source of info-Lanka Business Online. in 2010 march article
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