Lanka Orix Leasing Company PLC (LOLC), which pioneered the leasing industry in Sri Lanka 29 years ago and is now into many other businesses, has posted an attributable profit of Rs.504 million in the year ended March 31, 2009, half the Rs.1.06 billion earned the previous year according to the company’s annual report.

However, LOLC Chairperson Rohini Nanayakkara explained that group profit before tax was up 5.4% to Rs.1.25 billion over the previous year with the company profits dipping mainly due to a shift in profits to subsidiaries.

Most subsidiaries had made positive contributions to the group’s bottom line and will continue to contribute significantly in the coming years, Nanayakkara said.

LOLC which is now into insurance, factoring, savings and fixed deposits, pawning, micro finance, mortgage loans among others is the biggest player in the competitive leasing industry in the country following its acquisition last year of Commercial Leasing PLC.

The group is looking forward at playing a prominent role in rebuilding the nation following the end of the terrorist conflict and is also focusing on regional expansion opportunities, its just released annual report said.

LOLC, with two reputed international partners, was making a pitch to take over a substantial slice of the Seylan Bank assuming management control and was the final bidder in the running but was unable to match the expectations of the Monetary Board and is now out of the running.

There was no reference in the annual report to the bid for Seylan which occurred post balance sheet date.

Nanayakkara said in her chairman’s review in the annual report that the global economic crisis had an impact on LOLC due to escalating finance cost and delays in repayment with businesses constrained by the crisis finding it difficult to meet their obligations on schedule.

"In such a scenario, LOLC employs an optimum balance between collections and supportive credit that strives to deliver a win-win solution – safeguarding our own business interests whilst providing maximum leeway for the businesses of our customers to survive and grow," she said.

Nanayakkara was hopeful that with inflation coming down interest rates will fall enabling them to lend at reasonable rates and pass on benefits to their clients.

The company concentrates on serving the SME and micro finance sectors with 90% of their clientele within these categories, the chairperson said.

She described the acquisition of the profitable Commercial Leasing Company PLC during the year as a ``significant event.’’ There were many synergies between LOLC and Commercial Leasing and this combined strength and expanded outreach strengthened their hand in the leasing market.

The other significant event during the year arose from their decision to spin off their micro finance business as a separate company with the Netherlands Development Finance Company (FMO) taking a 20% stake in LOLC Micro Credit Limited and also providing a credit line.

``I believe this is the first Sri Lankan private sector micro credit company incorporated with foreign partnership,’’ Nanayakkara said.

Orix Corporation of Japan is the major shareholder of LOLC with 30% of its equity but Mr. R.M. Nanayakkara (of Ishara Traders) and his family together own more than 50% and are the controlling sharehoders.

The company has a stated capital of Rs.475.2 million, reserves of Rs.554.4 million and retained earnings of nearly Rs.5 billion in its books. Total assets were running at Rs.46.4 billion and liabilities at Rs.40.3 billion.