RAM Ratings Lanka has reaffirmed the long- and
short-term ratings of The Multi Finance Company Limited ("MFL" or "the
Company") of BB- (with a stable outlook) and NP, respectively. The
ratings are premised on the Company’s small size and concentration risks
arising from exposure to large loans. These factors are, nonetheless,
moderated by the fact that MFL has met the minimum core-capital
requirement of LKR 200 million, which has consequently improved the
Company’s capital adequacy and liquidity levels.
MFL remains one of the smallest players in the registered finance
companies ("RFCs") industry, accounting for 0.19% of the industry asset
base as at end-December 2008. Meanwhile, the Company complied with the
regulatory minimum core capital requirement (of LKR 200 million) mainly
through the investment by Entrust Limited ("Entrust"), formerly Ceylinco
Shriram Securities Holdings Limited. Entrust now has a 92.13% stake in
the Company. Consequently, certain key functions were taken over by the
new management team. The new management line-up is focused on
streamlining MFL’s back-office operations and tightening collections as
well as recoveries. In this regard, all manual systems are being
automated; this is envisaged to facilitate efficient monitoring and
control.
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