Capital-needy Sinhaputhra Finance talking to potential investors

Sinhaputhra Finance PLC is talking to prospective investors to infuse much-needed capital. 

The company in a stock market filing said the Board of Directors is currently negotiating with a few potential investors through a professional investment bank. 

A letter of expression has already been given by one company in the same sector, backed by a bank, and also a keen interest has been shown by a large conglomerate amongst others. Sinhaputhra is awaiting further correspondence from them.

“Currently, the company’s focus is to find an investor who can actually move beyond the Rs. 2.5 billion capital requirement based on the deadline given,” it said, adding that it will be able to resolve this matter before 31 January 2019.

The Sinhaputhra Finance disclosure follows the Colombo Stock Exchange (CSE) continuing to place the company on the Watch List due to an emphasis of matter on going concern in the audit report for the year ended on 31 March. The company was originally transferred to the Watch List on 7 September due to the non-submission of the Annual Report for FY18.

Auditors had said that the company has not complied with the minimum core capital requirement of Rs. 1 billion as at 31 December 2017. This along with indicate that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern.

Marking 40 years, in October Sinhaputhra in a statement said it has stood strong and conservatively built up a deposit base now exceeding Rs. 5.4 billion. Its portfolio of lending from such deposits brings a steady cash flow between Rs. 160-220 million a month net of early settlements which allow for the repayment of all interest obligations to depositors, which are around Rs. 55 million.

It manages a total asset base of Rs. 7.4 billion, down from Rs. 7.6 billion as at 31 March. Liabilities amounted to Rs. 6.3 billion as at 30 June.

Post-tax profit in the 1Q of FY19 was Rs. 13.5 million, lower compared to Rs. 15.2 million a year earlier. Gross income declined from Rs. 331.5 million to Rs. 311 million.

Largest shareholders of Sinhaputhra Finance PLC are K. R. B. Wijeyeratne (50.27%), Bimputh Finance PLC (19.93%) and related party Daya Group (6.16%). The Board of Directors comprises of Prof. Amal Karunaratne (Chairman), Ravana Wijeyeratne (Managing Director), Saliya De Alwis (Director of Operations), Tiranjan Bulankulame and Lal Ekanayake. The Board is assisted by two Senior Consultants; President’s Counsel Mohan Weerakoon and Fellow Chartered Accountant K. H. K. Wijedasa.