Mercantile Investments celebrates 50th anniversary with impressive performance

Sri Lanka’s renowned and respected finance company Mercantile Investment and Finance PLC (MI) which celebrated its 50th anniversary in July 2014 has notched up a solid performance for the financial year ended as at 31 March 2015 with Gross Income reaching Rs. 4.29 billion, which in fact is higher than corresponding year by 5%. The profit after tax has come down marginally from Rs. 675.4 from previous year to Rs. 631.3 this year.

Founded by George Ondaatjie and is still largely owned by his family, Mercantile Investment and Finance PLC latest annual report says that its success over the years is attributable to its unique business model that exemplifies strategic thinking and precise execution.

Sri Lanka’s hospitality industry witnesses the worthy presence of the group with three quoted hotel companies – Grand Hotel Nuwara Eliya, Tangerine Beach Hotel and Royal Palm Beach Hotel – along with the unquoted Nilaveli Beach Hotel, in the eastern coast which in fact is their first hotel property. Extending their presence in the hospitality sector, the group launched recently a new three-star hotel in the city, in Wellawatte.   

The company’s Chairman Saro Weerasuriya’s assessment of the future was that “The national economy growth forecast looks very positive with GDP growth levels expecting to be hovering around 7% even in the medium term. This should pave the way for the corporates to exploit emerging opportunities to their advantage and thrive.”

MI’s Managing Director Gerard Ondaatjie says in the annual report: “We have kept our promise of generating stakeholder value and therefore celebrate this 50th anniversary with a real sense of achievement.” 

He elaborated further saying: “The year had seen growth in the licensed finance company sector fuelled by the resurgence of the economy in key sectors and improved spending power of the people. This indeed sustained the steady demand to provide finance support to purchase brand new as well as registered motor vehicles, while demand for non-traditional lending such as personal loans, property mortgage loans and microfinance showed potential as lucrative areas of focus for the sector.”

Fixed deposits had experienced growth momentum and were a preferred investment choice of most as opposed to property market and stock market investment, he added. 

Ondaatjie saw the MI’s pre-tax profit of Rs. 912 million, which is up by 11% from a year earlier as ‘satisfactory’ while the after-tax profit of Rs. 631 million, down by 7% from corresponding year as a ‘moderate decline’

MI’s dividends payment to its investors was Rs. 89 million, up from Rs. 30 million of the previous year. Sound financial results and retaining profits provided the strength for the company to ensure consistent increase in shareholder funds which exceeds Rs. 7.5 billion as at 31 March 2015, said Ondaatjie. 

Continuing he said; “I can once again assure all our shareholders of our unwavering commitment towards business excellence which will enhance their returns in the years to come.”

In the quoted share portfolio costing slightly over Rs.3 billion and with a market value over Rs.3.9 billion, MI had made only modest gains with trading gains down to Rs.13 million from previous year’s Rs. 81 million.

Ondaatjie said: “Despite the gradual pick up in the stock market, the persistent volatility in price movements hampered the possibility of realizing expected share trading gains. However, fair value of available for sale financial assets increased substantially to Rs. 781 million year-on-year on account of the boost in the stock market.”

With 20.83% shares in its fold, Nilaveli Beach Hotels Ltd., an Ondaatjie company is the largest shareholder of MI. Members of the Ondaatjie family, G.G. Ondaatjie, A.M. Ondaatjie and T.J. Ondaatjie own 15.88% each. Mercantile Fortunes another group company owns 13.67% and the founder G.L.A. Ondaatjie owns 8.93%. Other shareholders in the top 20 list own minor stakes going down from 12, 525 shares to 10.

The stated capital of the company is a modest Rs. 36 million. Total assets run at over Rs. 28.4 billion. Total liabilities stands slightly over Rs. 20 billion including customer deposits of Rs. 13.7 billion which is up from Rs. 11.4 billion of the previous year.

Directors of the company are; S.H.J. Weerasuriya (Chairman), G.G. Ondaatjie (MD), Mahesh Amarasekera (Deputy MD), Shermal Jayasuriya (Finance Director), Angeline Ondaatjie, Travis Ondaatjie, Punyakanthi Tikiri Kumari Navaratne, Hasantha Perera, Sanjaya Bandara and P.C. Guhashanka.