RAM assigns BB+, NP to Swarnamahal Financial Services
RAM Ratings Lanka has assigned respective long- and short-term
financial institutions ratings of BB+ and NP to Swarnamahal Financial
Services Ltd.
The long-term rating has a stable outlook. The ratings are premised
on the strong credit quality of the Company's loan portfolio and its
healthy capitalisation.
The ratings are also supported by SFSL's well-known name, primarily
underscored by its sister company, Swarnamahal Jewellers (Pvt) Ltd.
Nevertheless, the ratings are constrained by SFSL's small size, as well
as the Company's short track records on profitability and improved
corporate governance under its new management team.
Incorporated in 2004, SFSL is part of the EAP Group of Companies a
well-established, diversified family business with interests that
include entertainment, jewellery, leisure and finance.
However, the Company is a relatively small registered finance company
accounting for only 1.53 percent of the industry's assets as at
end-September 2010.
Historically, SFSL has faced regulatory pressure due to related-party
transactions; meanwhile performance had been in the red.
Notably, the company underwent a major management restructuring in
2009, following which it has turned around while strengthening its
corporategovernance framework. |