RAM downgrades Bimputh Finance
View(s):Local finance company Bimputh Lanka Investments PLC has been downgraded by ratings agency RAM following its associate company Sevangala Sugar, previously a member of the Daya Group which also owns Bimputh, being expropriated by the government of Sri Lanka.
According to a statement, RAM highlighted that Bimputh’s ratings downgrade, from “BB” to “BB-”, was a result of “loss of financial and operational synergies derived from Sevanagala Sugar Industries (Pvt) Ltd (‘Sevanagala’), previously one of Bimputh’s significant counterparties”.
In addition, RAM also noted that Bimputh’s ratings were “weighed down by its weak funding, moderate performance, small stature and the lack of seasoning for its new loan products”.However, RAM also added that the finance company had “good liquidity and strong capitalisation levels, along with the financial flexibility derived from its ultimate parent, Daya Group (Pvt) Ltd.”
Owned by the Daya Group, with 30% of its deposits from Daya Group-owners the Gamage family, Bimputh has moved away from its reliance on loans from sugarcane cultivators following operations of Sevanagala being halted, according to RAM. Further, also stated was that Bimputh has “moved into other segments such as paddy, maize and peanut, personal loans, pawnbroking and leasing while reducing its exposure to sugarcane-related loans”.
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