Lankem Ceylon PLC

Lankem Ceylon PLC Rating Placed on Notice of Withdrawal

Rating action

ICRA Lanka Limited has placed the Issuer rating of [SL]D (pronounced SL D) assigned to Lankem Ceylon PLC (“LCEY”/ “the Company”) on Notice of Withdrawal for 30 days. The withdrawal is at the request of the Company and the rating would be withdrawn at the end of the withdrawal notice period.

Analytical approach: The withdrawal is based on ICRA Lanka’s Policy on withdrawal and suspension of Credit Rating and the rating is based on ICRA Lanka’s issuer rating methodology, as indicated below.

Links to applicable criteria:  https://www.icralanka.com/issuer-rating-methodology/

About the Company:

Company Profile

Lankem Ceylon PLC was created by Royal Dutch Shell in 1964 primarily as an agro chemical business. As Sri Lanka started encouraging local ownership, the Company was acquired by local investors and was listed on the Colombo Stock Exchange (CSE). Over the past 25 years, Lankem has diversified into other related businesses. The Company has been present in most industry segments in the country but primarily focused on chemicals and manufacturing industries. Lankem’s Agro Chemicals, Paints and Bituminous Products had been the frontrunners in new product development in their specific industries. 

Group Profile

Over the years, LCEY had grown by strategic acquisitions and now constitutes a diversified group with 27 subsidiaries, which are in the manufacturing of FMCG products, import/export of agricultural inputs/commodities, distribution and freight forwarding, trading of chemicals/auto components and, managing hotels and plantations. Currently, Colombo Fort Land & Building PLC (CFLB) is the immediate parent of Lanken Ceylon PLC, which is also the largest subsidiary (including its stepdown subsidiaries) of CFLB, accounting for approximately 40% of the revenue of CFLB. Thus, LCEY is strategically important to the Group. The Company on its own also acts as a strategic investment holding company for the Group with several subsidiaries and stepdown subsidiaries being held by LCEY. With several of Lankem’s subsidiaries (including Lankem) being listed, the Group is also open to rights issues to raise funds for supporting its debt obligations. Further, dividend incomes from these entities form less than 2% of the Company’s revenues, making LCEY independent of any of the subsidiaries.

C.W. Mackie PLC is the largest subsidiary of the Lankem Group, which has recorded a noticeable growth over the past few years, despite the slowdown in plantation sector. Leisure sector is another important segment of the Group. LCEY has made some sizeable investments recently in the packaging segment.

Rating history for last three years:

ANALYST CONTACTS
Mr. Danushka Perera
+94-11 4339907
danushka@icralanka.com
RELATIONSHIP CONTACT
Mr. W. Don Barnabas
+94 11 4339907
wdbarnabas@icralanka.com

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