Lankem Ceylon PLC Rating Placed on Notice of Withdrawal
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 The withdrawal is at the request of the Company and the rating would be withdrawn at the end of the withdrawal notice period.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:
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.
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:
Mr. Danushka Perera
Mr. W. Don Barnabas
+94 11 4339907
Subsidiary of ICRA Limited
CORPORATE OFFICELevel10, East Tower, World Trade Center, Colombo 01, Sri Lanka Tel:+94 11 4339907;Fax:+94112333307 Email:email@example.com; Website:www.icralanka.com
© Copyright, 2019 ICRA Lanka Limited. All Rights Reserved.
Contents may be used freely with due acknowledgement to ICRA Lanka.
ICRA Lanka ratings should not be treated as recommendation to buy, sell or hold the rated debt instruments. ICRA Lanka ratings are subject to a process of surveillance, which may lead to revision in ratings. An ICRA Lanka rating is a symbolic indicator of ICRA Lanka’s current opinion on the relative capability of the issuer concerned to timely service debts and obligations, with reference to the instrument rated. Please visit our website www.icralanka.com or contact ICRA Lanka’s office for the latest information on ICRA Lanka ratings outstanding. All information contained herein has been obtained by ICRA Lanka from sources believed by it to be accurate and reliable, including the rated issuer. ICRA Lanka however has not conducted any audit of the rated issuer or of the information provided by it. While reasonable care has been taken to ensure that the information herein is true, such information is provided ‘as is’ without any warranty of any kind, and ICRA Lanka in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness or completeness of any such information. Also, ICRA Lanka or any of its group companies may have provided services other than rating to the issuer rated. All information contained herein must be construed solely as statements of opinion, and ICRA Lanka shall not be liable for any losses incurred by users from any use of this publication or its contents.