Rpt fitch affirms melsta regal finance at a+(lka); outlook stable

← Homepage

(Repeat for additional subscribers)May 21 (The following statement was released by the rating agency)Fitch Ratings has affirmed Melsta Regal Finance Ltd's (MRF) National Long-Term rating at 'A+(lka)'. The Outlook is Stable. KEY RATING DRIVERS MRF's rating reflects Fitch's expectation that support would be forthcoming from its ultimate parent, the Distilleries Company of Sri Lanka PLC (DIST; AAA(lka)/Stable). Fitch classifies MRF as being of limited importance to DIST, which results in a rating differential of four notches.

The agency's assessment is based on DIST's full effective ownership of MRF through its 100% stake in investment holding company Melstacorp Limited, which holds all non-beverage sector assets of the group. It addition, DIST has representation on MRF's board, and has demonstrated support in the form of regular equity infusions, a back-up credit line and the provision of letters of comfort for borrowings. The assessment however, also reflects MRF's still insignificant role in the group, the low level of operational integration, the absence of a common brand and relatively small contribution to group profit (0.6% in the nine months ending December 2013. Fitch is of the view that linkages between the entities could increase over the medium term as MRF, a licensed finance company, increases its scale through actively taking part in the financial sector consolidation. The authorities also require MRF to increase its capital base to LKR1.5bn by end-2017 (LKR1.1bn at end March 2014). In addition MRF is required to list by end-2014 with an expected public shareholding of around 20%. Fitch believes that DIST will continue to retain a majority stake.

MRF has expanded quickly since it started commercial operations in October 2012 as part of DIST group and Fitch expects that it will continue to growth rapidly. Short-term debt factoring and working capital finance remain MRF's core products, accounting for approximately 60% of advances in the financial year ending March 2014, with the remainder comprising mainly finance leases and hire purchase vehicle finance. DIST's ability to support MRF stems from its market leadership in the cash generative domestic alcoholic beverage sector, with profitability supported by relatively stable demand for spirits though economic cycles, and high entry barriers as a result of regulation.

RATING SENSITIVITIES MRF's rating may be downgraded if there is a change to DIST's ability or propensity to provide support. This may stem from a downgrade of DIST's National Long-Term rating, or weakening linkages between DIST and MRF. Fitch may consider narrowing the notching between the two entities should synergies, such as the provision of working capital products to DIST's suppliers and customers, materialise, thereby enhancing its role within the group. In addition, an increase in MRF's strategic importance through stronger linkages with the DIST group, higher profit contribution or common brand recognition could lead to an upgrade. var $relatedItems = $('lia "/article/riyad-bank-dividend-idUSD5N1E9002"Saudi\'s Riyad Bank recommends lower cash dividend for H2 2016/a/lilia "/article/idUSFWN1EU0AO"BRIEF-CME Group reached record average daily volume of 15.6 mln contracts in 2016/a/li'), $relatedItems = $relatedItems.slice(0,10), relatedBlockLimit = Number('6'), relatedItemsTotal = $relatedItems.length, $paragraphTags = $('#article-text p'), contentParagraphs = 0, minParagraphs = Number("8"); for (i=0; i $paragraphTags.length; i++) { if ($paragraphTags[i].innerText.trim().length 0) { contentParagraphs = contentParagraphs + 1; } } if (contentParagraphs minParagraphs) { setTimeout(function(){ if (relatedItemsTotal relatedBlockLimit) { $('.first-article-divide').append('div class="related-content group-one"h3 class="related-content-title"Also In Financials/h3ul/ul/div'); $('.second-article-divide').append($('.slider.slider-module')); $('.third-article-divide').append('div class="related-content group-two"h3 class="related-content-title"Also In Financials/h3ul/ul/div'); var median = (relatedItemsTotal / 2); var $relatedContentGroupOne = $('.related-content.group-one ul'); var $relatedContentGroupTwo = $('.related-content.group-two ul'); $.each($relatedItems, function(k,v) { if (k + 1 = median) { $relatedContentGroupOne.append($relatedItems[k]); } else { $relatedContentGroupTwo.append($relatedItems[k]); } }); } else { $('.third-article-divide').append($('div class="related-content group-one"h3 class="related-content-title"Also In Financials/h3ul/ul/div')); $('.related-content ul').append($relatedItems); } },500); } Next In Financials Dubai Islamic Bank requests proposals for dollar sukuk - sources DUBAI, Jan 4 Dubai Islamic Bank (DIB) has asked banks to submit proposals to arrange a potential U.S. dollar-denominated sukuk issue, sources familiar with the situation said on Wednesday. BRIEF-Colliers International UK acquires hospitality asset management firm * Colliers international uk acquires market leading hospitality asset management firm BRIEF-Dena bank to consider capital planning for FY 2016-17 * Says to consider capital planning for FY 2016-17 i.e. raising of capital through equities and/or bonds Source text: this site Further company coverage: MORE FROM REUTERS window._taboola = window._taboola || []; _taboola.push({ mode: 'organic-thumbnails-a', container: 'taboola-recirc', placement: 'Below Article Thumbnails - Organic', target_type: 'mix' }); Sponsored Content @media(max-this site) { #mod-bizdev-dianomi{ height: 320px; } } From Around the Web Promoted by Taboola window._taboola = window._taboola || []; _taboola.push( { mode: 'thumbnails-3X2', container: 'taboola-below-article-thumbnails', placement: 'Below Article Thumbnails', target_type: 'mix' } ); window._taboola = window._taboola || []; _taboola.push