Lanka ORIX Leasing Co. provides financing to Sri Lanka’s SMEs
23/06/2008
In many developing countries it can be difficult for small and medium-sized enterprises (SME) to get financing for equipment or for working capital. Sometimes it’s because of a lack of collateral or because local legislation on collateral is inadequate or does not work in practice. Sometimes there’s simply not enough capital available in the market.
SMEs are often important as employers and providers of services and goods locally. Development finance institutions look for reliable and competent local partners that can channel their capital to SMEs. One such company is Lanka ORIX Leasing Co PLC (LOLC).
Established in 1980, as the pioneer leasing company it is amongst the top financial services organizations in Sri Lanka. Its principal shareholders are Mr. Raja Nanayakkara, his son Mr. Ishara Nanayakkara and his daughter Mrs. Kalsha Amarasinghe and ORIX Corporation of Japan, the world’s largest independent leasing company and the second largest financial solutions provider in Japan.
Diverse, flexible service packages
LOLC offers SMEs leasing and factoring as well as working capital loans. The LOLC Group also has a securities and insurance brokering company and a finance company that accepts savings accounts and fixed deposits from the public.
Its competitive advantages are the fast and flexible service and a broad offering of service packages which are tailor-made to ideally suit the customer’s need. It carries out a great number of small, short-term transactions, where flexibility and a local service presence are important. The company has done well, as indicated by its steady and rapid growth and good profitability.
Development finance plays an important role
Finnfund has granted LOLC a long-term loan of US$ 5 million to refinance its lending to Sri Lanka’s SME sector. Financial backing is important to a country like Sri Lanka, in the lower-middle-income group and afflicted by an internal ethnic conflict. These factors increase the perceived risk rating of the country and make it extremely hard to obtain long-term finance from private sources.
As LOLC does not belong to any banking or major financial group in Sri Lanka, foreign Development Finance Institutions play an important role in its funding. In addition to Finnfund, European development finance companies of the Netherlands (FMO), France (Proparco) and Belgium (BIO) have provided loans to LOLC.
The contribution made to the financial services sector of Sri Lanka by LOLC, the high standards of corporate governance and transparency complemented by the professionalism of its team has been a source of confidence to these Development Finance Institutions.
“There are very little direct investments from Finland to Sri Lanka. Since in accordance with our mission we wish to contribute to the economic and social development of the developing countries, a solid partner with a clear SME focus like LOLC, is very valuable to Finnfund,” says Mr. Jyrki Halttunen, Finnfund’s Treasurer.
Tropicoir Lanka makes substrates from coconut waste
One of the customers of LOLC is Tropicoir Lanka (Pvt) Ltd., which produces substrates for growing fruit, vegetables and flowers from coir, the outer husks of coconuts. Coir is sold in loose form or made into briquettes or chips. This is ecologically rational because coconut waste is hard to utilize and is often simply dumped.
The company was established in 1997 and employs about 200 people. Most of its output is exported, and it has received an award from the national exporters’ association and a commendation from the president of Sri Lanka. The company’s quality assurance system is ISO 9001-2000 certified.
For more information please contact Mr. Jyrki Halttunen, Treasurer, tel. +358 9 3484 3318, email firstname.lastname@finnfund.fi
