Sumith Adihetti initially started with the financial performance. “We finished last year with over Rs 1.5 billion profit after tax. This is a sizable increase over last year. He said the Central Bank after ‘auditing’ LB finance’s record books and all transaction details had issued a statement that LB finance was a ‘low-risk’ Finance company. This is due to our transparent and honest financial policies in all our dealings with the customers and with the Central Bank.
Smith Adihetti said LB Finance which was initiated by Lewis Brown’s over 40 years ago was bought over by Dammika Perera nine years ago. With that the management changed and I too joined them. Our aim is to reach Rs 2 billion profit in the financial year ending 2013 March which would be a 25% growth. He further said, “This is an ambitious goal which I believe we can achieve”.
He said “everyone needs to agree that at present the economy is not in a stable condition” but he was very positive and claimed, “with our effective and aggressive marketing efforts achievement of this is possible despite difficult market conditions”. Further he said when I started there were only three branches and after that I embarked on the branch expansion programme. He pointed out that currently they had branches spread to all parts of the island. He said, “Last year we opened 25 branches, and in the Jaffna peninsula alone it was five branches”.
We offer 50 to 60% of the vehicle value as finance. This could change depending of the financial stability of the client. When asked about the credit ceiling imposed on banks by the Central Bank he said, “It was good for the finance companies before the vehicle import tax was imposed. But most of the finance companies do not have money. Last year we had 2.5 million deposits but our target is Rs 1 billion.” In response to a question he said “Most of the deposits are short term therefore there is a mismatch”. But showing optimism he said, “Most of our deposits are renewed which means customer confidence is good”.
He did not forget to talk about the profits. “We finished last year with over one and a quarter billion as profits after tax which is a sizable increase over previous years. He said the Central Bank after ‘auditing’ LB finance’s record books and all transactions details, had issued a statement that LB finance is a ‘low risk’ Finance company. This is due to our transparent and honest financial policies in all our dealings with the customers and with the Central Bank.
He further said Central Bank had also indicated that they were the second in the market as far as the finance companies were concerned. In response to a question he said that currently the market leader was Central Finance and that they wished that they could reach the top very soon.
Sumith stressed that LB Finance had all the conventional finance company products with no plans to expand into unknown areas and that the company was currently concentrating on what was available in hand only. Describing the market growth further he said, “We are the market leaders in pawning business and our inland money transfer service is very popular among the public and has become the most convenient and safe mode of money transfer.”
He said their staff strength was 1750 and that this would rise to 2000 by end of the year. The current tax increase on import of vehicles has adversely affected their business was his opinion. The move to increase vehicle import tax has affected the entire industry very badly. We have been doing very well in the leasing business and the drop currently faced is very severe. Leasing of vehicles stood at around 2000 previously and last month it was a very pathetic 300. Since new vehicle imports are less we are into more refinancing.
The Managing Director said, their fixed deposits schemes were very popular and this was another area where the company was doing well along with their ATM card which they had tied up with Sampath Bank. “We pay an attractive interest on deposits but due to the drop in the leasing business this too has dropped considerably and in a way the company was hit from both sides in this respect”.
He further spoke about the industry and said the competition was very severe and therefore they had to open more and more new branches to keep abreast with competition. “We did not have branches earlier but now we have branches in many parts of the island in order to face the competition.” He was very pragmatic in saying “the days are gone when the customer came to the branches for transact business even people from faraway places like Jaffna and Badulla, used to come to Colombo. But the present situation is totally different; we go to the consumer, and this is an effective way of braving the completion successfully”.
Sumith did not forget to mention about the Central Bank of Sri Lanka which he said was performing a valuable service to the whole industry by way of issuing directives and timely supervision.
When asked about the possibilities of diversifying the business he said, “We like to do only the core business associated with finance companies and we do not want to go to unknown areas and burn our fingers”.
“At present only the hotel and construction industries doing well. Business from the North and East is good but we are careful in lending. People like our presence in Jaffna and the eastern province. We have a very good clientele. We have just started factoring and have done only Rs 1 billion business up to now. We are slow in progressing because we only go for the reputed suppliers as this is a new area of business for us.”