Billionaire Subaskaran Allirajah owned Serendib Engineering Group PLC (IDL.N0000) and Dato Vijaya Eshwaran owned Asia Capital PLC (ACAP.N000) faces serious loss of capital and potential insolvency in Sri Lanka as per the latest quarterly results for the 30th September 2022 released by the respective companies.
Subaskaran Allirajah is a British-Sri Lankan Tamil entrepreneur. He is the founder and chairman of Lycamobile, a telecommunications company. Subaskaran Allirajah is the owner of Swarnawahini Tv and Jaffna Kings cricket team in Sri Lanka. He is also the indirect owner of Serendib Engineering Group Plc (IDL.N0000)
Vijay Eswaran is a Malaysian businessman and the executive chairman of the QI Group (which operates the Gold Quest pyramid scheme worldwide that was banned by Central Bank of Sri Lanka) and the direct majority shareholder of Asia Capital PLC (ACAP.N0000)
SERENDIB ENGINEERING GROUP PLC
Letter issued to CSE by Serendib Engineering Group PlC on 8th November 2022 regarding the qualified opinion of the auditors of the company.
Serious Loss of Capital at Serendib Engineering Group PLC
Latest Corporate Results of Serendib Engineering Group PLC (IDL.N0000): As at 30 September 2022
The Serendib Engineering Group PLC has recorded a loss of Rs.23,862,165 during the quarter ended 30th September 2022 and the accumulated losses as at that date was Rs.390,462,457. The current liabilities exceed the current assets by Rs. 160,590,533 and the Group’s net assets reflect a negative balance of Rs.231,70,3935,140 which is a serious loss of capital as per section 220 of the Companies Act, No. 07 of 2007.
ASIA CAPITAL PLC
Serious Loss of Capital at Asia Capital PLC
Latest Corporate Results of Asia Capital PLC (ACAP.N0000): As at 30 September 2022
Asia Capital PLC's net assets stand at LKR (341,329,000) which is below the 50% of its stated capital. This situation has triggered a serious loss of capital as at 30th September 2022 in terms of section 220 Of the Companies Act No 07 of 2007. The Board of Directors has paid much attention to this matter subsequent to the balance sheet date and subsequent to a preliminary discussion with the auditor and the Indipendent consultants of the Company have identified assets wherein the company holds a minority stake that could be liquidated in order to restructure the balance sheet. Consequently the Directors have had discussion with owners of the majority stake of the identified assets who in principle are willing to exercise their first right of refusal subject to an independent valuation and board approvals. Information gathering to facilitate the independent valuation is in progress. The Asia Capital Board expects, once substantial information is available, to provide a plan in terms of section 220 Of the Companies Act No 07 of 2007 to the shareholders of the Company.
Solvency Test as per the Companies Act of Sri Lanka
- A company will be deemed to have satisfied the solvency test, if: (a) it is able to pay its debts as they become due in the normal course of business; and (b) the value of the company's assets is greater than: (i) the value of its liabilities; and (ii) the company's stated capital.
57. (1) A company shall be deemed to have satisfied the solvency test, if—
(a) it is able to pay its debts as they become due in the normal course of business; and
(b) the value of the company’s assets is greater than —
(i) the value of its liabilities; and
(ii) the company’s stated capital.
(2) In determining whether a company satisfies the solvency test, the board—
(a) shall take into account the most recent financial statements of the company prepared in accordance with section 151 of the Act ;
(b) shall take into account circumstances the directors know or ought to know which affect the value of the company’s assets and liabilities ;
(c) may take into account a fair valuation or other method of assessing the value of assets and liabilities.
Duty of Directors: Section 220 of the Companies Act of Sri Lanka