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Namini Wijedasa

12 Dec, 11 tweets, 3 min read

@TimesOnlineLK

Think the private sector always does thinks better? And cleaner? And right? Read how Hingurana Sugar has been sucked dry via an interesting mechanism by #LOLC and #Brown. Great work by #SriLankan National Audit Office. via @TimesOnlineLK

sundaytimes.lk/211212/news/hi…

Hingurana sugar factory is run jointly by the Government and private entities Brown & Company PLC and Lanka ORIX Leasing Company PLC (LOLC). #LOLC took billions worth of loans for the business at soaring interest rates from its associate companies.

The sugar company's operations were repeatedly funded through loans obtained from LOLC subsidiaries “under abnormal terms and comparatively higher interest rates”. Some were taken on compound interest, resulting in high finance costs, the NAO found

Company statements show that GOPL had borrowings of more than Rs 13.7bn from April 2009 to March 2020. Of this, Rs 11.3bn was from LOLC, Brown and associate companies of LOLC. This is 82.8 percent of total borrowings.

These include LOLC PLC (which has a 26 percent shareholding in Brown); Brown & Co PLC; LOLC Factors Ltd (of which LOLC has a 100 percent shareholding); Commercial Leasing and Finance (Pvt) Ltd (of which LOLC has a 90 percent shareholding)...

Saakya Capital (Pvt) Ltd (the third-largest shareholding company of LOLC); LOLC Finance (Pvt) Ltd; Commercial Trust Technologies (Pvt) Ltd (registered to the address of Ishara Traders which shares directors with LOLC)...

and Seylan Bank PLC (of which Brown holds 10 percent and LOLC holds 13 percent). The stakes are as reported in the NAO report. It also borrowed from Satya Capital (Pvt) Ltd (which, in 2020, was the fourth-largest shareholder of LOLC) and Danya Capital (Pvt) Ltd...

...(a directress of LOLC serves on the board of this company). Just over Rs 2.36bn was from the Bank of Ceylon, People’s Bank, and HNB.

Loans from other financial institutions had annual interest rates of four to 15 percent at the time of borrowing, the NAO records. But loans from associate companies were “at comparatively very high interest rates, in the range of 18 percent to 28 percent”.

@charith9

At least Rs 5bn of these was at annual interest rates of between 20 to 26.5 percent while Rs 6.3bn was at between seven and 10 percent. @charith9 did COPE follow up?

GOPL referred herein is Gal Oya Plantation (Pvt) Ltd, which was the joint venture company.

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