Mercantile Investment and Finance PLC (MI), considered one of the strongest finance companies in the country with over 50 years in business, has returned a strong performance in the year ended March 31, 2015, with gross income up five percent to Rs. 4.29 billion although the profit after tax was down slightly to Rs. 631.3 million from Rs. 675.4 million a year earlier.
MI which was founded by Mr. George Ondaatjie and is largely owned by his family celebrated its 50th anniversary in July 2014 with the company saying in its latest annual report that its success over the years is attributable to its "unique business model that exemplifies strategic thinking and precise execution."
The Group is a major player in the country’s hotel industry with three quoted hotel companies, Tangerine Beach, Royal Palms Beach Hotels and Grand Hotel Nuwara Eliya under its umbrella along with the unquoted Nilaveli Beach Hotel, its first hotel property. A new 3-star hotel in the city has also been recently launched in Wellawatte by the group.
The company’s Chairman Saro Weerasuriya expected the prevailing economic transformation to speed up once the political climate stabilized and economic policy takes full effect within the next year.
"The national economy growth forecast looks very positive and therefore we can expect GDP growth levels to hover around 7% even in the medium term. This should pave the way for corporates to thrive (and) exploit emerging opportunities to their advantage," he said.
"We have kept to our promise of generating stakeholder value and therefore celebrate this fiftieth year in business with a great sense of accomplishment," MI Managing Director Gerard Ondaatjie said in the report.
He said the year had seen growth in the licensed finance company sector fuelled by the resurgence of the economy in key sectors and improved spending power of people.
"This sustained constant demand for credit, particularly to provide finance to purchase both brand new and registered motor vehicles. Demand for non-traditional lending such as personal loans, property mortgage loans and microfinance showed potential and was a lucrative area of focus for the sector," he said.
Fixed deposits had seen growth momentum, and were a preferred investment choice of most as opposed to property market and stock market investment, he added.
Ondaatjie saw MI’s pre-tax profit of Rs. 912 million, up 11% from a year earlier as "satisfactory" and the after-tax profit of Rs. 631 million, down 7% from a year earlier as a "moderate" decline.
The closely-held company paid Rs. 89 million in dividends, up from Rs. 30 million during the previous financial period. Ondaatjie said that while recording sound financial results and retaining profits, the company had ensured consistent increase in shareholder funds which exceeded Rs. 7.5 billion as at Mar. 31, 2015.
"I can once again assure all our shareholders of our unwavering commitment towards business excellence which will enhance their returns in the years to come," he said.
The year had seen MI making only modest gains on its quoted share portfolio costing slightly over Rs. 3 billion and with a market value of over Rs. 3.9 billion with trading gains down to Rs. 13 billion from the previous year’s Rs. 81 million.
"Despite the gradual pick up in the stock market, the persistent volatility in price movements hampered the possibility of realizing expected share trading gains," Ondaatjie said. "However, fair value of available for sale financial assets increased substantially to Rs. 781 million year-on-year on account of the boost in the stock market."
Nilaveli Beach Hotels, an Ondaatjie company, with 20.83% of MI is its largest shareholder. Members of the Ondaatjie family, Messrs. G.G. Ondaatjie, Ms. A.M. Ondaatjie and T.J. Ondaatjie own 15.88% each. Mercantile Fortunes, an associate company owns 13.67% and the founder, Mr. G.L.A. Ondaatjie owns 8.93%. Other shareholders in the top 20 list have minor stakes going down from 12,525 shares to 10.
The stated capital of the company is a modest Rs. 36 million with total assets running at over Rs. 28.4 billion and total liabilities at slightly over Rs. 20 billion including customer deposits of Rs. 13.7 billion, up from Rs. 11.4 billion the previous year.
The directors of the company are Messrs. S.H.J. Weerasuriya (Chairman), G.G. Ondaatjie (MD), Mahes Amarasekera (Deputy MD), Shermal Jayasuriya (Finance Director), Ms. Angeline Ondaatjie, Travis Ondaatjie, Ms. Punyakanthi Tikiri Kumari Navaratne, Hasantha Perera, Sanjaya Bandara and P.C. Guhashanka.
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