The Rating reflects the strong ownership structure of the Company, majority (~83.42%) owned by LOLC Holdings and demonstrated support from the parent through guarantees and intercompany loans. LOLC Group, Sri Lanka’s leading conglomerate, has a diverse portfolio of investments in over 25 countries. The consolidated asset base of LOLC Group was recorded at LKR~2,132bn as of 1HFY26 (1HFY25: LKR~1,905bn, FY25: LKR~2,030bn) with a net income of LKR~12.2bn for 1HFY26 (1HFY25: LKR~30.9bn, FY25: LKR~41bn) during the same period.
Brown & Company operates as an Investment Holding Company, along with operations of its own. The Company’s various business segments, referred to as Strategic Business Units (SBUs), are classified in three (3) broad clusters, i.e., (i) Automotive & Hardware, (ii) Agriculture and Heavy Equipment, and (iii) Pharma, Consumer, and Integrated Engineering Solutions. During FY25, the Company’s clusters exhibited mixed performance. Despite economic stability, the Company recorded a standalone net loss (excluding share of profit of equity accounted investees) of LKR~1.9 bn in FY25, an improvement compared to a larger loss of around LKR~4.2 bn in FY24. While this reduction in losses reflects some progress, the Company’s performance remains constrained, as evidenced by a net loss of LKR~10.7 bn during 1HFY26. Going forward, the Company plans to fortify its market share and presence in the Tractors and Batteries segments to improve its overall performance. At the Group level, despite a revival in economic activity, the investments yielded subdued results during FY25. Barring the Trading Segment (net profit of LKR~5bln), other segments remained under pressure and registered bottom-line losses, with the Investments’ segment losses being the most significant. Overall, the Group reported a net profit of LKR~29bn during FY25 (LKR~-8.5bn in FY24), primarily owing to the acquisition Gain on Bargain Purchase (LKR~65bn) of Plantation segment subsidiaries. This turned into a loss during 1HFY26. In terms of financial position, the Group’s funding needs were primarily met through borrowings from the parent entity (LOLC Holdings) and Financial Institutions.
As of June 2025, Brown & Co’s loans from related parties increased to LKR~34.6bn, up from LKR~25.6bn in June 2024. Meanwhile, the Group’s 'due to related parties', primarily from LOLC Holdings, climbed to LKR~173bn in FY25 (FY24: LKR~127bn). A substantial portion of these payables relates to “Browns Investments PLC,” the key investment arm of the Browns Group. The Company’s debt coverage ratios remain under stress due to weak operating cash profits, recording at just ~0.3x in FY25 (~0.1x in FY24), and ~0.3x in 1QFY26. This comes off despite a moderate debt leverage ratio of ~37.9% in FY25 (FY24: ~37.9%), and ~23.8% in 1QFY26. Meanwhile, the Group’s debt leverage ratio was recorded at ~16.1% in FY25 (~17.4% in FY24), and ~26.6% in 1QFY26. Going forward, Brown & Co. is planning to dispose of some of its Group assets to reduce the inter-group borrowings and improve its overall financial discipline.
The ‘Negative’ Outlook assigned reflects the Company and the Group’s substantial reliance on borrowings and continuing losses in key business segments. Meanwhile, cashflow generation through core operations remain constrained. Timely disposal of certain assets and utilization of proceeds to reduce debt levels is critical. Similarly, stronger cashflows generation for debt servicing is imperative for sustaining the rating. Continued support from LOLC Holdings PLC's remains a key rating factor.