LANKA RATING ASSIGNS


Preliminary Rating to

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Janashakthi Finance PLC- Asset Backed Securitization- Gold Loans

25-Jun-25

01

Applicable Criteria

Methodology | Debt Instrument Rating | Aug-24

02

Related Research

Sector Study | Leasing & Finance Companies | Feb-25


03

Analyst

Ruwanthi Sylva | ruwanthi@lra.com.lk
+94 114 500099 | www.lra.com.lk

PRESS
RELEASE

DISCLAIMER

This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to LRA

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Rating Type Debt Instrument
Current
(25-Jun-25)
Action Preliminary
Rating BBB-
Outlook Stable
Rating Watch -


The rating of the trust certificates takes support, but not solely determined by, the entity rating of Janashakthi Finance PLC (JF or 'the Company'), formerly known as Orient Finance PLC. A higher rating is assigned to the trust certificates due to their asset backed secured structure with certificate investors having dual recourse to the underlying assets and the Company. The certificates will be backed by a pool of gold loan receivables, with collateralization of 150% of outstanding principal and interest. The underlying gold portfolio has average maturity of around 3 months. A sudden and large decline in gold prices poses pricing risk, potentially affecting the quality of gold loan receivables. This is mitigated by short tenor of loans. Internal controls are in place to maintain LTV ratios below 70% of the portfolio. A primary mortgage over the receivables will be registered in favor of the Trustee, thereby enhancing the credit protection available to the certificate holders. The Trustee has identified top branches of JF with highest gold-backed portfolio and will create charge on receivables of the gold-backed portfolio from these branches. Historic rate of default in these branches is less than 5% in gold portfolio. Any shortfall in collateral will be recouped by the Company in 14 working days. The Company will deposit the interest and principal in the Trustee account on or prior to payment date and make any shortfall in the payment amount. Rating takes comfort from the fact that the structure provides Trustee with the right to assume control over the collection of receivables of the underlying gold loan contracts upon occurrence of predefined trigger events or default by the Company. JF is a listed Licensed Finance Company ("LFC") engaged in a range of financial services, including deposit mobilization, leasing, hire purchase, gold-backed lending, pledge loans, and factoring. The Company maintains a modest market share of ~1%.
In FY25, Janashakthi Finance PLC demonstrated moderate financial improvement and posted marginally higher net profit of LKR ~371.8Mn on YoY basis (FY24: LKR ~348.5Mn). Asset quality remained sound, with the Gross NPL ratio declining to ~7.7%, slightly below the industry average of ~8.3%. The Company's Capital Adequacy Ratio stood at ~14.2% as of FY25, which remain below the industry average, although it remains above the regulatory requirement of 12.5%.
The rating assigned to the trust certificates is contingent upon the timely payment of interest and principal under the gold loan receivable securitization structure and strict adherence to agreed covenants. The rating remains contingent to the issuer rating and any change in the issuer rating will be accordingly incorporated in trust certificate rating.
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About the Entity

Janashakthi Finance PLC (formerly Bartleet Finance PLC) is a licensed finance company incorporated in Sri Lanka in 1981 and regulated by the Central Bank of Sri Lanka under the Finance Business Act No. 42 of 2011 and the Finance Lease Act No. 56 of 2000. The Company is registered under the Companies Act No. 7 of 2007 and has been listed on the Colombo Stock Exchange since 2014. Following its acquisition by Janashakthi Limited, the Company was renamed Orient Finance PLC, with subsequent regulatory approval to revert to its current name in May 2025. As of FY25, Janashakthi Limited holds a majority stake of ~87.3%, followed by Janashakthi Capital Ltd at ~5.6%. The Board comprises nine members, including eight Non-Executive Directors and one Executive Director, with the Chairperson serving in an independent Non-Executive capacity.


About the Instrument

The Company proposes to raise approximately LKR 1.5Bn through the securitization of gold loan receivables, with over-collateralization of up to 150% against the aggregate value of the trust certificates. The certificates carry maturities ranging from 7 to 24 months, with interest rates varying by tenor. The first certificate is scheduled to mature in January 2026, with the final maturity expected in June 2027. Both interest and principal payments are structured to follow a bullet maturity profile.

Lanka Rating Agency Limited

No. 145,
Kynsey Road, Colombo 00800, Sri Lanka

Tel: +94 11 450 0099

Web: http://lra.com.lk

E-mail: info@lra.com.lk