Ratings agency RAM has assigned a financial institution rating of "BB-," for the long term, with a stable outlook, and "NP," for the short term, to registered finance company Divasa Finance, which was, until recently, known as Asia Commerce. Further revealed, ratings were limited by the company's "small stature, short profit track record and moderate funding position."
At the same time, and in contrast, RAM also highlighted Divasa's "healthy liquidity and capitalisation as well as sound asset quality" while also commenting that the company had "secured a margin-trading licence, thus diversifying its lending portfolio." Previously, Divasa had relied only on leasing and hire purchase.
However, RAM also noted; "Although its margin-trading facilities are well collateralised by shares, Divasa's substantial exposure to this product renders it vulnerable to single-product risk."
Additionally, RAM also stated that the company's "performance in [the financial year ending March 31, 2011,] was upheld by an equity gain of Rs. 66.53 million, excluding which the company would have made a pre-tax profit of Rs. 7.58 million."
The ratings agency also commented that the company's "ability to garner deposits is constrained by its limited network of only 4 branches. Furthermore, Divasa is still running marketing campaigns to gain recognition for its newly coined name. Only 25.68% of its funds comprise fixed deposits."
RAM also said; "We note that its capitalisation was recently strengthened by a capital infusion of Rs. 150 million. Meanwhile, its internal capital-generation ratio of 16.97% is also expected to boost its capitalisation." |
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