Financial Times

Quoted companies

The Sunday Times FT reports on rating for quoted companies are good. I am so happy that your group of newspapers has decided to “gently” warn investors on the Colombo Stock Exchange with a rating of financial institutions such as Arpico Finance Co. Ltd which is actually quite dead.

It is the official business of the CSE and the SEC to do so especially in the matter of quality of real auditing done. They have done virtually nothing, despite being told. The investors therefore believe in a system that betrays by not working. Where is the analysis?

A basic factor to focus upon is the quality or reality of the asset base. Is the security taken for loans physically traceable such as Real Estate, Vehicles, good quality collateral, or is it all based upon paper and fictional (untraceable) substances? In fact a whole lot of loans C/F are bad debts carried forward because even when it is named non performing loans they attribute income from such loans to determine “Profit”! (at a fixed rate).

The auditors who certify such ‘fiction’ are culpable and must be struck off. What about the wide-eyed and unknowing shareholders, depositors/ investors – you and me?

Rohan Jayawardane
Dehiwela

Business Editor’s note: Rating reports that we publish are not our own but sent to us by two rating agencies – Fitch and Lanka Rating Agency.

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