Abans, owned by the Pestonjee family, has not put forward a clear succession plan nor introduced independent directors to its board, the ratings agency says. The rating was given taking into account Abans' position as a retailer of consumer electronics and household appliances and the franchise for LG products in Sri Lanka, distributorships for other brands and its market share.
"However, the rating is constrained on account of its high reliance on foreign suppliers for the continuity of its business," Fitch says.
Its main brand, LG, accounts for 60 percent of Abans' revenues of which more than half is generated from the Western province.
"Although this concentration is somewhat concerning, Fitch notes that Abans' new distributorships have reduced this gradually over the last five years."
Last year, Abans' total revenue increased 26 percent to 10.5 billion rupees while operational profits reached one billion rupees, supported by volume growth of 10-15 percent in its main product c