Downgraded

Mar 23, 2009 (LBO) – Fitch Sri Lanka has downgraded the rating of Industrial Finance Limited (IFL), a central bank regulated finance company, to 'CCC(lka)' from 'BB-(lka)' with a 'negative' outlook, the rating agency said. "The rating action reflects IFL's weakening credit quality, which has resulted in continued operating losses that eroded the company's capital base to below the regulatory minimum required level," the rating agency said.

"Fitch further notes that the company's significant exposure to real estate investments since the quarter ended September 2008 has added to the risk."

Fitch said the outlook on the rating was negative indicating probable "liquidity challenges".

IFL was bought by ASPIC Corporation (Pvt) Ltd in February 2008. The firm has 91.9 percent of the equity and the new shareholders have put in equity to meet a 200 million capital requirement deadline by end-July 2008.

Fitch says further equity infusions will be necessary on account of subsequent losses.

IFL had an asset base of 1.2 billion rupees by the end of December 2008. It is registered as a finance company and as a leasing company.