Sathosa guarantees Rs. 450 m for SML Frontier’s new Jaguar biz

Monday, 17 October 2016 00:01 - - {{hitsCtrl.values.hits}}

Sathosa Motors Plc has guaranteed a Rs. 450 million facility for subsidiary SML Frontier Automotive for its new Jaguar agency business.

The standby Letter of Credit of Rs. 450 million was from HNB.

The SML disclosure was part of related party transactions requirements.

SML said the facility was a commercial requirement of SMLF for the growth of business through the new Jaguar agency and SMLF had requested from SML as a parent entity to provide security.

The aggregate value of the Related Party Transactions for the first quarter of FY2017 excluding the latest Rs. 450 million guarantee was Rs. 150 million and the aggregate value of Related Party Transactions for the current financial year is Rs. 600 million.

In August Jaguar Land Rover announced the appointment of SMLF Automotive as the sole authorised distributor of Jaguar and Land Rover in Sri Lanka. SMLF will offer the entire range of Jaguar and Land Rover vehicles at the recently opened world class showroom located at No. 74, Flower Road, Colombo 07.

Jaguar Land Rover, UK’s largest automotive manufacturing business is built around two iconic British car brands: Land Rover, the world’s leading manufacturer of premium all-terrain vehicles and Jaguar, one of the world’s premier luxury sports saloon and sports car marques.

SML acquired 50% stake in SML Frontier Automotive in 2013 which then handled only the land Rover range for Rs. 65 million.

SML Group turnover in the first quarter was up 56% to Rs. 1.2 billion and highest cost of sales saw gross profit dip by 8% to Rs. 233 million. Higher administrative and selling and distribution expenses saw profit from operating activities dip by 34% to Rs. 85 million and after tax profit was down 51% to Rs. 42 million. In FY16, Group turnover was Rs. 4 billion, up from Rs. 3.5 billion in the previous year. After tax profit improved from Rs. 270 million to Rs. 327 million.

Group’s long term interest bearing liabilities were Rs. 157 million, up from Rs. 149 million a year earlier whilst at company level it was zero.

Short term borrowings were Rs. 436.5 million, at Group level from Rs. 194 million a year earlier. At Company level the figures were Rs. 258 million, up from Rs. 55 million in FY15 first quarter.

In FY16, SML received Rs. 0.65 million as dividends from SML Frontier Automotive.