MARKET
The financial sector in Sri Lanka is dominated by commercial banking, mortgages, stockbroking, lending, deposits, insurance and credit cards. But there is a slot within this segment that is often misunderstood and under-served – the leasing business.
Over 25 years ago, the then Lanka Orient Leasing Company (LOLC) introduced leasing to Sri Lanka. The company soon made its mark in an expanding financial services market. The banking sector at that time was largely dominated by state institutions, but the free-market economy had just opened people’s eyes and expectations to how business could be carried out in collaboration with financial institutions. The market, in other words, was quick to identify the many benefits of leasing. With this came new opportunities.
Today, with a growing number of globally connected banks and banking instruments, leasing and associated value added services continue to revolutionise the financial services industry. In fact, leasing now ranks highly in popularity among all sections of commerce and industry. Because of LOLC’s pioneering efforts, many new players have entered the leasing market. Most banks, for instance, now have specialised leasing divisions and even some conglomerates have incorporated separate entities to establish a presence in the leasing market in Sri Lanka. In this context, LOLC is the pioneer whose services are now within reach of everyone, because of its islandwide network with fully fledged branch offices. It is in this market that the achievements of LOLC stand out.
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ACHIEVEMENTS
LOLC commenced business in 1980 with the introduction of leasing to Sri Lanka. In 1993, it was the first company to issue asset backed debentures and in 2001, it became the first to receive a short term rating by an international agency. LOLC was also the first leasing entity to launch a finance company in the same year. In 2002, it was the first to issue a rated commercial paper, and it was also the first to publish interim results in line with Sri Lanka Accounting Standards SLAS 35 that year.
In 2004, LOLC became the first leasing company to win an award for corporate governance, an award for Excellence in Annual Reports and Accounts conducted by the Institute of Chartered Accountants of Sri Lanka (ICASL). It followed this up by being named the first winner in the non-banking sector to secure first place at the South Asian Federation of Accountants (SAFA) Best Presented Accounts competition in 2003/04. It was also the first leasing company to be ranked among the top 20 brands by the UK-based Brand Finance in 2004/05.
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HISTORY
In 1980, at a time when Sri Lanka was beginning to enjoy an economic resurgence, economists and entrepreneurs alike felt that a catalyst was needed to put the economy on the fast track. Leasing was identified as one of the big hopes in this regard.
The Washington-based International Finance Corporation, the private-sector window of The World Bank, requested the Bank Of Ceylon to get the leasing industry off the ground. It drafted the Orient Leasing Company of Japan to provide assistance with its expertise. Orient Leasing was the largest independent leasing company in the world, with leasing entities in several countries. This formidable combination led to the creation of Lanka Orix Leasing Company, known today as LOLC.
Leasing to Sri Lankans, however, was an unexplored avenue. Like the reaction to change in any sphere of life, there was a degree of circumspection. The resistance at the outset was based on a belief that leased equipment or vehicles were owned by LOLC and not the lessee. This negative perception was dispelled by a compelling marketing strategy and an effective message that drove home numerous other valuable benefits: in particular, that profits accrue through usage, not ownership. As leasing grew in popularity, underwritten by the in-built expertise of LOLC, many entrepreneurs turned to it as an ideal way to jump start an enterprise, consolidate, modernise and grow. The ready acceptance by the rural sector – traditionally weary of new ideas – added to LOLC’s growing stature as the driving force behind growth of both the leasing industry and agriculture.
From the outset, innovation was an attribute of LOLC. This, together with value additions to existing services and a clear customer focus, has enabled LOLC to take giant strides in a comparatively short time. And this success has prompted the company to look to being a total financial services provider. Today, there are subsidiaries dedicated to factoring, insurance and insurance broking, stockbroking (which includes online trading), finance and information technology – and there is more to come.
It is, perhaps, a moot point as to whether the concept of leasing launched the company or vice-versa. What is certain is that leasing was and continues to be perceived as the most attractive path to success for entrepreneurs. 
LOLC, for its part, successfully dispelled the need for companies to make substantial investments in their plant and machinery, vehicles and office automation. It educated the market on how to pursue expansion without causing cash flow problems.
Today, an LOLC lease is also seen as a hedge against inflation. Leasing could also reduce tax liabilities. Some 25 years later, leasing has not only opened and widened other avenues, but has positioned LOLC as one of the pillars of the business world. With a broad spectrum of customised services ranging from loans and leasing, to trust and commodity funds, LOLC has successfully taken on the shortage of capital for both institutions and rural segments. Its philosophy of decentralisation has paved the way for an outreach programme that has broadened its customer base and, more importantly, resulted in bolstering the wealth of the nation.
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PRODUCT
LOLC’s uncompromising stance on customer convenience has added a plethora of choices to regular leases. Orix Fleet Management takes the hassle out of fleet management by identifying vehicles, analysing costs, and maintaining and repairing vehicles. Orix Finance Lease is customised for the individual anywhere along the business spectrum. This accommodates three-wheeler taxis for the self-employed, tractors for industries of any size or any other requirement. LOLC’s strategic alliances with the country’s foremost suppliers places consumer durables and service products within easier reach. Orix Auto Option provides for the convenience of a vehicle on hire purchase, with the added advantage of general maintenance and repairs being included. There are also Tea Development Loans for nurseries, replanting, the modernisation of factories, the purchase of vehicles and more. Islamic Leases circumvents religious constraints on interest payments and is in itself a tribute to LOLC’s innovation.
Among the other services provided by the subsidiary companies is Debt Factoring, which eliminates the risks of delay or non-payment vis-à-vis exporters. Further assurance is offered through a strategic alliance with Dun & Bradstreet, the world’s largest business information company with an encyclopaedic database. There are also Savings Accounts for both adults and minors, as well as Time Deposits. Yet another subsidiary provides Online Share Trading and the insurance arm of the group offers a wide range of insurance products.
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RECENT DEVELOPMENT
LOLC endeavours to continue being a strong, integrated financial solutions provider. It provides customers with total financial solutions tailored to meet their specific needs. To this end, it applies service excellence, technology and process controls to guarantee satisfaction, increase its customer base and retain existing clients. In addition to providing corporates and others with products and services, LOLC has been working with small and medium-scale entrepreneurs for sometime – it has, in fact, financed over 80% of their ongoing business.
The success of infrastructural projects has opened new vistas and overseas-expansion plans are underway – initially in Bangladesh, Vietnam and Cambodia.
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PROMOTION
A strong commitment to CSR enables LOLC to be morally and socially responsible about impacting the lives of people, both directly and indirectly. It proved itself to be the bridge over troubled waters in the aftermath of the floods in May 2003 and the tsunami tragedy of 2004. There is, in fact, a village comprising 25 houses constructed by LOLC in conjunction with Orix Corporation, Japan, in this context. It also provides many other forms of assistance.
LOLC’s Viyapara Shilpa is a special programme that familiarises the rural SME sector with the intricacies of marketing, stock control and accounting and to gain a deeper knowledge of taxation. Regular seminars are an ongoing process. When the deadly dengue fever reached near-epidemic proportions, LOLC launched a massive project that warranted a substantial investment through the print and electronic media, supplemented by posters, leaflets and banners with explicit messages on how the disease can be countered.
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BRAND VALUES
LOLC’s most treasured value is the trust that its service and products inspire in its customers. A culture of innovation is the driving force behind the company, and this drives its inspiration to introduce innovative products and service concepts to the market. These stimulate working towards LOLC’s vision of being the country’s premier financial services provider and gives it a continuous fillip in constantly seeking to fulfil its mission – that of enhancing the quality of life by providing value added financial services. These ideals have influenced the company’s core values, which focus on maximising shareholder wealth; building lasting relationships with customers and business partners; creating an environment that fosters teamwork, personal growth and respect for each individual; while being a model corporate citizen by maintaining the highest professional and ethical standards.
This innovative spirit will deliver superior value to its shareholders and its customers, two of its most important stakeholder groups.
Believing in Sri Lanka and its people is why LOLC has become the desired supplier of financial products to local entrepreneurs. LOLC’s global expertise powers local enterprise. This is the result of innovation in virtually every aspect of its service. It is dedicated to serve today’s entrepreneurs, and to serve their needs in the future.
In business circles, LOLC is consistently recognised as a name that is synonymous with dependable financial solutions. It offers a service that can be tailored to suit any organisation, from a fledgling rural industry to the high-powered urban conglomerate.
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THINGS YOU DONT KNOW ABOUT LOLC
♥ LOLC pioneered the concept of leasing in Sri Lanka.
♥ It was the first company to issue asset-backed debentures in Sri Lanka.
♥ It has a fast-track lease product that eliminates waiting periods.
♥ The company has a customer portfolio of some 70,000.
♥ Its total asset base amounts to Rs. 8.7 billion.
♥ LOLC was the first leasing company to win an award for corporate governance.
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www.lankaorix.com
