Sarvodaya Development Finance (SDF), the financial services arm of the Sarvodaya Movement, sailed through the turbulent 2019-20 financial year to report a record profit growth.
The finance company, which funds the charitable and social development activities of the Sarvodaya Movement across rural Sri Lanka, recorded one of its best years of financial performance against one of the most difficult years ever experienced by the Sri Lankan economy.
The financial year 2019-20 started by sending shockwaves through the country with the Easter Sunday bombings. The year continued to worsen with bad weather, poor agricultural returns, political uncertainty, and below par economic activity, and drew to a close with the emergence of a global pandemic that effectively shut down much of the global and local trade systems.
Despite this backdrop, SDF has recorded a year-on-year revenue growth of 14.4%, an operating profit growth of 48% and an after-tax profit growth of 147%.
“As you know, SDF profits do not go into private pockets. Our profits are principally given to our parent, the Sarvodaya Movement, which redistributes the money through various social development and poverty alleviation programmes. That is why the SDF team and I, are very proud of our performance. While we have directly helped people financially, we have also indirectly, through Sarvodaya, helped so many children, youth, men, women and elders, in need of help. I take this opportunity to also thank our customers for their trust and confidence in us. We will do everything we can, to help our customers recover from Covid-19 impacts,” said SDF Chairman, Mr. Channa de Silva.
SDF financial performance 2019-20
For the financial year 2019-20, SDF recorded a total revenue of Rs 1.80 billion from its financial services which is a Rs 227.1 million increase from the revenue of Rs 1.57 billion in the 2018-19 financial year and the operating profits increased to Rs 232.1 million from Rs 156.7 million. Despite the higher taxes and growth in other operating costs, the company’s profit after tax grew by an impressive Rs 147.8 million, to reach Rs 101.7 million, against the after tax profit of Rs 41.2 million in the previous year.
SDF attributes the significant improvements in its financial performance to the extensive reorganisations executed within the last few years that have made the company more efficient and market driven. The company has invested heavily in training for its employees, introducing modern digital technologies in to its busines processes, and strengthening its risk management and recovery mechanisms. These efforts have paid off with previously loss-making branches becoming profitable and marked improvements to staff motivation and efficiency levels.
During the 2019-20 financial year, SDF continued busines expansion by tapping into alternative channels, including digital platforms, and also entered new markets to expand its customer base and lending portfolios. The company has migrated to a fully integrated front and back office IT platform, which has generated higher efficiency levels within the organisation, together with greater controls and superior decision-making capabilities.
SDF has also incorporated social welfare into its lending model, by supporting enterprise development activities for SMEs and through capacity building for local entrepreneurs by linking up with the Lanka Jathika Sarvodaya Shramadana Sangamaya. The Sarvodaya Shramadana Societies, through their widespread rural network, represents the Sri Lankan grassroots entrepreneurs and are directly linked to rural economies. By working with the Shramadana Societies, SDF has been able to effectively channel much needed funds into the grassroots economy of the country and strengthen rural enterprises and livelihoods. During the last year, SDF conducted a number of highly successful projects to connect SMEs with markets and has successfully entered the agro-farming and dairy farming sectors. In addition, through its Tharunodaya program SDF channels financial support to young and upcoming entrepreneurs and also supports them with market development support and technical assistance.