Currency depreciation late last year has been a net benefit to Aitken Spence Group which is focused on expanding and exploiting opportunities in their growth areas, namely tourism and property development, logistics, power and IT, officials say.
"In our service sector MMBL Money Transfer (Pvt) Ltd., the largest principal agent for Western Union in Sri Lanka witnessed increased inward remittances and posted strong growth last year due to the currency devaluation. We are bullish on the potential for Western Union in Sri Lanka and has made several strategic inroads in key markets which will be reflected in the results of the coming year as we see this service improving in the future," Rajan Brito, company Deputy Chairman and CEO told the Business Times.
Bullish on tourism
Mr. Brito said that they are very bullish on Sri Lanka tourism and noted that Sri Lanka should encourage high end tourism as the country is not endeared towards mass tourism. "We must focus on high end tourism marketing as our neighbors have done," he nted.
He said that while Browns Beach under their Heritance brand with 150 rooms will be ready by next year, the six star hotel project with Soneva at Ahungalle, will be completed in two years' time and some 90 new rooms will be added to ' The Sands' at Kalutara making it 200 room resort by end of 2013. Mr. Brito said that the company is working with an international promoter to develop their 110 acre land in Nilaveli, Trincomalee. "We plan to build a 6-star resort, a Heritance Hotel luxury villas and a nine-hole golf course on this property," he added. Logistics - maritime
Mr. Brito added that Hambantota is greatly beneficial to the country and that Aitken Spence Logistics will benefit as the country's infrastructure expands. "The decision to exit the Colombo South Terminals Ltd was necessitated by cost escalations as well as unfavourable changes to financing terms due to global economic conditions, exacerbated by the inordinate delays between the submission of the bid and the final agreement," he said, explaining the sale of their 30 per cent in this firm.
The maritime segment of the company, Mr. Brito said posted extraordinary growth last year despite a tough year for the entire global supply chain. "The sector's port efficiency enhancement operations in the African continent have gained ground as Aitken Spence has now built a strong reputation through proven expertise in the region."
IT and power
Aitken Spence has identified information technology (IT) as a growth area and as such, consolidated operations of the new technology subsidiary by buying out its joint venture partner Calsoft Group of India. "The company is now known as Aitken Spence Technologies and is now an authorized training centre, offering professional training courses towards prestigious Oracle University certifications," Mr. Brito said, adding that the IT sector will expand into knowledge processing outsourcing which will be at a higher end.
Aitken Spence is also bullish on the renewable power sector. "We have applied for an extension of the Power Purchase Agreement on the Matara plant and are currently in discussion with the Ceylon Electricity Board in this regard," he said. During the year, the unit successfully entered the Bangladesh market through two independent power purchase contracts, Mr. Brito said, noting that it'll allow the company to build on its local competencies in overseas markets. "With ample appetite to expand, we will continue to seek opportunities overseas."
Mr. Brito said that the company's Elpitiya Plantations Plc (EPP) recorded a profit for the last financial year amidst several plantation companies recording losses mainly due to the irrational wage increase that was granted without any link to productivity. He added that every two years the plantations companies have had to give into this wage increase which has been 500% since 1992, the year of privatization. "The increase in wage cost has been 25% year. No industry could survive with such an increase in cost for a component which compresses more than 50% of the Cost of Production particularly in tea." EPP diversified into palm oil and also expanded the rubber base to mitigate the risks associated with the wages. "Both Palm oil and rubber require less labour, hence we have been able to manage the wage increases more efficiently," he added. EPP provided the leadership to set up Sri Lanka's second palm oil mill in the last 50 years, a joint venture with two other renowned plantation companies.
Describing the challenges, Mr. Brito said that the greatest faced by the company would be the growing shortage of suitably skilled and qualified human resources especially for the hospitality industry which is expecting an exponential growth in the next few years.