The Softlogic Group has made its mark in Sri Lanka’s commercial sector and has marked a presence of 21 years in business. The conglomerate is diversified and continues to make investments in some of the sectors that are widely held to be the areas offering opportunities for rapid development and growth. Representing the first generation, the company’s founder Ashok Pathirage shared some thoughts on the economy and his quest for growth-with the long term in mind.
Question (Q): What made you shift your area of business-you were initially in IT and you are now a dominant player in the hospital sector. How did this sea change come about?
A: When we started, our country was going through a bad patch with a war going on and no end in sight, opportunities for growth, expansion and success were limited. This led to me searching for other opportunities because the market in Sri Lanka is rather small, for example unlike in India where the numbers are plenty, if you were in any sector there, the market is large enough to make a meaningful mark. There was every possibility that with the numbers your company would be able to be successful in just one sector. In a way the lack of the necessary numbers-the opportunities, has led to the larger companies in Sri Lanka having to diversify and establish itself as a form of “conglomerate” to achieve growth and expansion. I was and still am very ambitious and this led to my looking into opportunities to achieve our growth where we could make a real difference.
Q: Are you happy with your investment in Healthcare?
A: When I entered I felt that the industry had lots of limitations in Terms of ownership and facilities where most of the private sector was family owned and run, that had its own limitations. I have shifted into healthcare where I am proud that we are number one. It presented good enough challenges which we have taken on and we are successful.
Q: When you chose partners for your businesses like for instance leisure, did you consider a local partner or what led you to seek international brands?
A: I did not seek local partners. To me it was a conscious decision and there is a sound reasoning for that. My foremost priority in this sector was to sell my rooms. In that context it was an easy decision. In Sri Lanka we do not have a solely management company-there are companies but they are also owners of their own properties apart from managing properties owned by others. So clearly they would wish to first market their own before looking at the other managed properties. For instance the exposure of our local hotels-even if they are 5-star-is limited. They have little international exposure in terms of reservation systems for instance. So for a local manager to market successfully they would have to make a huge investment for them to even start competing. When I considered international companies as opposed to the local ones, it was an easy decision.
Foreign brands are established and mature businesses where it would be far easier for them to market my properties. That is why we chose Movenpick. These brands that we represent and are in business with are well known and importantly, mature.
Q: You are almost exclusively a retailer to the rich-with the brands that your Group represents. How does your company cope with the taxation-how does it impact on your businesses, to stay competitive?
A: Well we have played an active role in lobbying for meaningful changes.
This government has in fact done much to encourage the marketing of luxury brands and goods but we are not exclusively retailers to the rich. For instance our group represents Nokia-and that is marketed to all sectors.
The shopping experience in Sri Lanka is an important addition for visitors to this country. As it is the opportunities we offer visitors are limited in terms of entertainment for example. Shopping is a key element in the decisions of the traveller and I can foresee that retailing is an area set to grow rapidly. This will not happen overnight, but it will most certainly happen. A lot of expectation in Sri Lanka revolves round trying to make a billion almost overnight, Practically I know that will not happen. One has to grow the market, develop and there will be a fusion between investment and return in the fullness of time. In the meantime we are investing heavily in this sector. We already represent Levis, Nike, Mango, etc.
We are bringing in Mothercare and we are opening a mini departmental store soon. We are testing these waters now, but I’m certain that with the full complement of the brands we represent, it is our Group that will be in the driving seat-the anchor tenant of any new mall. And Malls will definitely happen in this country.
Tourism is not just hotels. There are many opportunities and most are all sectors related to Tourism. If the branded market is now Rs. one billion, in three to four years with our per capita GDP at USD 4,000-the market is bound to be worth 10 to 20 times.
Q: What is the difference that you bring to Sri Lanka’s economy?
A: We are in for the long haul. Nothing I have done is short-term. We are passionate about whatever we do. We enjoy the dominant position we already have. If we don’t believe in a business we are not there.
When we are there we do it right and we aim to be number one in everything we do-like the hospitals for instance. Inside five years we are number one and we intend to keep it that way. There are windows of opportunities and we choose the ones that we believe in and where we are passionate about the business.
That is the difference.