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| Sunday, 23 June 2002 |
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Business |  |
| News Business Features Editorial
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Richard Pieris turnover tops Rs. 10b mark The Group turnover of Richard Pieris and Co. including its associates has topped the Rs. 10 billion mark for the first time during the 2001/02 financial year. Its turnover increased by 17.7 per cent to Rs. 10,194 million from Rs. 8,663 million in the previous year, Group Chairman Henry A. Pieris said in the Richard Pieris annual report for 2001/2002. The consolidated group turnover excluding associates grew by 16 per cent to Rs. 3,678 million from Rs. 3,160 million, while profit from operations at Rs. 309 million remained almost unchanged from the previous year's Rs. 312 million. Financial expenses escalated by 47 per cent to Rs. 163 million consequent to increased borrowings which eroded profitability. The higher borrowings were largely due to the investments made recently in two large retailing centres at Battaramulla and Dehiwala. Profit before tax grew by 1.4 per cent to Rs. 248 million from Rs. 245 million in 2000/01 while profit after tax declined by 5.7 per cent to Rs. 192 million from Rs. 203 million, the annual report said. During the year under review, the Group expended Rs. 362 million on fixed assets and equity investments. Its total investment on the same during the last two years is over Rs. 700 million and the company is now well positioned for growth. Capital expenditure of Rs. 253 million was incurred mainly on the retailing centres and manufacturing of rubber products. Rs. 109 million was also invested to increase the Group's holding in export-oriented rubber manufacturing companies and Asia Capital, the Chairman said. The company has generated high visibility and exposure from its new hypermarkets, Arpico Supercentres, at Battaramulla and Dehiwala. These were a significant contributor to the growth in sales. The company was confident that this strategy of opening large format retailing centres marketing a mix of general household merchandise and food, in addition to the island-wide showroom network, would contribute significantly in the foreseeable future. The company intends to expand the hypermarkets to its flagship store at Hyde Park Corner next year. The development at Hyde Park Corner was made possible by the successful acquisition of one half share of the property belonging to H.A. Pieris and P.I. Pieris for Rs. 150 million. The company would pay this amount over a period of four years at a concessionary interest rate of six per cent per annum. Richard Pieris Group is one of the largest value added rubber products exporters, adding value to around 10 per cent of Sri Lanka's rubber production. The Arpico brand has now been registered internationally. The area of export marketing has received significant attention. Arpico Rubber USA, the first overseas company of the Group, hopes to begin operations shortly and a full-time representative will be based in Columbus-Ohio. To further support the export drive, research and development (R&D) has been strengthened with a new R&D centre. Close contacts are being developed with universities and the company has consented to the establishment of an industrial research chair at a university. Richard Pieris is now one of the largest players in the plantation industry. The plantations produce 15 million kilograms of tea and 10 million kilograms of rubber, which account for five per cent and 10 per cent of national production. The slump in rubber prices has been a cause for concern. This has adversely affected the profits of Kegalle Plantations whose primary crop is rubber. Kegalle Plantations has already implemented radical operational and financial restructuring to address this issue. Rubber prices have started to show an upward trend. However, the tea business continues to perform well and it is expected to generate good profits. The company has asserted itself as a leader in the tyre rebuilding business with its product Arpidag followed closely by Arpico Retreads. The fourth retreading factory established in Pallekalle is another infrastructure development that has helped to dominate the tyre retreading business. The company also pioneered expanded rigid polystyrene (rigifoam), as well as polyurethane foam, mattresses and cushions, the annual report said. The Group's confidence in its future potential is linked to the strategic alliances it has formed with reputed local and international companies. Dipped Products, a joint venture with the Hayleys Group, commenced operations 25 years ago and is now among the five leading producers of non-medical gloves worldwide. RPK Management Services, another joint venture established with John Keells Holdings, owns and manages two plantation companies. The Group entered into a joint venture to foster technical collaboration in tyre rebuilding with Bandag Incorporated in USA, a leading global precured tyre rebuilder. Another international partnership is with Davos SpA for the manufacture and marketing of shoe soling sheets. The Group also has a strategic alliance with Asia Capital, a leading stockbroker, which has now diversified into IT, apparel manufacture, commodity broking, debt trading and insurance. The recent appointment of Dr. Sena Yaddehige as Joint Deputy Chairman is seen as another positive step. It is expected that Dr. Yaddehige, a Sri Lankan born British scientist and engineer and an UK-based industrialist who has clearly indicated that he intends working closely with the management to develop and expand the company, will add further value to the Group's manufacturing and export activities. |
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