Tea with Pravir D. Samarasinghe, Director Chief Operating Officer, Richard Pieris and Company

Hiran H. Senewiratne

The Government should find ways and means to subsidise extremely essential items to support the livelihood of masses, Director/Chief Operating Officer (COO) Richard Pieris and Company (RPC) Pravir Samarasinghe said.

He said various subsidies, which are given to the people to control the cost of living in the country, should be really restricted to the needy in the country.

To curtail inflation and control expenditure, the Government has to reduce the budget deficit through prudent fiscal policies, which will enable it to manage the country's interest and inflation to a great extent, he said.

Samarasinghe said the Government also must curtail unnecessary expenditure while concentrating on security concerns to maintain a stable economy. A stable economy will accelerate growth in the country benefiting the entire country from medium to long-term perspective.

Q: Richard Pieris and Company was a family owned company for a number of decades, but few years ago it changed hands with the owning of controlling stakes of the company by Dr. Sena Yaddehige. This discouraged a number of companies especially family owned to be listed in the Colombo Stock Exchange. What is your comment?

A: I would say that any company to grow in this competitive market, needs capital. To raise capital for any entity one of the options is to be listed in the CSE. Once the company is listed in the CSE any one could acquire its shares.

Where RPC is concerned it was a family owned entity that had gone public in the 1960's. The original family members were involved in the management until 2001 and had a minority stake. Dr. Sena Yaddehige acquired 29 per cent of the company's shares and he took over the main stewardship in 2001.

This is normal under a capitalistic system, and shareholders are benefited. Apart from Richard Pieris's a number of other leading companies have changed hands, like Whittals and Carsons. In the Asian region and particularly in Sri Lanka merges and acquisitions are less common unlike in Europe and USA.

Q: With many changes in your organisation what is the current management structure?

A: We have a Board of Directors. Dr. Yaddehige is the Chairman, CEO and Managing Director. Additionally the COO, two Executive Directors and three Non- Executive Directors comprise the Board.

The Board basically looks after the strategic and policy related matters of the entire Group.

We have more than 30 subsidiary companies under our wing clustered under six main sectors and four other smaller businesses and each entity has its own Managing Director or General Manager to drive the businesses and engage in all operational aspects. However regular monitoring takes place.

Q: Your company is going to divest certain companies under its wing. What are those companies?

We always evaluate our business portfolio. It is an on going exercise. If certain businesses do not generate required returns and also where we feel there is not much long-term potential we may decide to exit from these.

We recently disposed of a 10 per cent stake in NDB, this is a classic example which did not generate revenue to the company. Therefore, we have now identified certain companies that we are either going to divest or join hands with partners with relevant expertise.

Q: Do you have any particular reasons for divesting certain companies?

A: We basically have five core sectors, namely, retail, plastic, rubber-related exports, tyre manufacturing and plantations. We will continue to focus on these areas. In addition to our core businesses we have diversified in to other lucrative areas like construction, real estate development, media and transportation business.

In the past we have moved out of steel tubular furniture manufacture, artificial leather cloth manufacture and more recently we exited from tea plantations in the Uva region. Therefore this is an ongoing exercise of reevaluating the portfolio.

Q: What are the new business areas RPC is going to penetrate?

A: Whilst focusing on our core sectors and consolidating our operations this year we have identified one new area to develop further, that is furniture. We hope to enter in to a strategic alliance to develop furniture manufacture for the local and selective export markets.

There is huge potential in India. The current two solid wood furniture factories we have will take this business forward. We are also negotiating to tie-up with a partner who has the required expertise to complement our strategy.

Q: Your company is mainly focusing on the local market. How do you manage it with current economic conditions?

A: We have many businesses that mainly depend on the domestic market like plastic, tyre and retail business.

With high inflation and interest rates the economy is gradually slowing down, which is a challenge for the company with demand shrinking. Therefore to arrest the situation we also have to look inwards at possibilities to ensure supply chain efficiencies.

Q: What are the cash cow areas of business?

A: Our cash cow are retail, plastic and plantation sectors which accounts for 75 per cent of total turnover and an equivalent proportion of operating profits.

Q: As we all know the plantation sector plays an important role not only for the company but also for the entire sector as well. How do you look at that area?

A: We are the largest plantation company in Sri Lanka. Currently, we control and manage three regional plantation companies namely Maskeliya, Kegalle and Namunukula Plantations. We manufacture seven per cent and eight per cent of Sri Lanka's total tea and rubber out put.

We are bullish on the tea industry after taking over the controlling interest of Maskeliya Plantations and also buying Namunukula Plantations. We have a good crop mix of up country to low grown to mid grown teas. We will continue to invest in replanting to further improve the yield. We are also focusing on value added tea especially for export markets under the St. Clair brand.

Q: Are you're getting rubber for manufacturing rebuild tyres from the company owned rubber plantation companies?

A: No. We are into rubber products manufacturing and plantation. These two areas operate totally independently. In rubber plantations we are geared to make centrifuged latex sole crepe and other high premium rubber. We are very bullish of the rubber industry and are confident the market will be strong for the next 10 years.

Q: What are the plans for the year 2008?

A: We will be focusing on our core business areas including retail, plastic plantation and tyre businesses. In the retail sector we will set up several supercentres in strategic locations.

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Profile

Name : Pravir D. Samarasinghe

School Attended : Royal College, Colombo

Civil Status : Married with a daughter.

Qualifications :

Professional - MBA from the University of Sri Jayawardhanapura.

Academic : Fellow of the Institute of Chartered Accountants of Sri Lanka and the

Chartered Institute of Management Accountants UK

Current Position : Director/ Chief Operating Officer.

Experience : Has over 20 years in Finance, Strategic Planning and General Management. Joined the Board of Richard Pieris and Company in 2000. Director of several quoted and unquoted companies. Past President of the Chartered Institute of Management Accountants in Sri Lanka.

He is a Committee Member of the Industrial Association of Sri Lanka, The Sri Lanka Institute of Directors, The Ceylon Chamber of Commerce and the National Labour Advisory Council.

Sports : Represented Sri Lanka in rowing and swimming.