Biz Bud

‘Research new markets’:

Diversifying pays dividends - Speed Water MD

Ramani KANGARAARACHCHI

People diversify their businesses for many good reasons.

It could be either to sell more products to existing customers or to reach out to new markets which could supercharge growth prospects. However, it is vital to research new markets before diversifying. Therefore, Managing Director Speed Water (Pvt) Ltd, Nishantha Delgoda diversified his business of apparel accessories into a new area having done much research. He was interviewed by Daily News Business.

The eldest in a family of two sons, Nishantha Delgoda had his education at St. Joseph’s College Colombo. He obtained a Masters Degree in Business Administration from Newport University in USA.

At the age of 21 he joined the apparel industry in Hong Kong while pursuing higher studies. By the time he completed his Masters degree he was a specialist in fashion accessories as well. He is also a Fellow of the Association of Business Executives (ABE).

He said, “When I was 27, I had exposure to the apparel industry in several countries such as Bangladesh, India and Myanmar. I had a very good network and business relationship. With that experience I was confident of starting a business of my own by then. In 1997 I set up a company of garment accessories in Hong Kong doing business directly with Sri Lanka. I opened two sub offices in Bangladesh and Sri Lanka in 1995, he said.

Delgoda owns two fully automated button manufacturing and belt manufacturing companies in China. Today he is one of the main suppliers to garment buyers, in Europe and USA for leading brands such as Marks and Spencer. He won the OEKO Tex award and the certificate was issued in Zurich.

His expertise knowledge and experience has brought him to this position today. Delgoda’s dream was to have a household brand name in Sri Lanka one day and in 2001 he visited Sri Lanka to attend a family event and decided to stay back and realize his dream.

Competitive business

For a while he spent time and money on research for new business opportunities in different fields. He found an untapped area to start a business and that was the birth of Speed Water Systems (Pvt) Ltd, a fully owned Sri Lankan Company. It was set up in 2003 to produce purified water under the brand name Speed which became popular for its unique taste and quality. However, it was a highly competitive business at that time but Delgoda brought in new ideas and management styles to face the challenge.

It was Speed Water which introduced free dispensers to its customers for the first time which became a hot topic among the other industry leaders. I secured 1000 customers in the very first year and obtained the SLS stamp (Sri Lanka Standard Certificate) which is a very rare feat by any water company to date, Delgoda said.

In 2005 he exported the first consignment to an African country, Haiti, where the Sri Lankan Army was assigned to the UN mission.

The Speed Water product range includes popular pet water bottles -500ml to five litres, 19 litre bottle Oxygenated water, Cube ice, Packeted water and dispensers which has a high sales potential in the future. In 2007 the company went for a fully automated plant and a modernized factory at Padukka to cater to the growing customer needs.

The filteration plant was imported from USA with the latest technology in water treatment. It provided direct employment to seventy people. The company is a big player and can compete with any giant in this field, according to Delgoda.

Significant milestones

Speed Water is popular at leading restaurants and five star hotels in Colombo and the Eastern Province market for the last three years. It has introduced a VIP service in Colombo operating round the clock with specially trained staff, opening of franchise water shops in every small town and launching e-ordering via the web site are the other significant milestones of the company.

While taking Speed Water to great heights, he successfully managed his garment accessories business through the network in different countries as well.

He enjoys the advantage of diversifying into a new area during the global crisis.

Asked what was the success behind him, he said, I work very hard. I am the first to come to office and the last to leave. I have a very hard working staff as well.

I go overseas very often. My father does all the administration with his expertise knowledge and longstanding experience as a Deputy Inspector General of Police. Nalin Delgoda is the pillar behind my success, Delgoda said.

Central Finance continues steady growth

In the backdrop of the current macro economic challenges in Sri Lanka, Central Finance Company PLC (CF) has reported successful operational results, for the nine months ended December 31, 2008.

Total assets stood at Rs. 31.2 billion compared with Rs. 29.4 billion in 2007 (April-December) whilst deposits increased from Rs. 12.3 billion to Rs. 13.3 billion.

The highlights for the period under review were an increase of 16 per cent in income over the corresponding period generated through its core business activities.

Profit before tax was 1.04 billion, an increase of 6.4 per cent over the corresponding period, while after tax profits recorded a marginal (0.9 per cent) drop due to higher taxation (Rs. 316 million) compared to Rs. 214 million.

Sound treasury management practices have resulted in containing funding costs at 22 per cent.

Despite the expansion of business activities, overhead cost increases have been contained to a mere 6.7 per cent (of which 2.1 per cent includes VAT on financial services) over the corresponding period. Shareholder funds continued to grow recording an increase of Rs. 660 million and stands at Rs. 6.825 billion.

Fitch Ratings Lanka, recently affirmed the Company’s National Long-term rating at ‘A+(lka)’ with the comment ‘The Outlook is Stable’.

“Well defined credit policies and stringent recovery procedures have translated into asset quality that is amongst the best in the Registered Finance Company (RFC) sector in Sri Lanka,” Fitch Ratings stated.

Whilst Fixed Deposits continue to grow, there is also a satisfactory expansion in Savings Accounts Operations, which have been further supplemented with the recent link up with the Commercial Bank network of over 300 ATMs islandwide.

During the period under review, FMO, a financial institution owned by the Dutch Government extended an Euro 6 million, long-term credit facility on attractive terms, as a further endorsement of the Company’s financial strength.

“Complementing the normal lending operations, the company has also initiated several promotional campaigns in association with strategic, partners,” said a company spokesperson.

MTI forum on ‘Tough Times - Tough Strategies’

Leading Corporate figures and senior management of Sri Lankan corporates will attend the MTI Consulting’s second Evening Meeting on Tough Times - Tough Strategies today at the Taj Samudra.

MTI CEO Hilmy Cader will make a presentation supported by indepth research on ‘Tough Times - Tough Strategies, Are you Ready for the Upturn?’ The presentation will be followed by an interactive discussion with a panel consisting of Amal Cabraal, Chairman, Unilever Sri Lanka, Lalith De Mel Chairman, Hemas Holdings, Nihal Fonseka CEO, DFCC Bank and Pravir Samarasinghe, Director/COO, Richard Pieris and Company).

At a time when the impact of the Global Financial Crisis is felt largely in this part of the world, including Sri Lanka, today’s forum will revolve around a thought provoking question; Is your organization’s reaction Chop and Cripple or Trim and Fit? Hilmy Cader, CEO of MTI said, “enterprises have put on fat, when the going was good.”

In response to the crisis many organizations have indiscriminately being cost cutting, which may not be the long term solution”.

The interactive panel session which follows the presentation will enable the business community to share their thoughts and gain insights with the forum’s eminent panelists on confronting the current and future tough times ahead.