The Richard Peiris Group (RPC) which has turned around the corner in the current financial year and heading for its biggest profit in history, says it’s looking to acquire assets overseas and build a plantation base in countries like Cambodia and Vietnam, official sources said.
“We find there is insufficient land here for expansion in rubber and palm oil,” one source said.
RPC’s Director/Chief Operating Officer Pravir Samarasinghe, declined to comment on profitability and results in the next few months in line with Colombo Stock Exchange requirements, but confirmed that the company was looking for land assets in these two countries.
“The problem in Sri Lanka is that there are no large portions of land in the region of 5,000 to 10,000 acres which we need for replanting or new planting in rubber and palm oil. Hence we are looking at options here and abroad and in countries like Cambodia or Vietnam where the entry costs are cheaper,” he told the Business Times, a day after the group announced its 6-month results to September 2010.
It had recorded a turnover of Rs.12.7 billion and a pre-tax profit of Rs.1.1 billion for the six months at end September 2010.
The other (earlier quoted) sources said that RPC is expecting larger profits in the third quarter ending December 2010, taking it to substantial profitability by year’s end (end March 2011). In a separate statement, the group said although it’s focused on core businesses, diversification into financial services during the fourth quarter is planned.
The group would continue to place importance on overhead, working capital and cash flow management and to further reduce borrowings, it said.
Mr Samarasinghe said that the group was keen to expand overseas and have assets in another country because “it’s useful to have exposure to another currency particularly in the sectors that we deal in.”
RPC core businesses are in retailing, plantations, rubber production and adding value, and plastics. The group plans to invest $15 million (over Rs 1.5 billion) in expansion over the next 24 months essentially in ‘aggressively expanding on retailing: doubling sales and doubling space’, according to Mr Samarasinghe.
The group plans to take its current 10 large super centres to 24 in during this period with the latest store (the second largest after Hyde Park), coming up in Wattala next month.
“We are much stronger and healthier (in our balance sheet) now,” the RPC CEO said, reflecting on previous years when the group struggled along under a huge debt.
He said third quarter performance should also be good for retailing with the December season which traditionally brings in three time the monthly revenue of an average month.
On the leisure sector, he said the company was looking as some options but no serious decisions have been made. “We were lucky we didn’t invest four or five years back (when the war had escalated). The entry costs however are now high and options we are looking at are either acquiring or developing new properties.”
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