Slow death for aging Lanka Salusala
Sri Lanka’s state owned handloom textile wholesale and retail giant in the 1960s, Lanka Salusala Ltd is now breathing its last with the government’s latest decision to give a golden handshake to 253 employees. The voluntary retirement scheme proposed by the government will signal the end of the only state textile trading enterprise which enjoyed a protected domestic market during the former Prime Minister Sirima Bandaranaike’s regime in the 60s and early 70s.
Secretary to the Ministry of Industries and Commerce S.S. Miyanwela told the Business Times that the voluntary compensation scheme will be introduced with the consent of the Treasury. Employees have already agreed to go on voluntary retirement and the modalities are being worked out by a special committee headed by one-time Treasury Secretary Charitha Ratwatte, he said adding that salaries will be paid up to June this year using the money collected by selling a ‘Salusala’ asset.
He noted that the state cannot maintain a textile trading enterprise which was set up to cater to the basic clothing and household textile requirements of the country under the Industrial Product regulation Act 1965 and foreign exchange restrictions, competing with the private sector in the modern era.
One of the options being considered by the Ministry is to sell the brand name ‘Salusala’ to a private sector firm as the institution has only a few assets including some lands, buildings and obsolete textile production machinery. The head office is located at Jawatte Road, Colombo 5 and has branches in Kurunegala, Badulla, Ampara, Galagedera, Galle, Unawatuna, Ratnapura and Kalutara.
Salusala, a one-time handlooms clothing and fashion giant of Sri Lanka has become a white elephant with two land plots of around 100 perches under its non movable assets. The sleepy head office complex at Jawatte Road is a rented building with a dilapidated showroom in which samples of old, outdated ‘fashion’ clothes are on display gathering dust. It has a mini garment factory with some industrial sewing machines which were not used for several years and storerooms stocked with outdated clothing material.
Salusala’s network of showrooms across the country too is in rented premises. One of its key functions in the past of importing and distribution of school uniform material was handed over to a private firm during the previous regime, depriving it of income avenues. Salusala has been running at a loss during the past five years with all attempts made to review the institution including the action taken to resuscitate Salusala as Lak Salusala in 2009 failing to bear fruit, Mr. Miyanwela said.
The accumulated loss was over Rs. 843 million up to now. According to the draft income statement of Salusala for the financial year April 1 2013- March 31 2014, it has incurred a net loss of Rs 14.8 million, and a sum of Rs. 57 million loss was reported during the previous financial year ending March 31 2013.
Among the annual costs of FY 2013/14, salaries and wages were at Rs. 63.6 million while the Treasury has been pumping in taxpayer’s money to maintain the institution. The committee appointed to revive this state-owned business enterprise will have to decide whether to revive and continue Salusala or to close it down since it cannot continue in this way, Minister of Industry and Commerce Rishad Bathiudeen told Business Times.
He said that he received information on 71 Salusala workers who are staying at home for months while their salaries continue to be paid in full. Such malpractices will not be allowed under the present regime and action will be taken to terminate the services of those employees, he added.
The ministry is looking for an investor as a last resort to revive the 48-year old textile giant on a Public Private Partnership, he emphasised.