Hemas Holdings ‘Future-Proofing’ Global Domination
Hemas Holdings Group is focused on becoming a truly global Sri Lankan player, and the company is future-proofing its business verticals to be ready for this goal.
“We are a step away from becoming a regional player with our entry into Africa and our efforts in becoming a global player in the medium term,” Ashish Chandra, Group CEO of Hemas Holdings PLC told the Sunday Times Business in an interview this week.
In its African entry, Hemas has plans to buy a 75 per cent stake in a Kenyan firm, Twiga Stationers and Printers Ltd. The Competition Authority of Kenya (CAK) has approved the purchase. “We are in the final stages of closing the working arrangements for the deal, and over the next 2 to 3 months, we want to finalise it,” Mr. Chandra said.
Explaining the reason for venturing into Africa, he said that a lot of Hemas’ businesses still operate out of Sri Lanka, and as a result, the company has a lot of single market dependency. “Diversifying this risk and having at least 25 per cent of our revenue coming out of Sri Lanka is the goal.” Under this strategy, we are creating portfolios of markets where we want to go, Mr. Chandra explained. “These are markets that have a large population, which are growing, and which have unmet demand and are typically markets in Southeast Asia, East Africa etc. They are a little more volatile than established ones, but running businesses in a Sri Lankan scenario for decades, we have stress-tested our business model, and we are confident of our localisation and innovation approach and that we will be successful in Africa.”
He said that at the right time, Hemas will get into personal care products in Africa after establishing the stationery business.
The West Asian crisis has put a ‘temporary’ slow trend in consumer demand which was growing at 7-8 per cent per annum, but it won’t dampen the business if the crisis doesn’t prolong, he said.
Raw material supply, fuel, energy availability are impacted due to the war in Iran, he said but Hemas is well prepared for this in the short run. “In raw material supply we have an impact for most of our Fast Moving Consumer Goods (FMCG) such as soaps, shampoos, hair oils, etc and on the pharmaceutical side which we manufacture at Morrison’s we procure from outside the country. Therefore raw material that we use in some of our products are byproducts of petrochemicals. Similarly some byproducts are required for packaging like in bottles and we need them for pens manufactured by our subsidiary Atlas. So the biggest concern now is to secure raw materials for the next month. Raw material prices are also up from 10 to about 50 per cent and it is a big challenge.” A lot of the purchases happen in US dollars, and the foreign exchange impact in this regard will be big if the war continues, he said.
With regard to energy availability, he said that fuel is a critical component of Hemas’ business. “We use fuel to run our establishments, such as hospitals and factories. We also use it to service the market. Most of our sales team, the medical marketing team, and servicing teams need transportation to carry shipments to retailers, supermarkets and collect lab samples.” Procuring fuel is becoming challenging, and the QR code imposed is impacting the serviceability of the operations, he said, adding that Hemas had to re-look at running its entire operation in the field to optimise fuel efficiency. “However, these are temporarily and we are hopeful that whoever ends (the conflict) within 3 to 4 weeks, the country can bounce back but if it prolongs for another 3 to 4 months, some businesses will face large problems.”
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