RPC takes a hard look at businesses

The Richard Peiris’ Group (RPG), strongly defending itself against angry shareholders who at the recent AGM accused the company of being mismanaged, is taking a hard look at its business portfolio and evaluating its options on which business to continue; which to divest and which should be restructured.

It wants to strengthen its balance sheet and is focusing heavily on its retailing business, plastics and the plantations.

Pravir Samarasinghe, Chief Operating Officer, RPG, in an interview with The Sunday Times FT, vehemently denied that Paul Ratnayake, temporary chairman at the AGM in the absence of RPG boss Dr Sena Yaddehige, had told a shareholder ‘not to talk nonsense’ – when some questions were being asked.

“Nothing like that happened. Mr. Ratnayake did not say anything like that. This is taken out of context. We are a very shareholder friendly company and entertain questions from any shareholder,” he stressed. But two shareholders present insisted Ratnayake had made such a statement.

Asked whether it was good practice to borrow money and buy shares of NDB when the company was in high debt, he said that the particular investment had to be taken in the context of the time the investment was made. “RPG is a net borrower and any large acquisition has to be funded by further borrowings. NDB is fundamentally a good bank with good potential which made it an attractive long term buy,” Samarasinghe pointed out.

Lalit de S. Wijeyeratne, Finance Director, RPG said at the time of acquiring the NDB stake, the stockmarket sentiments were not what they are now. “The interest rates also increased subsequently,” he added.

When asked whether the company was planning to dispose of this stake in the near future, Samarasinghe said they had not taken a decision as yet. “We continually look at and re-evaluate our portfolio. As at date we have not decided to divest this stake,” he said. He pointed out that various options were being estimated to strengthen RPG’s balance sheet. “We will continue to focus on the retailing, plantations and the plastic sectors,” he said, adding that the company’s retailing business consisting of the Arpico Supermarkets have done extremely well during 2006/07 and RPG would allocate more resources to fast track the development of the supermarkets.

On whether there is room for other retailers to enter the Sri Lankan market he said, “As the market is growing there is room for others, but they will be competing at a different level. There is room for small format supermarkets, but they will have to gain some economics of scale to survive.”

He said the Modern Trade (MT) is growing by about 25 percent per year in Sri Lanka. “More and more people are moving into self service and convenience retailing centres. Therefore the industry is growing. We are a large format, huge range, large parking retailing business compared to our competitors,” Samarasinghe said.