Hemas to reinvent itself

Hemas Holdings Plc said they are reinventing the organisation this year and noted their results for last year as satisfactory ‘in a difficult year’, while saying that the outlook for next year as challenging. The company said this week net profit for the year to March 31, 2008 rose 12.9 percent to Rs. 1.5 billion from Rs. 1.01 billion a year ago. Borrowings rose from Rs.2.9 billion to Rs. 3.2 billion while the turnover for the year went up 20.6 percent to Rs. 14.4 billion.

“We are repositioning our portfolio and setting a new growth trajectory in the future,” Hussein Esufally, Hemas CEO told a media briefing this week while announcing the results, adding that operating under conditions of high inflation and high interest rates may impact consumer demand.

“But we have a strategy around that. We want to accelerate growth by expanding overseas and diversifying,” he said, noting the contribution made by management consultants, A.T. Kearney to accelerate growth.

He said as advised by them the company is eying opportunities in the region to expand swiftly, especially India, because of limited investment prospects here and also to balance the country risk. Esufally said that Hemas' core competencies are in personal and health care, but several emerging industries show potential for value creation and growth opportunities, such as renewable energy, maritime and port business, and information technology.

“The high inflationary and high interest rate environment is expected to continue and the continued deterioration in the security environment is a threat to staff morale and retention,” he said, adding that the leisure industry does not promise any short-term revival. He said Hemas will work on improving Fast Moving Consumer Goods (FMCG) margins which together with the healthcare business saw revenue growth pick up during the second half of the year due to price increases.

“We are exploring a few mini-hydro projects and will start the network design and support venture in about two months,” he added. Hemas’ first mini-hydro power project, in Giddawa, in Kandy is billed to open in August together with the new hospitals in Wattala and Galle. Mr Esufally said that their first year losses in the Wattala Hospita, due to open by August 2009, will burden next year’s earnings while the increasing finance cost in power due to rising oil prices remains a concern.

He added that the transportation revenues were impacted by lower yields in the aviation business.