Browns bullish on healthcare, leisure and real estate
Browns will focus on expanding its presence in healthcare, leisure and real estate, while consolidating the business with its new parent, the LOLC Group, officials said.
“The country has a rapidly ageing population as well as increased incidence of non- communicable diseases brought about by affluence and changing lifestyle habits. Demand for private healthcare is expected to rise and therefore, Browns will further explore opportunities in the healthcare sector,” Murali Prakash, Group Managing Director / CEO Browns said. He said the company is building a new 50-bed hospital at Ragama to be opened in April next year. He added that Browns will expand into other provinces as well with this model.
The company is also keen to bring in value addition to their healthcare sector expansion with new areas such as stem cell management and medical tourism. “We also want to combine leisure and healthcare to introduce medical tourism,” Mr. Prakash said. Another important area of focus for Browns will be the leisure industry, which is expected to grow significantly over the next few years and they have invested in several hotel properties that will become operational in the medium term.
Mr. Prakash said that the company’s subsidiary Samudra Beach Resorts (Pvt) Ltd has obtained the requisite approvals to commence construction of a star class resort hotel in Kosgoda. “The site is unique as it has the sea on the West and two other water bodies on the North and South. It is adjacent to a turtle hatchery and the guests will have the opportunity of holidaying in this environment. With requisite approvals, it is planned to increase room capacity to 172 rooms at a cost of Rs. 1.7 billion,” he said, adding that negotiations are underway to have the property managed by an international hotel chain and plans are to start operations in winter 2014.
Real estate is another important growth area, and the company will leverage on its existing assets as it has a relatively large bank of prime locations in the city such as their former head office at Darley Road, another two acres at Darley Road, etc and also the suburbs such as their former factory premises at Ratmalana. “Development plans being considered for these locations range from entertainment complexes to mixed development and housing projects. An improved business climate, political stability and increased per capita income, makes real estate a sector to watch for,” Mr. Prakash added, noting that Browns will tie with international partners for these projects.
Browns’ Galoya Plantations (Hingurana Sugar) is now producing sugar, Mr. Prakash said. “This factory was closed for more than 15 years and we produced 2,000 hectares (ha) of sugarcane this year. We started threshing sugar in August and now we’re selling to the local market.” He added that Rs. 1.5 billion was used on this investment.
Browns’ is trying to consolidate the plantation and plant sugarcane in the balance 3,000 ha. “Then we’ll go into power generation and also other areas,” Mr. Prakash said.
In the trading area Browns is eyeing energy related products. “We signed with Engine UK for energy mapping recently. We want to expand in this area by introducing energy saving devices in solar energy and green energy,” he added.
Some of the main challenges the company expects to face in the year ahead is the continued devaluation of the rupee together with the credit squeeze that will affect credit available to dealers for purchases, he noted. “The rising cost of capital due to increasing interest rates could affect the viability of business expansion in the short term. Cost efficiency is especially crucial given high energy costs that have impacted on local manufacturing operations. Improved energy efficiency and use of alternate energy sources are crucial areas that will be explored as we consider further expansion in the years ahead.”
Last year, turnover at company level increased by 30 per cent to 10.56 billion, while at group level, it grew by 19 per cent to Rs. 14.4 billion. The best performing sectors were agriculture, general trading, consumer, retail, plantation support service and power systems, all of which grew by 10 per cent year on year. Gross profits at company level grew by 33 per cent and six per cent at the group level. Last year the company posted a profit before tax of Rs. 621.8 million, while at group level this was Rs. 3.3 billion.
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