Financial Times

JKH develops Crescat with Singaporean expertise
The John Keells Holdings, which posted pre-tax profits of Rs 873 million for the quarter ended December 31, 2003, up 81 percent from the same quarter last year, is working with a leading Singapore property developer to develop its recently acquired Crescat complex in Colpetty.

JKH joint managing director Ajit Gunewardene said the company has a "working relationship" with CentrePoint, the Singaporean property developer. Crescat Development Ltd.,was acquired last year with the acquisition of Asian Hotels Corporation, and through it the Colombo Plaza and the Trans Asia hotels.

"We're having talks with Centrepoint and working together with them towards development of Crescat. They have the professional expertise." Asked about getting a new management company to run its newly acquired hotels such as the former Oberoi, Gunewardene said: "Not for the moment - we first need to invest and upgrade the property. We now have in place a management team which we believe can take the property to a different level and can achieve more efficiency and profitability."

JKH chairman Vivendra Lintotawela said in a statement on the quarterly results that the third quarter of 2003/2004 had "started with much optimism and buoyancy" with heightened levels of external trade and tourism but ended "rather depressingly" as the constitutional crisis dragged on, unresolved. The group reported revenue for the third quarter rose 24 percent to Rs 5.8 billion over the same period.

Gunewardene said the current drought was unlikely to significantly affect the company. "Most of our businesses have back up power generation. We have contingency plans in place." If a severe drought affects the group's plantations it would normally be accounted for in price increases. Forthcoming elections were unlikely to affect JKH's tourism business as long as there was no violence. "The tourism industry is doing reasonably well.

As long as there is no violence we don't anticipate anything serious - we expect rational behaviour," Gunewardene said. JKH is continuing to invest pretty heavily in creating greater efficiency in the organization. In the area of sourcing, JKH intends to use the group's strength for purchasing and common services to ensure all the group synergies are pulled together.

"This will ensure better pricing, better credit terms, better delivery times - we're now in the process of implementing a significant programme which will save us a lot of money going forward," Gunewardene said.

JKH was also spending $3 million on a group wide ERP (Enterprise Resource Planning) project, initially for financials and later for other areas as well. "This is to make sure we have the management information in time, in the way we want it, that will enable us to make the right decisions."

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