Financial Times

Hemas Holdings Limited is to build a hospital in Wattala, with a Rs 800 million investment, while hoping to go international with some of their fast moving consumer goods (FMCG).

"We are planning to build a hospital, but it will not be in Colombo," Hussein Esufally CEO, Hemas Holdings told The Sunday Times FT. Although the location was not divulged, market analysts said the company was negotiating to buy land in Wattala.

Mr. Esufally said that it would not be a speciality hospital, but a general one. "We have not identified a definite model, but we are hoping to finalise it soon," he said, adding that this was a natural progression for a company such as Hemas, which was very strong in the pharmaceuticals business.

The company's healthcare sector continued to show good progress with a healthy growth in both turnover and profits, on the back of the 25 percent strategic acquisition in eChannelling Ltd, which controls the doctor reservation system at most leading private hospitals in the country.

The company's FMCG sector achieved a turnover of Rs 2.46 billion and a profit of Rs 131 million, despite higher taxation taking the shine off post-tax earnings.

Strong industry growth coupled with market share gains helped revenues grow by 10.2 percent, while earnings grew at a faster rate of 11.8 percent, despite taxation on account of the disallowance of 50 percent of all advertising and promotional expenditure.

"We are planning to go to countries such as India with one or two of our brands as some of our key brands have done well here, especially Baby Cheramy which recorded significant gains in market share. And in a bid to accelerate growth without diluting our focus on the company's core personal care business, the sector is restructured its activities by forming a dedicated division to focus on foods and homecare," Esufally said.

He said that this sector intends to take advantage of the incentives offered under the government's programme to encourage industries to set up outside Colombo and the Gampaha provinces. "The manufacturing arm of the company if set up outside Colombo and Gampaha will have a full tax holiday and this will bring the sector's tax down by more than half," he added.

He said the transportation sector's growth was driven by the expansion of passenger and cargo traffic into and through Sri Lanka.

"The sector diversified its activities through the acquisition of ACX Courier which is a well known brand in the courier business and the regional expansion efforts of the freight management arm are set to gain momentum this year with operational infrastructure being setup in Mumbai, Chennai and Karachi. Our freight management business was further strengthened last year, through our joint venture partnership with Hellmann Worldwide Logistics," he said.

Esufally said that the low arrivals adversely impacted the tourism sector's performance and has postponed plans to develop a new five star hotel in Tangalle given the current instability in the macro economic and political situation in the country.

"Instead we are focusing on repositioning the existing properties in collaboration with a foreign operator," he said.