Richard Pieris bullish on expansion, new ventures

By Duruthu Edirimuni

The Richard Pieris Group is gearing for overseas expansion in different sectors and going into new projects with their existing resource bases but is apprehensive about the economic climate next year.

“In plantations we are sitting on a huge resource base and we will look at other opportunities,” Pravir Samarasinghe, Director/ Chief Operating Officer, Richard Pieris Group told The Sunday Times FT. (See detailed interview on Page 4)

The Group has launched a subsidiary with a Dutch party to export rubber-wood furniture, with antique look-a-like furniture out of rubber wood, now being sold in Europe and North America. Samarasinghe said the company is actively pursuing its construction drive and will eventually venture overseas. “In addition to houses and commercial developments we will take up infrastructure development contracts also and has recently been awarded a large bridge and road works. At present we are evaluating venturing into the Gulf region where the construction industry is booming,” he said.

Samarasinghe said that the company sold six Uva Range of tea estates for Rs.400 Million to record a healthy capital gain.

“Namunukula Plantations (NPL) was a very sick company when we took it over last year from a Consortium lead by John Keells. It had a debt of nearly Rs.1 billion accumulated over the years. We purchased it with an idea of restructuring it both operationally and financially. A part of the financial restructuring of NPL was selling the six Uva Range of tea estates for Rs 400 Million and recording a healthy capital gain,” he said, adding that the proceeds from this disposal have been applied to reduce the debt levels of Namunukula Plantations.

Samarasinghe said that the company will be divesting the oil palm plantations. “We are further looking at options of divesting the low yielding non core crops, which we feel does not support our long term goals,” he said, adding that they will sell the oil palm land which is about 1000 hectares. “Our total plantation interest is about 40,000 hectares of rubber and tea and the 1,000 hectares of palm do not strategically fit in to our portfolio,” he added. Meanwhile, the Group CEO said he expected 2007 to be an extremely difficult year in Sri Lanka in terms of the economy. “Good weather has helped our agricultural sector, and the services sector lead by telecom has supported growth so far,” he said adding that rising defence spending and the deteriorating fiscal deficit will put pressure on inflation, raise interest rates and weaken the rupee.