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Friday, 10 August 2018 00:10 - - {{hitsCtrl.values.hits}}
By Safna Malik
Sri Lanka’s State-run Lanka Sathosa has come up with new changes this year to beat the retail market.
The Government urged Lanka Sathosa to initiate its infrastructure developments by locating its mega outlets in the Northern and Eastern Provinces to facilitate war-affected people by giving them an opportunity to experience fully-equipped and modernised mega stores consisting of banking facilities, restaurants, fisheries corporations, Nawaloka pharmacies and play areas for kids all under one roof at a lower cost, creating a new face of urbanisation for the north-east regions.
Ministry of Industry and Commerce Lanka Sathosa Ltd. CEO Dr. S.H.M. Faraaz told Daily FT that the first mega outlet in Welisara was launched on 5 January and capital outflow per mega store which stood at around Rs. 7-8 million had increased by 210% following the opening.
“Compared to the first six months of last year, this has led to plans to open 25 mega outlets in the country. We hope to open two outlets in Ja-Ela and Narahenpita, followed by Kandy and Badulla.”
Commenting on the expansion of mega outlets in the north and east, Faraaz expressed that many industrialists in retail chains refused to risk investment on development projects in developing rural areas such as the north and east but as a State-owned corporation Sathosa Lanka aimed to provide a ‘mega experience’ for its customers at an affordable price for middle class or low-income families.
Sathosa also intends to open 10 more outlets as a privilege to all three ethnic groups which live in these areas to benefit consumers at reasonable prices through a network of sales outlets.
He said Sathosa had driven its profits up by 23% for its first two quarters and profits keep rising continually.
“Lanka Sathosa was listed as a loss-making and corrupt organisation. Minister of Industry and Commerce Rishad Bathiudeen has taken efforts to bring Lanka Sathosa from red to black by achieving Rs. 40 billion in revenue this year. It recorded a turnover of Rs. 17 billion in the first six months of 2018. Lanka Sathosa recorded a turnover of Rs. 31 billion in 2017. By end of 2018 we can assure that we will be a profit-making organisation,” he added.
Lanka Sathosa is the largest store network consisting of 400 outlets island-wide.
Comparing Lanka Sathosa with other retail competitors, Faraaz said that other retail industrialists in the Fast Moving Consumer Goods (FMCG) chain assume Sathosa does not have to pay taxes since it is a Government organisation. However, he countered: “We do pay our taxes as well as VAT. Lanka Sathosa generates operation costs and employee salaries without any help from the Treasury.”
Speaking on changes implemented by Lanka Sathosa this year, Faraaz said after discussions with Unilever Sri Lanka, the latter had come forward to help and develop Sathosa by merging its quality assurance team with Sathosa’s quality standard group to implement 5S system in all Lanka Sathosa outlets.
Initial pilot projects to improve quality standards and to implement 5S in outlets will be initiated in 10 selected outlets starting from 15 August island-wide. Furthermore, Lanka Sathosa also plans to extend its operating hours till 11 p.m.
Faraaz added: “We have signed a MoU with USAID, which will be coming to Sri Lanka to visit all the outlets in the island and provide job training for four years.”
Lanka Sathosa will also initiate the Green Lanka Sathosa project with the assistance of USAID under its ULEAD program.
The main objective of the program is to promote environmentally-friendly practices such as encouraging the use of cloth bags and stopping the use of polythene, which harms the environment.
Lanka Sathosa also plans to set up SME corners at its outlets, aiming to provide job opportunities for youth in rural and semi urban sector and to improve national production by purchasing local production of farmers and small-scale manufacturers.
The Lanka Sathosa CEO said: “We will be launching a training centre in Ratmalana very soon, since Sathosa doesn’t have its own training centre. We will provide continuous training on customer service communication and identifying customer needs for more than 4,000 employees.”
Faraz stated that though Lanka Sathosa didn’t have a price formula, its objective was not to earn huge profits but to deliver a service and cover operational costs.
He said Sathosa procured items weekly on tender basis to sustain the organisation and to provide lowest prices for essential items.
“Lanka Sathosa sets prices every week systematically which fluctuate according to the world market rates, so being the price setter to the whole nation, only Lanka Sathosa consumers will be benefitted whenever the price rate falls off or rise up,” he added.
