Vallibel One rolls out 5-year strategy on AI tools to optimise decision-making

By Charumini de Silva

Creating history and disrupting corporate decision-making culture in Sri Lanka, Vallibel One Plc yesterday announced a five-year strategy to implement Artificial Intelligence (AI) tools that will assist the group to reduce cost without increasing retail prices and overcome any negative economic cycles.

Addressing the occasion of the inclusion of Vallibel One to the S&P 20 index in the Colombo Stock Exchange (CSE) on Wednesday, its Chairman Dhammika Perera confirmed that they had capitalised on high-tech tools to explore opportunities in its cost reduction strategy and would carry out implementation from next month.

The company now has over 45 subsidiaries spanning over several sectors with a workforce of over 13,000 people, paying over Rs. 10 billion in taxes in a single year and a market capitalisation of Rs. 18.6 billion. The Group has aligned its growth in keeping with the broader economy and appears to be closely aligned with the country’s key growth sectors of manufacturing, leisure, and finance, among others.

“We conducted a cost reduction program last year and while being in the process physically we realised that there wasn’t sufficient use of technology in decision making. Cost reduction is a major challenge we all businesses face. Within the next six months all the board meetings of our companies will be conducted with the use of Business Intelligence (BI) tools, while the first company will use it next month,” he added.

Describing it a proud moment for the company and the management, Perera said they were happy about its performance within a relatively short period of just seven years of listing and that it has met the S&P criteria in terms of size, liquidity and financial viability. 

With the use of BI at board meetings, he pointed out that all board meetings would take a different shape from next month. He said data referred by directors would appear on a screen within two minutes, thereby none of the managing directors or the employees of the company could no longer rely on the excuses of bad economic or industry performance, as everyone would be held accountable.

However, he admitted that he foresaw major challenges in the business environment if his group didn’t opt to implement AI to its business model.

“Despite the status of the economy in the next five years, the implementation of the BI tools will enable all my companies to be on a comfortable level. We have solutions for the next five years,” Perera asserted. 

Perera said two data scientists were flown into the country yesterday from India and Europe to articulate the BI tools.

It was revealed that he constantly engages in brainstorming sessions with top industry individuals on the use of new technology to optimise performances of the companies. “Recently, I had a brainstorming session with Hitachi’s Head of AI. When I asked him what they have done, he told me that they have achieved almost the same level that we are embarking on. I think it is a proud moment for us as the gap that we intend to achieve and what they have achieved doesn’t have a huge difference.”

He did not disclose the investment allocated by the companies to adopt AI tools, stating that it was not a staggering amount and the percentage was quite insignificant. “It is like another day-to-day expense of the companies and not a huge amount,” he added. 

Citing Rocell (Royal Ceramic) as an example, Perera said that the firm designs around 200 tiles per year, but only 60 of them really take off while others are considered as tests, which he described a massive cost. However, with the implementation of AI in its business model he pointed that it allowed the company to design 80 tiles per year where 60 of them would take off. 

“This will save a massive production cost, time and other resources of the company. I think this will set a good example to all other companies in Sri Lanka. They should be aware of such tools and shouldn’t be all doomed about overcoming future obstacles,” he stressed.

Highlighting that Lanka Tiles had started three Original Equipment Manufacturing (OEM) locations in India, Perera emphasised he was the top importer of tiles, where 120 containers were imported every month, in addition to being the only manufacturer at home.

Justifying why he hadn’t come up with any marketing tools for Vallibel One shares during the past seven years, which is trading below the IPO price, he said that it was a decision taken to retain the retail investors in the market without affecting them.

“Considering the interest rate and foreign currency appreciation, it is natural to encounter rollercoaster effects, but if you look at our net asset value it has increased to Rs. 42. My objective it to build the asset because the market share is not important in this instance. The key issue of the retailers is if they can afford the shares in the market. Once we attract retail investors and if they don’t have holding power, they face difficulties. This is why I haven’t developed any marketing tools. In case we build a marketing tool, then the retail investors will get into the roller-coaster effect, they will lose their investments. It is not a big deal to implement it as other listed companies have done, but as a policy we have taken a decision not to do so,” he explained.

He also challenged anyone to come up with a strategy to reduce prevailing interest rates. “It is easy for a politician to accuse of high interest rates, but what is the strategy?” he asked.

CSE Chief Executive Officer Rajeeva Bandranaike commended the charismatic and decisive leadership with transformative ideas that had enabled the Group to achieve the success it has gained over the past seven years. 

He said that it also meant that Vallibel One was better placed than most companies to attract foreign investors.

Pix by Upul Abayasekara