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Friday June 18th, 2021

Sanath Amaratunga turned around Hela Casual before Covid; here’s what happened next

Sanath Amaratunga Chief Executive at Hela Casual

You became CEO of Hela Casual at a challenging time for the company even before Covid-19. Can you tell us about that experience?
I was appointed Chief Executive of Hela Casual to restructure a business on the verge of collapse after sustaining losses for several years. The first step was to consolidate standards and centralise processes while realigning people to a single vision. We needed the right people at the right place.

We had to shut down unyielding production lines, but we added capacity into profitable ones which kept jobs intact. Next, we invested in improving quality standards and processes to deliver orders on time and exceed customer expectations which meant we had to let go of customers that did not offer good margins. Giving up some of our customers was the hardest thing we did. It takes years to build a relationship, but we had let go of unyielding brands to focus on building the future.

We also looked at our cost structure, went through it all line by line to see where we can improve. With that, we attacked our manufacturing costs which were too high by industry standards. We had to be careful here because we could not afford to compromise on quality and our brand image for the sake of lower manufacturing costs. We revisited our sourcing strategy, which included packaging and printing.

It did not take long for customers to notice the difference, and they started rewarding us with their confidence and orders. This encouraged everyone at Hela Casual. A year after the restructuring began, Hela Casual reported its first decent profit, and we have not looked back since! Despite the Covid-19 pandemic, Hela Clothing continues to grow in terms of profitability, and we are now in a position to execute some exciting plans in the months ahead.

Hela Casual had recovered by the time Covid-19 broke out. How did the pandemic impact the business?

The lockdowns abroad impacted global sales, and the 52-day lockdown in Sri Lanka affected production. Our clients pushed back or cancelled orders entirely. However, having just gotten out of an existential crisis of our own making, Hela was structurally prepared for any crisis Covid-19 could bring. For the financial year ending March 2021, Hela Casual reported a 10% growth in sales and 15% profit growth from the previous year, so we did well for ourselves during the pandemic-hit year. There were several reasons for this success.

First, we were leaner and gave customers better quality and rates so that we not only got back on to their lists but topped them too once sales started picking up in the US and Europe during the latter half of 2020. Although retail stores had reduced space for fashion brands, it did not affect our order books because we topped the lists of preferred suppliers. By the end of this financial year in March 2022, we anticipate a 18% growth in sales and 22% growth in profits. I am pleased that we are picking up momentum since the turnaround a couple of years ago.

What are your plans for the future?

We hope to generate 25% or more growth annually over the next few years as we venture into Africa. The lingerie cluster, Hela Intimates, has operated production facilities in Kenya and Ethiopia for several years now, and Hela Clothing will join them in 2022. Our factories in Sri Lanka employ close to 2,500 people. We will set up a production facility in Africa in early 2022 initially with 750 people and go up to 1,000 by the year’s end and further increase capacity to 2,000 in 2024, so we have plans to grow Hela Casual and take things to the next level.

What is the one business lesson you had to learn the hard way?

For me, it was the realisation that attitude is more important than talent or experience. To survive in this industry and to build a promising career requires a lot of hard work and you must be willing to go the extra distance. Being the most talented, skilled, or smartest guy in the room is not nearly enough to take you far unless you are willing to burn both ends of the candle when needed and engage positively with the people around you and share a common purpose.

We hope to generate 25% or more growth annually over the next few years as we venture into Africa