Sri Lanka’s RIL Property seeks further diversification

ECONOMYNEXT- Sri Lankan commercial real estate developer RIL Property Plc will be further diversifying its investments, a senior official said.

“The company will continue to pursue new market opportunities to stimulate growth, which may not necessarily be focused on the realty business,” Chief Executive Hiroshini Fernando said in the annual report.

The report said that a subsidiary, United Motors Lanka Plc (UML) will also diversify into non-core segments.

This will be a continuation of the strategy RIL has adopted over the past three years.

“We have already brought under our wing a world-famous food chain and a premier automobile marketeer, and envision a future of many more additions of premier businesses to our product portfolio,” Fernando said.

RIL Property, which was founded in 2009 and operates two Grade ‘A’ commercial spaces, acquired the franchise of Singapore-based bakery chain BreadTalk in 2015.

The company acquired a 30 percent stake in automobile dealer UML from a related party for 2.4 billion rupees in late 2017 and bought another 21 percent shares through a mandatory offer for 1.7 billion rupees.

The established vehicle dealership was mainly acquired for the land it owns adjacent to RIL’s flagship PARKLAND property on Park Street.

Meanwhile, the BreadTalk franchise narrowed its net losses to 18.9 million rupees in 2018 from 34.6 million rupees a year earlier.

Revenue from the franchise increased to 402.4 million rupees in 2018 from 367.4 million rupees a year earlier with two more outlets being added in 2018 using some of the money raised in RIL’s initial public offering in 2017. This brought the total number of BreadTalk outlets to nine.





However, the centralised production facility for BreadTalk can accommodate 16 outlets, and the under-utilisation of the facility has contributed to the loss in the segment.

BreadTalk’s financials also improved as it developed new bakery items ‘to cater to a wide range of tastes and pocket’ Chairman Sunil Wijesinha said.

Many corporates in Sri Lanka have been following a diversification strategy to mitigate risks from one segment, but some have failed and had to divest or seperate their non-core operations. (COLOMBO, 28 August, 2018)

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