Sri Lanka’s Vallibel to cut costs, harness hi-tec to ride out economic cycles: Dhammika Perera

ECONOMYNEXT – Sri Lanka’s Vallibel One Plc, which has interests in manufacturing, construction material, finance and power is cutting costs, harnessing hi tech tools to keep ahead of economic cycles, Chairman Dhammika Perera said.

Vallibel is the top producer of tiles in the country.

In a 5-year strategy was being rolled out where the group aims to absorb cost increases in the next five years without increasing retail prices, he said. The cost reduction strategy started last year.

"Because of the cost reduction strategy, whatever the level the economy is, we will be comfortable," Perera said.

After a cess import tax was reduced, Lanka Tiles has started imporint from three original equipment manufacturing (OEM) locations in India, in addition to manufacturing at home. Each month about 120 containers are coming in, he said.

The current administration had reduced some of the protetion to big business, after criticism sthat high import taxes especially building materials were making it difficult for poorer Sri Lankans in particular to build a home.

To make optimal decisions, business intelligence tools are being used, Perera said. Two data scientists, who are industry specialists are being flown in from abroad for a three month pilot project, he said. There are plans to roll out such tools throughout the group.  The firm hoped to harness artificial intelligence in the future.

"At Rocell (Royal Ceramics) each year we introduce about 200 new designs," he said. "But only about 60 takes off.

But by using technology the firm could launch only about 80 units to make 60 successful designs.

"So only about 20 will fail," he said. "So my production costs, time, disruptions to the line from the 120 designs (that are not successful) will stop.





"There are tools, we have to use them. We need not fear the future all that much."

He said the construction sector was still weak. Even if the overall market was not growing there was still room to compete and win market share, he said.

"We cannot grow market share only if we have a complete monopoly," Perera said. "If we have to 30 percent, we have to ask who has the balance 70 percent."

He said in consumer durables, where he had an interest, revenues had grown when the overall market growth was down.

"The best examples is Singer. The white goods market is down 2 percent, but we have 15 percent growth."

But interest costs and currency fluctuations were a challenge, he said.

Giving capital allowances was good but unlike tax holidays which were given by the board of investment, there was uncertainty whether they will end suddenly, he said.

Vallibel One Plc has just been included in the S&P 20, index of liquid stocks at the Colombo Stock Exchange. CSE Chief Rajiv Bandaranaike said as an S&P 20 company, Vallibel will find it easier to access foreign investors. (Colombo/July04/2018)

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