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IT IS ALL ABOUT

Ashok Pathirage, Chairman and Managing Director of Softlogic is driven by passion and to be the best in everything that they do. His Group has a diverse portfolio and he has ensured that Softlogic is a main player in all the segments that they operate in. Continuously introducing international brands as well as partners to the country, Ashok Pathirage stresses that the private sector is indeed the engine of growth, where a more aggressive approach and stable Government policies will enable Sri Lanka to go to the next level.

By Udeshi Amarasinghe | Photography Menaka Aravinda and Mahesh Bandara

PASSION

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An international hotel name has been established in the country after more than 25 years with the opening of Mövenpick, can you elaborate on the strategy behind this endeavour?

The only industry that is currently growing

is tourism. We have always believed that

tourism will have a good growth and also

provide opportunities in this country.

Therefore, we wanted to establish a good

5-star business hotel that would set the

standard for the industry. When you look

from that perspective, we felt that it was

a good investment and went forward.

We did not actually go after a brand,

however when Mövenpick approached us

we felt that they would be a good fit. They are

not too big with only 70 hotels internationally.

They have a good presence in the Middle East,

and we were confident that the focus would be

there. Sri Lanka is not a large market and we

felt that if we went for a bigger brand then

the focus that we required would not be there.

Mövenpick is also very much like us and have

the same values. Therefore, we felt that

Mövenpick would be a good choice. From a

commercial perspective too, we have entered

a mutually beneficial agreement, which is a

win-win for both parties.

Leisure and tourism are important sectors for the Group, can you tell us about any future plans made in this area?

Softlogic Holdings does not have any

immediate plans in terms of the hotels.

We have invested in Centara Ceysands Resort

& Spa that has been in operation for the last

two and a half years and it is doing quite well.

The resort is one of the best in Bentota.

Mövenpick Hotel Colombo was opened to

see how the Colombo environment behaves

as tourism in the city, consisting quite

significantly of business travellers is not

driven by seasons, but on the economic

growth of the country.

We are cognizant of the plans being made

by the Government and are waiting for many

of them to become a reality. Therefore,

if everything goes well, and even if the

Government does not put too much emphasis

on these plans, we believe that with the

country achieving peace alone there would

be many opportunities that will be utilised

by the private sector, which is the engine

of growth. Irrespective of whether the

Government brings in investment or provides

support to them, the private sector will always

do their part. In that sense the leisure and

hospitality sector should do well. But from our

perspective Softlogic Holdings will watch first,

we want to wait because we are making

massive investments. It is not easy to build

5-star hotels one after the other. We want to

first see the progress of Mövenpick and then

we will move on to our next project. We always

ensure that we are dominant in the sectors

that we enter.

We have entered the leisure sector, I would

say may be we are too late as there are many

established players, but if the opportunities

are there and everything goes well we want

this sector to be a large focus for us. As the

Softlogic Group, we do not want to be a small

player; we want to be a substantial player.

Softlogic is also involved in the restaurant sector, what can you tell us about this area?

The restaurant segment is actually tagged

with our retail sector and not the leisure

sector. We have been very aggressive even on

that front. We hold the Burger King franchise

in Sri Lanka and we have already opened 13

outlets and another four will be opened in the

next three months. By the end of the financial

year we would have a total of 20 outlets. Some

of the other restaurant franchise operators

who have been in the industry for over 20

years are still operating 10. Therefore, you

can see the approach that we take. We need

size and scale and that is the way fast food

chains grow. We will expand continuously

while being cautious.

The acquisition of Odel can be seen as a major milestone for the Group, what was the thinking behind this endeavor, and what more has been planned?

We were already a fairly large fashion

retailer with many international brands under

our wing when the opportunity to acquire Odel

came up. We felt that this would be a good fit

for us because we saw a lot of synergy between

the two. A key aim was to bring in our

international brands, which were already in

the country into Odel whilst also introducing

new ones. We felt that there was a need for

a good department store in Sri Lanka offering

genuine authentic products where there would

be a good market for it. Our strategy for Odel

was not to run it as it is was but to develop it

further and take it to the next level of growth.

We saw great potential in where we could take

the business to and that is why we have

invested significantly in Odel.

We have made many changes. If you look

at the main store you will see that our product

offering is quite different. We have introduced

new brands. Today, Odel emulates the look

and feel of an international department store.

We will continue to make improvements every

day. We are adding a further 10,000 sqft and

many more international brands are coming in.

We have also planned to develop a mall.

Today one of the constraints for the retail

industry is that we cannot find a proper mall

with adequate space. Sri Lanka has not seen

a new mall in the last 25 years.

However, there is massive development taking

place and Shangri-La is building one too.

We will definitely be present in these malls,

because today almost 95 per cent of the brands

are either owned by us or represented by us.

We need international grade malls in which

we would operate as the anchor tenant.

In terms of Odel, we have planned on a 100

million US dollar investment, which will be the

670,000 sqft ultra chic and modern Mall.

We hope to commence construction within the

next one month. This would also have 40 high-

end apartments and a fully-fledged cinema

complex, which will operate seven screens.

We have partnered with India’s largest cinema

operator in this regard. I feel this would be

a great addition to the country and for our

growth.

You are known to rent some of the largest retail spaces, what is the thinking behind this?

We want to first see the progress of Mövenpick and then we will move on to our next project. We always ensure that we are dominant in the sectors that we enter.

Today, Odel emulates the look and feel of an international department store. We will continue to make improvements every day.

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This is because we cannot find space so

we make sure that we get whatever space is

available. We also want to go to a place where

we can see like-minded brands and ambience.

Therefore, we acquire the space and bring in

our own brands so that we can create the right

shopping experience for our consumers.

We have to create the ambience and provide

confidence to the customers that the products

offered are the same as what you would find

in international markets like Singapore, Dubai

or Malaysia.

With Softlogic partnering with many international brands, can you tell us how the Group is performing?

We have been in this business for about

7 years. I am very happy to tell you that this

year our Brands portfolio of the business has

demonstrated a growth of 30 per cent.

Having said that we do not see the same thing

happening in some of the other areas of retail.

I do not feel that in terms of the current

economy, as a country, we are doing that well

as inflation is on the rise, interest rates are

high and consumer confidence has not peaked.

This reflects upon our sales too. We find this

is not the best situation, however we are,

and as always have been very optimistic about

the country. There will always be fluctuations,

however the Government too needs time to get

things in order. Everyone is very ambitious

and hopeful that the Government’s plans will

be realised soon. When that happens I am sure

there will be good times to come.

Softlogic is also in Healthcare. Could you elaborate on the strategy behind this?

Before we entered the healthcare sector,

we were very much into ICT and Consumer

Electronics retail. We felt that it was better

for us to move into a different segment that

generates cash rather than credit. That was

one of the reasons we entered the healthcare

sector. It was not really a planned entry but

an opportunity that we received by chance.

We realised that there was great potential

because if you look at our healthcare industry

today, most of our operators are family driven.

But we are not; we are a public quoted

company and a professional organisation. We

are looking for returns for our shareholders.

Therefore, we look at business in a different

way. We saw the opportunity and went for it.

We invested and we bought Asiri Hospitals and

Asha Central, and we totally revamped the two

hospitals. We entered the sector 12 years ago

and today we are the largest player.

We will not stop because we see that

there are so many opportunities in this sector.

We are building a hospital in Kandy because

there is a need for a private hospital in the

district. We are investing 5 billion rupees in the

Kandy hospital project. That should be opened in

about 20-months time. And we believe that its

going to be a great business proposition for us.

As you know many people are acquiring

medical insurance. These people will want to

seek private healthcare. In this manner there

are many opportunities in the healthcare

sector. There are obstacles such as regulatory

challenges as well as policy changes. However,

we need to work through these challenges and

work with everyone. It is necessary to change

with the situation as no business can run with

one strategy. Your strategies have to change

based on what is happening around you.

How is the performance in the Automobile sector?

I must admit that we have not made much

progress in this sector. Today our Ford

dealership is the main aspect of this segment.

However, it is very challenging due to

fluctuations in terms of Government policies

and duties. Everything depends on this as with

changing policies, vehicle leasing facilities

change as well. Whenever the authorities want

to curtail imports, the first area they look to is

to increase vehicle duties. This does not affect

only us, but all motor vehicle agents. The

Government has to look at the investments

made by these companies. We are not just

small traders who import reconditioned

vehicles and display. We are an organisation

that has made significant investments in our

facilities. Therefore, we expect the Government

to be more clear in terms of their policies.

If there is a proper procedure and system this

industry can grow further. We will wait and

see. This has not been a very profitable venture

for us and it has not been a large sector for us.

But we want to see how we can do better.

We may need to reconsider certain

decisions if things do not improve. We operate

in many other large sectors, which hold a

commanding or leadership position and

therefore we may decide to channel our focus

to those areas.

Softlogic has also entered the Finance sector, which also includes insurance. What can you tell us about the progress thus far?

Our financial services sector is a cluster

of finance companies which are listed as

Softlogic Finance. We rebranded Asian Alliance

to Softlogic Life. We also recently

sold the general insurance part of the business

to Fairfax, a Canadian company, for 1 ½ billion

rupees. That was one of our small businesses

within the insurance segment in which we

were losing money. Therefore, we wanted to

completely focus on our life insurance

business, an area in which we are very strong.

This area has been a great investment and we

also believe that there is much opportunity

here. The insurance industry has had a

substantial growth in the recent years.

Softlogic Life is growing at 40-45 per cent

YOY. It is phenomenal. Since we took over the

insurance company we have been growing at a

higher rate than the industry. We continue to

get great results. This year we believe that we

will deliver in insurance more than a billion

rupees in profits.

Softlogic Finance is also doing well. Our

profits have been growing. I believe that there

needs to be consolidation because as some

finance companies are in trouble. I hope the

regulators will look at that, because we need

some stability to make sure that customers

have confidence in finance companies. Due to

the progress we have achieved, the finance

industry will be one of our key growth sectors.

Softlogic recently entered the property segment, can you elaborate on this?

Softlogic has just entered the property

development sector and we are actually

testing this area out. We recently commenced

a 25-unit apartment complex. We have not

even started marketing the property because

it is not difficult to sell 25 apartments.

We want to deliver the best when it comes

to anything. That is our game. We will develop

quality apartments and we would look at how

the market reacts. After that we will look into

how we can develop further in this industry.

At Odel too we will have very high-end

apartments. We believe that there is an

opportunity for a company like Softlogic where

customers believe that we always deliver great

products and reliability. I feel that it is

important when selling apartments or anything

for that matter. We have earned that reputation

as a company. I feel this is a good industry to

have a presence in. We have not considered any

further plans at the moment because we have

made significant investments in other areas.

Our current focus is on Movenpick and the

hospital in Kandy. Our biggest project is going

to be the Odel Mall, which is a 100-million-

dollar investment. These are our priorities. As

a Group we do not do small things. We do

small things only to test the waters when we

Everyone is hopeful that the Government’s plans will be realised soon. When that happens...there will be good times to come.

It is necessary to change with the situation as no business can run with one strategy. Your strategies have to change based on what is happening around you.

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enter an industry. We then know where we

want to put our capital and investments.

Softlogic has such a diverse portfolio, how do you manage it all?

As long as you have good CEOs and a good

organizational structure then you can manage

a diverse portfolio. We have six sectors and

each is run by a sector head. Within the sectors

there are many companies. So it is well-

structured. We have about 8 listed companies

within the Group. We have independent

directors and have regular meetings and

various committees. We take corporate

governance very seriously.

The retail sector comes under my purview

as it is a fast paced sector. Decisions must be

made quickly. For me the excitement today is

more in retail because I believe there is so

much opportunity.

Softlogic has partnered with many international brands. What was the thinking behind this?

When your company is transparent and

straightforward its very easy to attract foreign

partners. In certain instances foreign partners

have come to us. In terms of brands, we select

what we want to introduce to the country. There

are many brands that we have in the pipeline,

but we will not be bringing them in

immediately. We will introduce these brands

when the time is right. I will tell you what we

are introducing in the next three months.

You will see Aldo coming to Sri Lanka very soon.

It is not a big deal for Softlogic to bring in

brands because we are the giant in this sector

and we have the necessary infrastructure in

place. We have the privilege to pick and choose

what we want. We have the back-end to

support new brands.

In terms of partnerships when we acquired

Asiri Hospitals we partnered with Actis. When

they left three years later they had recovered

100 per cent of their initial investment. Today

TPG Growth is our partner. Then with Softlogic

Life, DEG and FMO are our partners and they

collectively own 38 per cent.

How can the private sector make use of the opportunities available?

We have always sought after opportunities

and we take calculated risks. Everything

depends on how you analyse the situation.

I feel that the private sector can be more

aggressive. The point is most Sri Lankans are

very comfortable with what they have.

I do not know if they are driven by passion

or driven by a certain amount of returns. There

is no harm in that, but it all depends on how

you look at things. For me it is not about

having 100 million dollars in my personal

account, it is all about passion. I work not for

the need to make money, it is because of my

passion, I simply love it. If you love what you

do, you can also be successful. The end result

will be that you will increase your wealth and

develop a larger organisation, you will create

value. That is how I look at things.

I feel it is important from the

Government’s perspective to create stability

and to create a fear free environment. The

private sector and the public sector have to

work together. The Government has to clearly

role out their strategies and inform the private

sector about their expectations from the

private sector. The policies they introduce

should be for the long term and not short term.

Even if a Government changes they must

support the policies implemented by the

previous Government because people have

invested based on those policies. Therefore,

stability has to be created, irrespective of what

political changes are happening in the country.

This will attract more investment to the

country. Today foreign investment is at a low

level, why? When policies are inconsistent it is

very difficult to attract foreign investments.

Furthermore, even if you have brilliant policies

you need to communicate these properly.

There is no point in concealing it. If those

areas are rectified, then there will be more

investment by the private sector and foreign

investors as well.

Who is Ashok Pathirage?Ashok Pathirage is a businessman.

His vision is to build a great company,

which can contribute towards society and

the country at large. He is down-to-earth and

has not changed his values for over 25 years.

I might be busier today with my current

responsibilities but I am driven by passion

and I like what I do. There is no formula to

success. Also there are no short cuts. Work

hard and believe in yourself. You also need to

It is not a big deal for Softlogic to bring in brands because we are the giant in this sector and we have the necessary infrastructure in place.

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be passionate about what you do. If you do not

love what you do, I do not think you will have

long term success. If your motive is only

money, I do not think you will achieve long

term sustainability and profitability. It will

be short term. As long as you work and are

focused, you build that credibility as an

honest man. Then you will succeed. I do

not think I could have come to this position

alone. The reason is I have always been

straightforward in my dealings. You need to

build your credibility. Of course, you need

to be focused and work very hard to be

successful. Maybe you need a bit of luck

as well.

I have never gone behind politicians and

asked favours. I have never seen the reason to

do it. I think if you are an upstanding

individual the political establishment or the

respective institute would always help you.

That is what I practice. You do not need a

middleman to get your work done. That is my

experience.

I can very simply go to another country

and receive benefits through investments.

But I will not do that. All my investments are

in Sri Lanka, because we believe in our country

and we love our country. We also want to

develop this country because if we do not we

will not be able to achieve what we want. It is

very simple.

Any thoughts?Softlogic is here to stay. We have great plans

as an organisation. We are very confident about

this country. We are confident about ourselves.

Hopefully the Government can get their act

together. We have already missed many

opportunities and time is running out. We are

growing around 5 per cent as a country, we

should actually be aiming for 8-10 per cent in

order to take Sri Lanka anywhere near countries

such as Singapore, Malaysia or Dubai. India has

a large economy and is growing 6-7 per cent.

We are a small country and economy and have

all the ingredients to be successful. I hope that

we look at the country positively, without

looking from a political perspectives or our own

individual gain. Think about the country and

put our best foot forward.

All my investments are in Sri Lanka, because we believe in our country and we love our country.