COLOMBO: Sri Lankan tycoon Ashok Pathirage remains bullish about his country’s consumer spending prospects, even as it endures a currency sell-off, and he is turning to foreign investors and contractors to build up his retail business.
Softlogic Holdings, Pathirage’s hospitals-to-financial services conglomerate, recently began building a luxury shopping mall in Colombo that he hopes will boost the country’s credentials as a tourist destination
The Sri Lankan rupee has dropped 10% against the dollar this year, hitting a record low as the South Asian island’s economy struggles. The World Bank forecasts another expansion of less than 4% this year. Pathirage’s retail ventures depend on domestic demand, and the sliding rupee hurts sales of brand-name imports.
“Obviously, we are raising our prices,” Pathirage said, referring to his mobile phone distribution and other retail businesses.
“We are going through a difficult patch right now,” he recently told the Nikkei Asian Review in Tokyo, where he met with prospective investors as Softlogic works to ease its reliance on the debt that has fueled its growth.
The conglomerate’s debt level hit 2.71 times equity in March, up from 1.70 times five years ago. Pathirage is now tasked with realizing his ambitions in retail while strengthening the company’s balance sheet.
The aspiring Sri Lankan retail king has enlisted a major Chinese construction group to build a luxury shopping mall at the edge of Cinnamon Gardens, a neighborhood of tree-lined avenues and colonial-era mansions. Pathirage’s decision to eschew local construction companies at the risk of being labeled unpatriotic typifies his business style.
He is unequivocal about his choice of state-owned China State Construction Engineering to build Odel Mall, the intended flagship of his retail group. The estimated $45.5 million investment will cover 67,000 sq. meters, and is slated to open in late 2020 or early 2021.
“I have worked with most of the local contractors. But unfortunately, sorry to say, most of the time there are cost overruns — despite doing budgets — and the projects do not finish on time,” Pathirage said in his minimally furnished office. “The Chinese don’t have these problems, and we chose China State after evaluating them purely on merit.”
