Hayleys’ ambitious foray into retail trade
Hayleys, the giant Sri Lankan conglomerate now controlled by businessman Dhammika Perera which acquired Singer Sri Lanka earlier this week, appears to be reverting back to a model which included consumer electronics that failed many years ago.
The deal which rocked the Colombo stock market on Wednesday and would eventually be worth at least Rs. 15 billion for a 71.2 per cent controlling stake, is one of the largest acquisitions in recent times. For over 25 years (1983-2008), Hayleys was in the consumer electronics business with top brands like Phillips but lost money and exited from this sector.
Market sources said Hayleys was not the first choice for a Singer buyout. Singer had initially made an offer to Browns PLC which turned it down. At this point Hayleys came into the fray.
As the Business Times pieced together the secretive, behind- the- scenes deal which caught brokers flat-footed, it was abundantly clear that the brains behind it was Mr. Perera, who in fact has been driving the group’s development since his ‘dominant entry’ into the company in 2011. Currently he owns 50.44 per cent of the company and is its co-chairman with long- time Hayleys employee, Mohan Pandithage as the chairman.
Despite Hayleys battling a huge debt position and reporting a staggering 91 per cent drop in post-tax profit to Rs. 61 million for the third quarter ending June 2017 against Rs.650 million in the 2016 quarter, Mr. Perera is confident that the Singer acquisition is a ‘good buy’. “Any pitch is a good one for those who can play cricket,” he quipped to the Business Times in brief on-phone comments.
When asked if it’s a wise decision given that the group is already highly geared with borrowings, Mr. Perera noted that ‘business’ is second nature to him and that funding Singer’s acquisition isn’t an issue.