Arpico Insurance Taps Sri Lanka's Relatively Untapped Life Sector

12th January 2012, www.lankabusinessonline.com

Sri Lanka's Arpico Insurance, a start-up insurer, is planning to capitalize on the island's relatively untapped life sector which is less competitive than general insurance, officials said.

Arpico Insurance, promoted by Sri Lanka's Richard Pieris group will start off with a 700 million rupee investment.

Richard Pieris operations director Ravi Liyanage said the firm will set up 10 branches in the phase of expansion and also start insurance units at 30 'Arpico' supermarkets run by the group.

He said only 11 percent of the population had a life policy and only 27 percent of the employed had life insurance.

Liyanage said unlike general insurance where competition was stiff, life insurance still had room to grow.

Chairman Richard Peiris Sena Yaddehege said this was the best time to start an insurance business in the group's 80 year history as Sri Lanka emerged from war and was poised to grow.

The island emerged from a 30-year war in 2009.

The firm had tied up with Munich Re for re-insurance.

Richard Pieris was also planning to expand its financial services sector by moving into leasing and finance, officials said. It was already involved in securities broking and asset management.

Image: Richard Pieris and Company Chairman Sena Yaddehige launching Arpico Insurance, Company Directors Prof, Lakshman R Watawala, Viville Perera and Ravi Liyanage look on. Pic by Sumanachandra Ariyawansa. (Image Courtesy: www.dailynews.lk)

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Unprecedented Growth in Sri Lanka Supermarket Trade in Coming Years – Research Report

03rd January 2012, www.news360.lk

Sri Lanka’s supermarket trade is expected to see an unprecedented growth within the next few years, backed by increasing per capita income, an increase in the work force and the changing consumption patterns, says a newly released equity research report.

According to the report, the spread of supermarket trade in the country as of now stands at just 15%.



The report compiled by Bartleet Religare Securities says, with the end of the war, the three leading supermarket chains in the country, namely Cargills, Keells and Arpico have started expanding aggressively while investing heavily in to this segment.

The report also observes the demand for supermarkets is also backed by convenience and late shopping hours it offers to the customers.

“Some individuals are also attracted to processed food items found in supermarkets which are much easier to prepare”, the report reveals.

The study has found that Supermarkets are also at an advantage, as they have a higher bargaining power over suppliers and are in a better position to offer products at competitive prices due to economies of scale.

However, despite the growth potential, the report says that most supermarkets operate on thin margins thus banking on higher volumes to cover operational costs while at the same time focusing on cost effective strategies.

“ Owing to the high competition in the industry; various promotions, loyalty schemes and advertising has to be carried out on a regular basis to retain the respective clientele as switching cost to customers are minimal”, added the BRS report.

According to BRS, there are 516 supermarkets being operated in the country which can be categorized as supermarkets, hypermarkets and convenience stores.

Cargills operates 177 supermarkets and the state owned Sathosa which offers products at a subsidized rate operates a convenience store network of 250 stores.

Keells has 48 supermarkets being converted to a hyper market while Arpico operates 13 hyper markets.

Sri Lanka Supermarkets to Grow 20pct Annually on Increasing Consumer Purchasing Power

23rd November 2010, www.dailynews.lk, By Indunil Hewage

The supermarket trade in Sri Lanka is expected to grow 20 percent per annum in the years to come owing to increasing purchasing power of the consumers. It is expected that this growth would be apparent from the next year. Richard Pieris Group Director and Chief Operating Officer (COO) Pravir Samarasinghe said the retail market which consists of small boutiques will also record about three to five percent growth per annum in keeping with the Government’s objective to record seven to eight percent economic growth in the country.

The total proportion of the supermarket trade is 15 percent out of the retail industry in the country. The remaining percentage has been acquired by the general trade.

It is expected that the supermarket trade proportion will increase at an unprecedented rate in the future.

“Retaining in the supermarket trade in a profitable manner is a challenging task as it needs more expertise and financial stability to run the trade in a continuous manner,” Samarasinghe said. The prevailing stiff competition among the giant players in the supermarket trade has not attracted newcomers in the market.

In addition to that the high entry cost has also hampered their aspiration to enter the market.

“The Government efforts to double the per capita income in five years will also enhance disposable income of the people creating an impetus to bolster the supermarket trade,” Samarasinghe said.

“During the last couple of years many players who entered the supermarket trade were unable to sustain their ventures, as they were not privileged to enjoy the various advantages reaped by major players in the industry,” Samarasinghe said.

Sri Lanka's Richard Pieris to Enter Leisure Business. Business and Agriculture Tourism on the Cards

18th July 2010, www.nation.lk, By Indika Sakalasooriya

Sri Lanka’s plantation-rich Richard Pieris Company PLC (RPC) will shortly enter the leisure business aimed at developing five hotels, RPC’ Swiss based Chairman, Dr. Sena Yaddehige told The Bottom Line.

“If we have a joint-venture partner to come with us for the development cost we will go immediately in a big way. If not, we would go slowly. But definitely we will go into the leisure sector in the near future,” Dr. Yaddehige said. As he elaborated, RPC is looking at developing five hotels including one city hotel.

“We have earmarked four sites out of Colombo and one in the heart of Colombo which will be developed into a 100 room city hotel. The land and the building we are planning the hotel belongs to a friendly party. We expect to renovate the building and to build the hotel,” he remarked.

The investment for the city hotel alone is estimated at Rs.1.1 to 1.2 billion and RPC expects to fund the project though both internally generated funds as well as bank borrowings.

Yaddehige further said that at the moment RPC is in the process of obtaining approval for the hotel from relevant authorities and it has already got the nod from the Board of Investment (BoI).

“This hotel will be designed as a business hotel under the 3to 4 star category,” he added.

Asked about the other four sites where the conglomerate is planning to put up hotels without disclosing the exact locations, Yaddehige said that the group owns prime land almost everywhere in the country out of which a few are located in key tourist attractions.

“We have a 50 acre land in Tangalle between lagoon and the sea. And we have lands in Dambulla and Trincomalee. Now we are looking at the possibility of acquiring a land in Kalpitiya,” he said.

Touching on the type of hotels the firm intends building in the selected locations, he said, “the concept today is high margin top end hotels; then they have to be boutique hotels”.

RPC also expects to enter into agriculture tourism in the near future as the bungalows in the group’s plantations are now under renovation.

“We have very fine ten plantation bungalows. We even have one original bungalow designed by Geoffrey Bawa. We will be converting these into boutique hotels once our entrance to the leisure sector is sealed,” he said.

As to whether the group has the expertise in managing hotels, Yaddehige responded negatively, but said that there ‘won’t be a better time than this for us to intrude into the business given the country’s positive macro-economic outlook.’

Richard Pieiris Group is a diversified conglomerate with interests in plantation, retail, plastics and logistics. With a recent history of a nearly Rs.9 billion debt burden, the firm seems to be now in a recovering process with the buoyancy in the international commodity markets and coming down of interest rates locally.