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Having pioneered the auto gas industry, set up a chain of Laugfs fuel stations and supermarkets along with a string of new businesses, the founder of LAUGFS Holdings, says his dream is to alter local people’s lifestyles.

W.H.K. Wegapitiya says this is why he got into the leisure business in the first instance, responding to critics who challenge his diversification strategy into hotels. LAUGFS Eco Sri, LAUGFS Leisure and a few other firms were preparing to go public but the plans were shattered when a crisis hit the share market two years ago. He still wants to do it but will do so when the All Share Price Index to cross 7000. He says supercharging growth is what he’s good at.

LAUGFS’ founder W.H.K. Wegapitiya during the interview. Pix by Athula Devapriya.

In an interview with the Business Times, he spoke on a range of issues dealing with current and future plans of the mega business empire. Here are excerpts of the conversation:

Your plans for the next three years:

We want to be in the first top 10 companies’ bracket in the next 10 years – or maybe even earlier . More than that we want to be in the first 10 Sri Lankan brands that have a high brand loyalty rate with the consumers.

Where do you see the company positioned in the next 10 years?

We have done our business planning. In the next 10 years our business planning includes diversification, improving infrastructure and resources. It’s a journey. Our human resources, technical resources, etc – we got all this figured out in the next 10 years.

What’s your business model?

It will always be related expansion, forward or backward diversification. We feel that strong brands such as LAUGFS can be extended into very diverse business areas. We also want our business diversification strategy to look forward along the supply chain for opportunities to tighten our grip on the market.

Critics say that your companies are getting into many unrelated businesses:

Our expansion will always be close to our core objective which is being close to the day to day lifestyles of Sri Lankan people. The businesses that we get into will always be in line with the daily lives of our people. That is how we see our business model.

This diversification strategy can put you on the fast track to growth but if the strategy fails it can also burn up your money:

The decision to enter one or more new areas is primarily done to take advantage of the company’s existing distinctive competencies. In this respect, how far you are in the value chain determines how strong you are as a company, which in turn will give you an idea of what areas to get into. With the right people, business plan and structure in place, diversification can help to supercharge growth.

In terms of strategy was getting into hotels a good thing?

Diversifying into hotels is also trying to alter local people’s lifestyles, which is in line with our core objective. Suddenly we see an opportunity and we grab it and it might be a success.

It might also be otherwise. Then it’s an experience.

What new ventures will you get into?

We want to shift from orthodox energy sources and get into renewable energy sources. We want to get into transport fuels. Now we use hydrocarbon such as petrol and diesel and we are dependant on them. One third of our foreign exchange goes to importing oil.LAUGFS might find a solution through renewable energy for this. It’ll be something which no one has introduced before.

We’re also looking at value addition to local mineral resources. We’re producing high quality materials, adding value to them and substitute imports in these materials.

In this regard we have already started a joint venture with the Sri Lanka Institute of Nanotechnology to add value to Ilmenite and produce nano titanium dioxide, which is a raw material for products such as paints. Most ilmenite is mined for titanium dioxide production.

Finely ground titanium dioxide is a bright white powder widely used as a base pigment in paint, paper and plastics. We’re setting up this factory at the Nano Park in Homagama.

Weren’t you planning to go public with some six of your companies?

LAUGFS Holdings, LAUGFS Eco Sri, LAUGFS Leisure and a few other firms were readying to go public, before the crisis hit the share market. Arrangements to improve are internal processes, etc, were made as these essential for listing, but plans were dragged due to this unhealthy situation market. We’re waiting for the All Share Price Index to cross 7000 to list these companies. Our leisure company is something that we’re seriously looking at going public with.

Your hotels are taking a long time?

It was mostly due to bad weather. In two months’ time, we’ll open our ‘Ananthaya’ resort in Chilaw. The Chilaw resort hotel, which is a 4-star resort with 88 rooms costs Rs 1.5 billion, while the 110 room resort at Pasikudah will cost Rs. 2.5 billion. This is also a 4-star resort and we plan to complete this project within 18 to 24 months.

Will you be buying or building hotels and where are you interested in?

We’re a cash rich company and we have the capacity to acquire or build hotels. Currently we’re looking at hotels in the deep South, Central and North Central Province. Many hotels which are for sale are also approaching us. We’re evaluating them.

What’re the new product line up that you’ll launch?

We plan to bring alternate energy products which are solar and wind based. We plan to set up power generation through solar and wind power.

Are there any expansion plans in other countries?

We looked at many regional countries and there are many opportunities in Bangladesh, Vietnam, Cambodia and Australia to expand in energy – LPG Petroleum, but we realised that we have more opportunities here.

How is your retailing business doing?

Electricity increases and taxes are affecting retailing business and it’s really bleeding.

Have you got any favours from the government?

No favours. The only favour is that they saved this country from terrorism. As a Sri Lankan I’m forever being grateful for that. Also they are national minded when it comes to businesses.

Hatton National Bank PLC’s five-year debenture issue of Rs. 2 billion with the option to issue a further Rs. 2 billion, in the event of an oversubscription, was opened yesterday.

The issue was oversubscribed on day one and hence was closed on the same day.
Commenting on the issue, HNB Acting CEO Jonathan Alles said: “The bank was successful in raising the full amount of Rs. 4 Billion including the green shoe option of Rs. 2 billion. Funds raised through the debenture will support balance sheet growth of the Bank and we wish to place on record our sincere appreciation to the investors for the trust and confidence placed in HNB.”

Acuity Partners Ltd. acted as Managers to the issue while Deutsche Bank AG, Colombo is the Trustee to the issue. SSP Corporate Services Ltd. are the Registrars and HNB acted as the Banker and Lawyers to the issue.

Asanga Seneviratne urges all to visit east coast; says “no better salesmen for Sri Lanka than all of us”

Despite being the first IPO in over a year, Anilana Hotels and Properties Ltd., on Wednesday launched its Rs. 960 million equity raising exercise with confidence largely encouraged by the future potential of its business and the rebound in post-war tourism.

Funds raised in the IPO are to be used in a massive expansion drive for the property chain, headed by entrepreneur Asanga Seneviratne. Anilana aims to build and launch several new hotels totaling at least 450 rooms across the country within the next three years. It already has a unique resort in Passekudah.

“Following the end of the 30-year conflict, Sri Lanka is well placed to prosper with peaceful settings drawing large number of tourists. Anilana with its expansion plans is harnessing this potential. I encourage all to visit the east coast and see the potential and revival. There are no better salesmen than all of us,” Asanga told a host of top business leaders, professionals, celebrities, stock brokers and fund managers at the launch on Wednesday night.

Anilana Hotels and Properties’ IPO (up for subscription now with its official opening on 12 June) involves the issuance of 40 million shares at Rs. 12 each with an option to upsize it for an equal amount in the event of oversubscription.
The company said the proposed expansion drive will expand Anilana’s portfolio to include resorts in Passekudah, Nilaveli, Dambulla, Panichchankani, Seladive Island, Vakarai and Blue Lagoon.
 These unique and luxurious hotels have been designed to showcase the great natural beauty of several unspoiled destinations, with stylish and contemporary facilities. With plans to become the leading hotelier and property developer on the east coast with its planned expansion projects, Anilana is growing and currently has an estimated fair value of approximately Rs. 5.5 billion.

The recent opening of Anilana Passekudah has been welcomed with positive reviews and Anilana Nilaveli is expected to open in the next few months, hotels in Dambulla and Panichchankeri will be opened shortly afterwards. The hotels offer a wide range of accommodations ranging from oversized deluxe rooms, family oriented split-level lofts, beach chalets with amazing ocean views, secluded water bungalows and suites to meet the needs of the more demanding travellers. Anilana marketing strategies target a cross-section of high-end tourists both foreign and local, including high spending tourists from Europe and newly emerging markets such as China, Russia and India.

Anilana has set the goal of providing high standards of comfort, thoughtful and friendly services and creating authentic and delicious food. These standards of hospitality are very high and the training and development of their young and motivated staff is a key consideration in these strategies. Anilana aims to satisfy the needs of discerning travellers, who are searching for an emerging and exciting new destination; the east coast of Sri Lanka. 

The company is currently in discussions with several established international hotel chains as part of the Anilana strategy is to partner with global brands on a shared equity basis. This would provide sales distribution and overseas management opportunities and help the Anilana brand to develop a strong reputation in overseas markets.

The company said further growth also looks positive with further developments being planned within Anilana, including large mixed-purpose developments in their conceptual pipeline, including prime location sites in Colombo.