ECONOMYNEXT – Sri Lanka’s Softlogic group which has interests in retail, leisure, healthcare, and financial services is looking to sell down assets and cut debt, Chairman Ashok Pathirage told shareholders.
The group has decided to shed to shed unproductive assets, review the internal operating processes and make some painful decisions to enhance liquidity and strengthen the financial standing of the group.
“Investments in key areas are being progressed in anticipation of an economic recovery and a credible debt reduction strategy,” Pathirage told shareholders in the annual report.
“At the same time, to add value to the promising sectors of the Group, we will not be averse to reduce our stake in any one of our subsidiaries should opportunities arise to make the Group more agile to face the uncertain future.”
In the year to March 2022, the group lost 8.1 billion rupees of which 4.6 billion rupees was an exchange loss, according to the accounts.
Softlogic was hit by the Covid pandemic, weak tourism, rupee depreciation, import controls and higher interest.
Softlogic had accumulated a loss of 26,397 million by March 2022 and its current liabilities exceeded its current assets by 45,857 million.
As of the reporting date, the Group reported total interest bearing borrowings of 92.3 billion rupees, of which 53.3 billion was reported as current liabilities and the balance 39 billion as non-current liabilities, the auditors said.
Auditors issued a going concern caution to say there was “a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern without the proposed activities by management and continued support of the lenders.”
The annual report said the company was operating on the basis that it was a going concern and that several measures were being taken mitigate the negative working capital position.
These included:
Disposal of some of the identified strategic investment assets and phase out of certain sectors of the group.
Re-negotiating the debt repayment plans with the lending institutions and restructuring the debt.
The group has negotiated with lending institutions and obtained capital and interest moratoriums enabling it to minimize the cash outflows on its financing activities
The group was currently evaluating alternative sources of financing including fresh equity infusion to its core business segments.
The Group was in the process of looking for potential equity partners to enhance the operational performances of the Retail Sector and Healthcare Sector (to identified projects)
Implementing aggressive marketing strategies to attract and enhance both international and domestic customer footfall.
Accounts were also qualified in respect of Softlogic Retail which were re-stated from the previous year. (Colombo/Nov22/2023)
