June 25, 2015 (LBO) – Lanka Sathosa, a state owned retail store will be given a 7.5 billion rupee bail out from the treasury and audit firm, KPMG has been appointed to look into ways of re-structuring it, a Minister said.
“The Finance Minister Ravi Karunanayake had agreed to give 7.5 billion rupees from the treasury to keep the firm out of trouble,” Rishard Bathiudeen, Minister of Trade and Commerce said.
“Lanka Sathosa owes 10 billion rupees to two state banks and three billion rupees to suppliers and we are facing problems to keep it profitable,”
“KPMG is expected to find ways to sustain Lanka Sathosa in a profitable manner.”
He also added that Sathosa has an eight billion rupees stock of rice which it could sell.
“During the last regime Sathosa had bought rice for 75 rupees a kilo and sold them for 60 rupees and Nadu rice had been bought for 65 rupees and sold for 50 rupees.
“This resulted in a loss of about five billion rupees.”
Meanwhile, Bathiudeen says there has been no internal or external audit in Sathosa since 2012.
“We have asked the Auditor General now to audit the firm,”
“We found one billion rupees worth of good which were not in a saleable condition but the money had already been paid to the suppliers,”
The Minister says discussions were ongoing with suppliers and one had already agreed to take back 50 million rupees worth of goods.
He also added that in another irregular deal, the previous management had spent 600 million rupees to computerize 80 retail shops and 16 store rooms.
“But when we inquired from other companies, we got several offers to computerize all the 305 stores for about 300 million rupees,”
Bathiudeen said that there are plans to increase the Sathosa chain by 50 stores this year and hopes compete against chains run by the private sector.
“We are intending to compete with the Keells and Food City retail chains,” he said.
In April 2015, Lanka Sathosa, the fully government owned company, reported a monthly turnover of 3.2 billion rupees, a record in its recent sales history.