Sri Lanka’s Hemas Holdings to raise debt for ongoing expansion plans

October 30, 2006 (LBO) – Sri Lanka’s conglomerate Hemas Holdings Ltd plans to raise a billion rupees in debt next year to fund expansion plans in its leisure, power, health sectors, its CEO Hussein Esufally said. The family controlled conglomerate, which has diverse interest in health and personal care, power generation and transport said its leisure sector, saw its net profits for the three months to September rise 100.4 percent to 294.57 million rupees, while sales advanced 25.6 percent to 3.1 billion rupees on-year 2005.

“We are looking at upgrading our hotels next year, while we are actively looking at developing a 2-mega watte mini hydro project,” Esufally said.

“New investments over the next year are expected to contribute 25 percent of group earnings by 2010,” said.

Hemas recently tied up with Thailand’s hotel chain operator Minor International to develop its leisure sector which consists of three-budget class hotels.

The leisure sector swung into the black posting a 36.7 million rupee profit growth for the six months period, after posting a 45.2 million rupee loss over the same period 2005.

“Yields from the leisure industry, going forward will depend on the security situation in the country,” he said referring to an escalation in violence between government forces and the Tamil Tiger rebels, which has left over 3,000 people dead over the past eight months.

On the healthcare front, Hemas’ 100-bed hospital – a joint venture with regional healthcare specialist Columbia Asia – is due to start commercial operations mid-2008.

“Columbia will provide us with support services mainly in areas like account payrolls, maintaining medical records, patient records and so forth for a management fee, which we have not worked out yet,” he said. “Overall business sentiment is not too good, the rupee is weak, inflation is going up…all it takes is a bit of stability to grow our business here,” he said.