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Nishani Pigera - LBR
Electronics retailer distributor and hospital owner Ashok Pathirage grew his business by borrowing during uncertain economic times. It paid off. He is now one of the largest private hospital operators and his electronics retail business – although affected by the downturn – still has bright prospects.
So when I met him for an interview - the first question to ask him was has the leveraged strategy paid off despite the interest rate volatility?
LBR: You have been expanding your business when interest rates were volatile. What has been the impact of rising interest costs in your business?
A: I must say there was a huge impact. There is no question about that. But sometimes, time is money. You can’t wait for interest rates to come down to make decisions or expand. If you look at the history of our country, we have been having a war for almost 25 years. So my company started during that time. Within 17 years we have grown while there was a war. We have got used to that.
You could never think that the war is going to end in three years down the line and the interest rates are going to come down. So if you had waited I don’t think any company would have expanded.
In nature I’m a very aggressive businessman. When there are opportunities I take them. And I’m hands-on in any business. If you ask me any question about any business, what is the position and how much of sales we have done? I know. So that’s the way we have been operating. So I thought why not take the opportunities that are there?
Yes, of course sometimes you need to pay a price. But sometimes when you borrow you include that in your services and the products you sell. It has to be reasonable too. But at the same time you have to have to compete with the rest of the players. But we have done a good job.
LBR: How did you manage to convince banks to finance your expansion, especially when it involved takeovers?
A: Well, I’m sure they have the confidence in me. When getting finance from a bank, I talk to them directly.
It’s based on your business plan and how much confidence they have in you, your past track record. If you have credibility I’m sure people will lend you. Certain banks may think it’s too risky while certain banks may think that’s the way to move forward. Within the banking circle there can be different views.
Sri Lankan banks have absolutely helped me. They believe in me. They know my track record. They know how credible I am. They have helped me in whatever the projects we have done. They know that every business is not going to be a success. There are ups and downs.
But we have managed to service every bank loan we have taken without a difficulty and at the same time we have expanded. So now we are in a much better footing today because the rates have come down and there is peace in the country and we hope the government will come out with aggressive policies to develop the country and the economy and local businesses. So with that I think we can look forward to a great future.
LBR: How would you rate your takeovers? Have they paid off and what role did debt play in that success?
A: Well, it’s a long term business thing. If you look at the dividend pay out, you can’t say that we have got the return on investment. But if you look at the market capitalization from that time to now, it must be four or five times.
If you are willing to exit, of course, there is a huge benefit. But we are not in this business to exit. We think there are so much of opportunities in the health care sector. That’s why we are aggressively pursuing those.
From the time that we took over, today we have made it the largest private sector hospital chain in Sri Lanka. It has been well recognized by the overseas chains. Our vision is to be a regional player. So if you look at that from that point, the value we have added and the market capitalization, it’s huge.
So I say it’s a hugely successful takeover and there are so many people after my stake because the moment they take that they become the largest private sector health care provider. I can’t say anybody can be in that position today. Health care has been perceived as ne of the most vibrant sectors today. So I think that had paid off in a huge way.
LBR: Private hospitals including ones you own have been expanding how are you going to position your hospitals?
A: Well, if you add all the top hospitals in the country there aren’t even 1,500 rooms. So there is enough scope. And if you look at the number of insurance packages the private sector is selling, where are they going to go? Are they going to go to public health providers? No. They have to come to the private sector. So we have not met the capacity.
Even if you ask me today, we are almost full everyday. All the other hospitals have also added to their bed capacity.
So any business needs to borrow money. You cannot develop your business with fresh capital only or zero cost funding. If you want to do that your strategy might take double the years than what we are doing today. So any business there can be a certain level of leverage. We are fine. We really don’t have an issue at all.
LBR: Do you see yourself as a risk taker?
A: I am a risk taker. But of course, you have to take calculated risks. You should at least in your heart know that this is going to be successful and you should have a plan for it. We don’t after everything. When we feel that it is a viable business, we don’t delay. I just go after it. Maybe that is one of the reasons why I have been successful.
LBR: Some of your businesses are planning public offerings soon, how will you use this money?
What is your opinion about the future IPOs? How successful do you think they will be? Since people have already invested a lot of money in the market.
A: It all depends on your pricing structure. I’m sure there will be enough money in the market. Interest rates are going down and more and more people will get in to the CSE. So I think that’s one way people should raise money. If you want to reduce your cost of borrowing it’s obvious that you need to bring zero cost equity. So I’m sure very exiting IPO’s will come in the near future and most of them will be very successful.
LBR: Anything you would like to add?
A: In terms of Softlogic, we want to develop on the retail side. We think there are huge opportunities in the retail side. Softlogic has been very aggressive in acquiring new agencies. We have taken over Xerox, Samsung and Levi’s, is our latest line. So we want to be a big retail player in Sri Lanka.
From Asiri’s side we have looked at new opportunities. If everything goes well, we want to be a regional player. We will look at opportunities in India, Bangladesh, Maldives and Pakistan.
[b]
Electronics retailer distributor and hospital owner Ashok Pathirage grew his business by borrowing during uncertain economic times. It paid off. He is now one of the largest private hospital operators and his electronics retail business – although affected by the downturn – still has bright prospects.
So when I met him for an interview - the first question to ask him was has the leveraged strategy paid off despite the interest rate volatility?
LBR: You have been expanding your business when interest rates were volatile. What has been the impact of rising interest costs in your business?
A: I must say there was a huge impact. There is no question about that. But sometimes, time is money. You can’t wait for interest rates to come down to make decisions or expand. If you look at the history of our country, we have been having a war for almost 25 years. So my company started during that time. Within 17 years we have grown while there was a war. We have got used to that.
You could never think that the war is going to end in three years down the line and the interest rates are going to come down. So if you had waited I don’t think any company would have expanded.
In nature I’m a very aggressive businessman. When there are opportunities I take them. And I’m hands-on in any business. If you ask me any question about any business, what is the position and how much of sales we have done? I know. So that’s the way we have been operating. So I thought why not take the opportunities that are there?
Yes, of course sometimes you need to pay a price. But sometimes when you borrow you include that in your services and the products you sell. It has to be reasonable too. But at the same time you have to have to compete with the rest of the players. But we have done a good job.
LBR: How did you manage to convince banks to finance your expansion, especially when it involved takeovers?
A: Well, I’m sure they have the confidence in me. When getting finance from a bank, I talk to them directly.
It’s based on your business plan and how much confidence they have in you, your past track record. If you have credibility I’m sure people will lend you. Certain banks may think it’s too risky while certain banks may think that’s the way to move forward. Within the banking circle there can be different views.
Sri Lankan banks have absolutely helped me. They believe in me. They know my track record. They know how credible I am. They have helped me in whatever the projects we have done. They know that every business is not going to be a success. There are ups and downs.
But we have managed to service every bank loan we have taken without a difficulty and at the same time we have expanded. So now we are in a much better footing today because the rates have come down and there is peace in the country and we hope the government will come out with aggressive policies to develop the country and the economy and local businesses. So with that I think we can look forward to a great future.
LBR: How would you rate your takeovers? Have they paid off and what role did debt play in that success?
A: Well, it’s a long term business thing. If you look at the dividend pay out, you can’t say that we have got the return on investment. But if you look at the market capitalization from that time to now, it must be four or five times.
If you are willing to exit, of course, there is a huge benefit. But we are not in this business to exit. We think there are so much of opportunities in the health care sector. That’s why we are aggressively pursuing those.
From the time that we took over, today we have made it the largest private sector hospital chain in Sri Lanka. It has been well recognized by the overseas chains. Our vision is to be a regional player. So if you look at that from that point, the value we have added and the market capitalization, it’s huge.
So I say it’s a hugely successful takeover and there are so many people after my stake because the moment they take that they become the largest private sector health care provider. I can’t say anybody can be in that position today. Health care has been perceived as ne of the most vibrant sectors today. So I think that had paid off in a huge way.
LBR: Private hospitals including ones you own have been expanding how are you going to position your hospitals?
A: Well, if you add all the top hospitals in the country there aren’t even 1,500 rooms. So there is enough scope. And if you look at the number of insurance packages the private sector is selling, where are they going to go? Are they going to go to public health providers? No. They have to come to the private sector. So we have not met the capacity.
Even if you ask me today, we are almost full everyday. All the other hospitals have also added to their bed capacity.
So any business needs to borrow money. You cannot develop your business with fresh capital only or zero cost funding. If you want to do that your strategy might take double the years than what we are doing today. So any business there can be a certain level of leverage. We are fine. We really don’t have an issue at all.
LBR: Do you see yourself as a risk taker?
A: I am a risk taker. But of course, you have to take calculated risks. You should at least in your heart know that this is going to be successful and you should have a plan for it. We don’t after everything. When we feel that it is a viable business, we don’t delay. I just go after it. Maybe that is one of the reasons why I have been successful.
LBR: Some of your businesses are planning public offerings soon, how will you use this money?
What is your opinion about the future IPOs? How successful do you think they will be? Since people have already invested a lot of money in the market.
A: It all depends on your pricing structure. I’m sure there will be enough money in the market. Interest rates are going down and more and more people will get in to the CSE. So I think that’s one way people should raise money. If you want to reduce your cost of borrowing it’s obvious that you need to bring zero cost equity. So I’m sure very exiting IPO’s will come in the near future and most of them will be very successful.
LBR: Anything you would like to add?
A: In terms of Softlogic, we want to develop on the retail side. We think there are huge opportunities in the retail side. Softlogic has been very aggressive in acquiring new agencies. We have taken over Xerox, Samsung and Levi’s, is our latest line. So we want to be a big retail player in Sri Lanka.
From Asiri’s side we have looked at new opportunities. If everything goes well, we want to be a regional player. We will look at opportunities in India, Bangladesh, Maldives and Pakistan.
[b]
