{"id":26756,"date":"2013-11-25T20:00:07","date_gmt":"2013-11-26T01:00:07","guid":{"rendered":"http:\/\/dbsjeyaraj.com\/dbsj\/?p=26756"},"modified":"2013-11-25T22:26:42","modified_gmt":"2013-11-26T03:26:42","slug":"sri-lankan-dhammika-pereras-master-plan","status":"publish","type":"post","link":"https:\/\/dbsjeyaraj.com\/dbsj\/?p=26756","title":{"rendered":"Sri Lankan Dhammika Perera’s Master Plan"},"content":{"rendered":"
\"Dhammika

Dhammika Perera-pic courtesy: Forbes.com<\/p><\/div>\n

By Jon Springer<\/strong><\/p>\n

Dhammika Perera didn\u2019t become one of Sri Lanka\u2019s richest people by luck. It was actually by design. Back in 1999, when he was 32, he developed a 20-year plan for his fledgling businesses with the help of a mentor.<\/p>\n

His audacious goal: Become the country\u2019s leader in each of 12 sectors by 2019. He\u2019s already succeeded in 9 of the sectors, building best-in-class companies in tourism, banking, apparel and other industries. Indeed, his Royal Ceramics Lanka appeared in 2010 and last year on FORBES ASIA\u2019s list of the best 200 listed Asia-Pacific companies with under $1 billion in annual sales.
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\nToday his empire boasts 23 listed companies\u2013that\u2019s 8% of all companies traded on the Colombo Stock Exchange\u2013and dozens of private ones. His reach extends to Thailand, Indonesia, Japan, the U.K. and elsewhere, and those outfits employ some 62,000 people. He supplies Wal-Marts in Canada, makes blue jeans for Levi\u2019s and produces tea that\u2019s shipped worldwide. With Sri Lanka growing fast since its 26-year civil war ended four years ago, his companies are taking off. His listed stakes are worth $190 million. But his three Colombo casinos and other unlisted assets boost his wealth to roughly $550 million, one of the country\u2019s four biggest fortunes (see below). He says his companies pay 5% of all corporate taxes in Sri Lanka, and his goal is to raise that number to 10% because \u201cmore taxes mean [his companies are getting] more business and a bigger market share.\u201d<\/p>\n

Perera, 45, works from a cavernous and spartan office on the 29th floor of the west tower of Colombo\u2019s World Trade Center, the country\u2019s tallest buildings. But this isn\u2019t an executive suite; it\u2019s an investment office. He doesn\u2019t run his companies\u2013he buys controlling stakes in them. Using mathematical models that he\u2019s developed over the years, he\u2019s a numbers guy who hunts for undervalued assets and then swoops in. Once he has the right managers in place, he gives them their head. A turnaround artist, he gets credit for revamping much of corporate Sri Lanka, which stagnated during the long years of war as foreign investors stayed away and competition shriveled.<\/p>\n

There are only a handful of pictures in his office, and two of them are of Perera shaking hands with Sri Lanka President Mahinda Rajapaksa. He is a big fan of Rajapaksa. \u201cOnly he had the guts to end terrorism,\u201d says Perera. \u201cHe put himself in harm\u2019s way.\u201d The president, in turn, has appointed Perera to top government positions. He was chairman of Sri Lanka\u2019s Board of Investment for three years, until 2010, where he would meet with anyone looking to invest $50,000 or more in the country. He\u2019s now Sri Lanka\u2019s secretary of transport, working to develop the highway system as part of a 25-year master plan. He\u2019s also one of five board members of the Strategic Enterprise Management Agency, which oversees state-owned enterprises. These posts, all unpaid, have generated criticism from some for the appearance of conflicts of interest and praise from others for his service to the country.<\/p>\n

Perera\u2019s story isn\u2019t rags-to-riches. He says his great-grandfather was the richest person in his home village of Payagala, an hour\u2019s drive south of Colombo. He owned most of the farmland in the area, but being rich in poor, rural Sri Lanka was like being middle class in Colombo, which is how Perera grew up. His father was in the grocery business. He credits his mother, a schoolteacher, with teaching him cash-management skills. She began giving him an allowance of $3 a month at age 11, and for eight years he had to stretch that money to pay for drinks, food and school fees.<\/p>\n

A born investor, he started as a teenager by putting money into a street hawker\u2019s business in front of his uncle\u2019s caf\u00e9. Then he rented slot machines and installed them inside the caf\u00e9. In 1987, with the country four years into the civil war, Perera dropped out of the University of Moratuwa, a top technology school south of Colombo. Instead, he went to Taiwan for three months of technical training, then returned home and started a business making slot machines, instead of just renting them. He hired his 17-year-old brother, Harindra, as the floor supervisor of their new factory. (Their youngest brother, Anuradha, was only 15 at the time but now is also in business with them; they have one sister.) In 1993 he moved into the gambling business itself, opening his first casino. He\u2019s replacing the casinos now, starting with construction of the 40-story, 500-room Queensbury Integrated Resort & Casino, which will cost $350 million. But he no longer makes slot machines, and he likes to downplay his involvement with casinos, saying they account for only 3% to 4% of the total profits of his companies.<\/p>\n

In 1999 his career took a new direction when he found a mentor in Nadeem ul Haque, the senior resident representative of the International Monetary Fund in Sri Lanka. Perera says ul Haque, \u201cencouraged [him] on how to behave, how aggressive to be.\u201d Ul Haque organized a seminar for him on infrastructure and business development at KfW bank in Germany. Perera came back \u201cwith a new perspective on mathematical models.\u201d He had earned a better appreciation \u201cfor how to avoid risk factors and for cash-flow management.\u201d<\/p>\n

Ul Haque and Perera then sat down and drew up the 20-year plan. With six years to go Perera still needs to conquer 3 of the 12 sectors: health care, insurance and telecoms. He has plans for the health care and insurance sectors, but he is still pondering what the right business model will be for telecoms because the technology changes so rapidly.<\/p>\n

Today ul Haque, now the deputy chairman of Pakistan\u2019s planning commission, looks back at how Perera has been able to maneuver around Sri Lanka\u2019s often business-stifling government: \u201cI was particularly impressed by how he converted limited regulatory space into a financial empire. Even more interesting, he was able to lever his business empire into politics and established himself at the policy level in Sri Lanka.\u201d<\/p>\n

One of the 12 sectors is tourism, and Perera began investing there in 2000 in anticipation of the war ending. He now has a number of luxury resorts and hotels\u2013600 rooms in all, with another 1,200 in the pipeline. Sri Lanka got more than 1 million visitors last year for the first time. He envisions 2.5 million visitors by 2016 and 5 million by 2020.<\/p>\n

A chat with Perera begins with math. He has built his empire largely through acquisitions\u201315 in all\u2013and for him, fixing companies comes down to getting their mathematical models right. His staff researches business models and balance sheets. \u201cWith that knowledge, [we] can identify companies\u201d that are good acquisitions. He makes it sound easy. \u201cOf course!\u201d he says.<\/p>\n

Some purchases, however, don\u2019t pan out, and Perera isn\u2019t shy about discussing them. There was a clothing and department store business he exited after one year because custom duties made the business model unworkable. He had a small interest in three ships for a decade, but the global recession that began in 2008 made the shipping business \u201cno longer worth the headache.\u201d There was a local bank he bought with the idea of using it to buy other assets and then turning it around. But reviving it turned out to be more complex than he anticipated, and it failed to give him access to other deals he wanted, so he sold out after 2 years.<\/p>\n

Perera is also proud to recite his successes. Royal Ceramics Lanka, which makes ceramic tiles and porcelain bathroom fixtures, earned only $400,000 in 2000, when he bought it; it\u2019s expected to post $18 million in profits on $127 million in revenue for the year ending Mar. 31. Local bank Sampath went from a $10 million profit in 2007 to a $41 million profit last year. He saw untapped value in 135-year-old conglomerate Hayley\u2019s and began buying up stock. He\u2019s now the largest shareholder; Hayley\u2019s is his biggest deal and, with $615 million in revenue for the 12 months ended Sept. 30, it\u2019s his biggest company. Profits have soared from $2.8 million in the year ended Mar. 31, 2009, when he joined the board, to $20.5 million over the 12-month period.<\/p>\n

His right-hand man in dealmaking is Nimal Perera, who is unrelated. He met Nimal after buying Pan Asia Banking in 2000. Nimal, 54, worked there and advised Dhammika on buying shares. After he decides on a purchase, Nimal closes the deal. Dhammika sets annual goals for each company, and if it meets the goals, then the management is left alone and \u201cwe\u2019re just investors,\u201d he says. If the company doesn\u2019t perform, then the two \u201cinterfere in the business\u201d to bring it up to par. Turning around a company begins by changing the management and changing the business model, says Dhammika. He compares a company with world standards by looking at the best company in that sector and aiming for that level.<\/p>\n

Many of Perera\u2019s private holdings are waiting to reach a certain size before they\u2019re packaged for an initial public offering. His first holding company, Vallibel One, contains stakes in seven of his listed companies and went public in June 2011. He plans to create a Vallibel Two, Three, Four and Five. Three of these will be for his children, all daughters, ages 13, 10 and 7. \u201cThey will own the business, but professionals will manage it,\u201d he says. And the other two Vallibels? \u201cFor charity.\u201d<\/p>\n

As a Buddhist, as is most of the country, Perera meditated regularly for two years beginning in 1999. He credits meditation with increasing his focus, but he felt that the experience was becoming too intense and he stopped. He doesn\u2019t like to drink or watch movies. He likes cars but only Mercedes\u2013he has six of them. He says he\u2019s owned only two watches in his life, both Rolexes. But these signs of wealth don\u2019t seem important to him. What he really enjoys is spending his leisure time studying the business models of companies around the world.<\/p>\n

\u201cI need a little pressure on my mind to be happy,\u201d he says. \u201cThen I feel aggressive, able to work and feel pressure. Otherwise, I\u2019m lazy, too relaxed.\u201d<\/p>\n

The Wealthiest Sri Lankans<\/strong><\/p>\n

Dhammika Perera\u2019s estimated $550 million fortune is most likely one of the four biggest in Sri Lanka. It\u2019s impossible to rank the four piles because much of the wealth is held in private assets, but in alphabetical order, here are the other three:<\/p>\n

Sohli and Rusi Captain<\/strong><\/p>\n

Family is the largest shareholder in conglomerate John Keells Holdings and Chemical Industries Colombo. Investments include banking, paint, agribusiness, raw materials, packaging and pharmaceuticals. Stock market wealth totals $185 million. Father Sohli turned 80 in September; son Rusi, 48, a graduate of the University of Miami in Florida, is an entrepreneur and investor.<\/p>\n

Harry Jayawardena<\/strong><\/p>\n

Chairman of the Stassen Group, which he founded as a tea exporter in 1977, and conglomerate Distilleries Co. of Sri Lanka. The 71-year-old was awarded the Knight\u2019s Cross of Dannebrog by Queen Margrethe II of Denmark for his contributions to Danish arts, sciences and business.<\/p>\n

Hari and Mano Selvanathan<\/strong><\/p>\n

The brothers\u2019 empire is largely private. Their listed companies Carson Cumberbatch, Bukit Darah, Ceylon Beverage Holdings and others are involved in palm oil, financial management, brewing, real estate and hotels. Hari, 64, and Mano, 66, are the grandsons of an Indian immigrant who arrived in Colombo nearly 100 years ago, started a petrol station and never stopped expanding. courtesy: Forbes.com<\/em><\/p>\n

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By Jon Springer Dhammika Perera didn\u2019t become one of Sri Lanka\u2019s richest people by luck. It was actually by design. Back in 1999, when he was 32, he developed a 20-year plan for his fledgling businesses with the help of a mentor. His audacious goal: Become the country\u2019s leader in each of 12 sectors by …<\/p>\n

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