In the year Sri Lanka gained independence from Britain Sheik Hassanlly Esufally and his four sons set up a pharmaceutical business. The small family firm on Dam Street in Pettah was then called Hemas Drugs limited.

Today the firm is one the largest diversified listed companies in Sri Lanka.

A Hemas holdings has a 12 billion rupee market capitalization and sells consumer goods, owns hotels and hospitals and operates and owns power plants. Its largest business is manufacturing and marketing fast moving consumer goods.

In an interview with LBR its chief executive and grandson of the firm’s founder, Husain Esufally, discussed the firms heritage and how it’s adapting to the future.

LBR: Hemas started off as a pharmaceutical business. But today your biggest business is FMCG. And you were instrumental in building that business in to what it is today. Can you share with us that experience?

A: It was a very interesting and exciting time. Particularly the early days when we got in to the manufacture of odicologne in collaboration with a French company in the early sixties. We were manufacturing a product called ‘Bia Netra’. And that company was subsequently bought over by ‘L'Oreal’ which is one of the main French companies.

When I joined the business in the early eighties we saw that there was potential to increase our sales of the odiclonge products and to introduce a few new things like talcum powder and lotions.

The important thing was that, up until I joined, the product was being distributed by a third party and we said that we will do this ourselves. Once we took it on we saw the potential of the baby range and how well it was perceived by mothers and the resembling public here. So we started adding some other products to this range. So we built up the range and distribution that way.

The next phase of the evolution was when we introduced tooth paste in the early nineties. That proved to be something very much liked by everybody. At that time the only other tooth paste company was Unilever. So of course, when we launched our product we had some interesting battles with them.

Subsequently ‘Clogard” has become a house hold name in Sri Lanka. The introduction of tooth paste allowed us to expand our business in to small outlets and grocery stores. And we’ve continued to add new products and improve the products that we have. And today the toothpaste businesses are a very strong part of our portfolio. We have very strong local brands and we see tremendous potential in growing that business.

LBR: What are the winners in your FMCG portfolio which are driving that business?

A: We have baby Cheremy which was the brand that actually helped us to expand our business. And it was the leading baby care brand in Sri Lanka.

We have our tooth paste range which is clogard which has a very unique clove oil benefit in managing oral care. That is an important part of this business and we have nearly about a thirty percent market share in this business.

Another recent success has been Diva, a laundry detergent which has accelerated people from the conversion of soap to powder. That has been a very important part of our portfolio. And we have products like Kumarika shampoo and oil and a range of fragrances like Goya, which we have acquired from Reckitt Benckiser and several other products in those ranges.

LBR: Do you expect the FMCG business to be the biggest business in the group in the future as well or will another sector take over?

A: This is a very important part of our business. We will continue to invest and to grow that business. It is not a business that is directly impacted by the prevalence of peace in the country. The growth of this business in Sri Lanka comes with the increase in disposable income and better living standards. I think that is more of a gradual growth that will happen in that area.

If you contrast that with something like hotels where suddenly the environment for tourism has changed significantly, there are many more significant opportunities for investment in hotels than there may have been in the past. By virtue of that the composition of the group may change as we go forward.

LBR: What are your plans for this sector?

A: We think that the game has changed significantly and the output is very good. We presently run three hotels; Serendib in Bentota, Dolphin in Waikkal and Hotel Sigiriya. They are three start hotels and we are hoping to upgrade them into the four star category.

We have a beautiful sight in Tangalle and another one in Kandy. We recently got a concession for a land in the East of Sri Lanka. So these are sights that they're looking at developing now. And we think that there is good potential for this.

LBR: Can you quantify your investments in this sector?

A: Basically for over a period of five years, the total project cost will be in the region of about seventy five million dollars.

LBR: And how do you plan to find the funding?

A: We would have to raise the money for this. Of course there would be debt. So we would be looking at options to raise the capital. Serendib Leisure is a listed company so obviously one of the options would be to raise money via a fresh issue of shares.

LBR: Let's look at the power business. Energy demand in the country is rising and the government is planning to half this demand through coal power plants. In this scenario where would you place your bullish investments in hydro power which is expensive?

A: The government has a long term plan for the energy sector. While coal is a very important part of their stratergy in briging down the cost of energy like you said, the government has also said that it wants to generate ten percent of the power requirements in the country through renewable sources. So we are actually focusing on that side of the government's plan rather than on the coal side because that's open to the private sector.

The government has not yet announced a public-private partnership for big projects like the coal power plant.. So we are concentrating on the ten percent target that it has on the private sector.

We have two mini hydro plants that are operating right now and a third that is under construction. And we're looking at expanding our portfolio and also looking for other forms of renewable energy like wind and bio mines.

Currently our generation here in the renewal sector is fairly modest we have about five mega watts of power that we generate. So we would be looking at generating up to twenty five to thirty mega votes. That would be the type of renewable portfolios that we will be looking at. Of course this is outside as you know we've got a hundred mega vote power plant.- Heladhanavi, which is a joint venture. That is aside from this.

LBR: In which sector do you foresee the toughest competition in the next five years?

A: I think it would perhaps be in the FMCG section because that is an area as you know is very competitive there are very big multi nationals and Indian players who are actively looking at these type of markets. So we expect a lot of competition but we are not unduly worried by it because we have been facing this competition over the years and we understand our customer better than some of our counter parts and we would continue to look at it in a innovative way and create new products.

The best way is to be excellent with the products to manufacture and make sure that you’re better admitting the consumer needs than the competition. So yes, we constantly bench mark our products with the best in class products out there and we constantly look into improving our quality in keeping it relevant to our consumers.

LBR: Where is your biggest focus right now?

A: I would say right now we are looking in terms of new investments as we mentioned in the hotel sector.

We are looking at our hospital business because that's the business we have entered very recently; it’s been nearly two years. We are now at a stage where our operations have come to some sort of a mutually and we’re thinking of expanding here in Sri Lanka as you know health care is something that has a tremendous demand for.

We have a very interesting family health care model that we would look to expand as we go on and the power business too. And quite apart from the expansion within Sri Lanka we are seeing weather we can expand our food print house as a country.

LBR: Do you have plans to diversify to any other sector in the economy?

A: Not at the moment because there is o much scope for expansion here. Principally we're looking at these processors.

LBR: What is the outlook like for the group this year?

A: This is very positive i think with the improvement of economy and all the economic fundamentals look good here so we are extremely positive about our performance not only this year but on going forward as well.

LBR: Is there anything else that you would like to add in conclusion?

A: Just to say that it is a very exiting time for Sri Lanka. We are tremendously optimistic and bullish about the future of our nation and we are looking forward in participating in the growth of the country as we go forward.