Richard Pieris Arpico Finance Limited is the youngest Finance company in the industry starting operations in May 2013. It has completed its first year with success and the Finance business growth rate expected in the coming year is 15 to 20 percent, says the Chief Executive Officer K. M. M. Jabir.
Speaking to The Sunday Leader, the CEO says that Arpico is predominantly known for rubber and plastic products, but today, it is a well diversified entity spreading into 51 areas contributing to the Sri Lankan economy such as being the largest Tea, Rubber and Plantation holders, and the largest Supermarket Operator offering over 45,000 range of products to customers.
“Richard Pieris group is also the largest employment provider in the country with a 40,000 employees. That’s only the direct employees and it is much more when considering the indirect employees. As such, Richard Pieris Group is contributing immensely to the country’s economy,” said Jabir.
Commenting on the brand name, CEO Jabir pointed out that the Richard Pieris Arpico Finance, is the only finance company which is under the umbrella of Richard Pieris group.
Consolidation of Finance Companies
CEO Jabir also noted that the talk of the town is the consolidation process of the finance companies . “I see the move by the Central Bank as an initiative to place the financial sector of the economy in an upper pedestal. We have a big challenge, since we are very new and the youngest.
The Central Bank has set a criteria of Rs. one billion core capital and Rs. 8 billion asset base. The Central Bank not only came up with this proposal but also came up with suggestions. We have the solid backing of the 84-year-old Richard Pieris Group, to meet those challenges steadfastly “ he observed.
“We are not an exception to the requirements of the Central Bank where the consolidation process is concerned. As such we are in the negotiation mode to merge with some finance companies,” said the CEO. The negotiation process is on but Jabir declined to name those finance companies until the deals were finalized.
“We are negotiating with five companies and anything could materialize,” he said.
Due Diligence
Eight audit firms were engaged by the Central Bank to provide Due Diligence reports on all finance companies and that has been completed. The valuations have been done and the benchmark prices have been given for the people who are going to acquire/merge , they can start with the benchmark price for their negotiations. It’s the Central Bank that facilitated that process, which has put all finance companies on a very good position.
The merger deadline is given as December 31, 2014 and all the criteria set by the Central Bank has to be met. By June 30, they have to identify their partners and the CB has to be informed and thereafter the amalgamation process takes place.
Expressing his views on the issues in the process, Jabir said the pricing had to be agreed on as some bargain for a higher price. However, with the Central Bank initiated Due Diligence report identifying the real value of the companies, such firms would not be able to call for exorbitant prices.
Consolidation concerns
Commenting on concerns that some staff in certain finance companies could be retrenched, Jabir said that was only for the CEOs. “There are 58 CEOs in the finance companies and the Central Bank has brought that down to 20. As such there will be only 20 CEOs.
“Meanwhile, the Central Bank has also said that nobody would be retrenched. CB is very much focused on it and the Governor of the Central Bank, Ajith Nivard Cabraal had said, ‘Don’t look at short term. Look at long term.’”
He also pointed out that the per capita income of Sri Lanka is to be US$ 4,000 by 2016. “Beyond that we have to sustain that as a middle income level country, and we need a financial growth. The idea of the Central Bank is to put on stronger companies so that money could be brought in from abroad at a cheaper cost to invest in Sri Lanka and increase production.
That will place the growth of the country on a higher pedestal. And for that, you need people. So if some are retrenched thinking of the short term, it will not serve any purpose. It’s better to sacrifice for a short period. Once the consolidation process is over, they could go for higher growth, and the Central Bank has said that they would facilitate all such measures,” said the Richard Pieris Arpico Finance CEO.
And these people are already in the industry and experienced. Instead of recruiting new staff and training them, it’s far better to keep the staff that is well versed in the industry, he added.
Success
At present, the company is servicing to the SME sector and not yet gone to the micro level financing.
The success of the company is due to the backing rendered by the Richard Pieris Group, the highly respected brand name “ ARPICO”, and most importantly, the well experienced, dedicated, committed, ever willing staff members we have from the inception.
“All our employees are hand picked, who have a reputation for being trustworthy as well as working as one team and family. Our structure is now stronger, internal controls are stronger and now ready to expand.
Commenting on the industry itself, Jabir said the industry was very competitive. “One may ask how we are going to differentiate. My answer to that question is that one side is the demand driven approach and the quality of service.
Service Quality
Elaborating on the quality of service, Jabir said seizing of vehicles and going for legal action on customers who fail to meet their commitment is not always the case with Richard Pieris Arpico Finance.
“What we do is at the time of granting customer requirements, we have an interaction with the customer. There we identify the customer’s strengths and weaknesses and suggest remedies for the weaknesses.
We advise them to progress keeping in mind the financial strength of the company and grow to become a big entity. That’s the kind of approach that works and during the last year, it did work and our clients are a happy lot.
“Our customers have commended us for bringing them on to the right path. They say that we did not keep on harping ‘target… target’, as some other companies do, but showed them the way to actually achieve their targets,” said Jabir exuding confidence
He also stressed that the most important factor is to understand the needs of the customer and deliver the services to match those needs. “That way, both we and our customers are happy resulting in both being more stable. That’s the different approach we are taking.”
Superior IT Systems
The second thing is the faster quality of service for which our systems and staff are very much geared to. We have an IT development company in our Group. They have been developing an in-house system with cutting edge technology.
With our vast experience we have eliminated all the weaknesses in our industry, which we have brought in to our IT system. So with our competitive advantage compared to other systems, we are well ahead as the superior IT systems are the backbone of any entity today.
Expansion
“In the first financial year we were crawling, and now in the second year, we will be walking. The third year we will be running and in the fourth, we will be flying,” said the delighted CEO and added, “All this is possible with the strong backing of the Group, loyal and satisfied customers, which we experience day by day.”
Our main focus is to establish our branches in all 38 Arpico Super Centres all around the country, where the service will be faster in addition to ample parking space available at the Arpico Super Centres. The faster service is with our cutting edge technology. As mentioned earlier, with our demand driven approach, we will never say no to our customers.
This is going to be very special as we plan to expand our branch network. Also, to motivate our staff and bring them to an upper pedestal with more training and knowhow which we will provide with our Group strategy, handled by our HR section. These efforts will inculcate a very good culture within the company with our staff members.
For the supermarkets alone there are over 1,500 suppliers. In the tire industry, there are over 7,500 dealers buying tires from Arpico. There are enough and more businesses within the group which we will tap from this year onwards. So there are a lot of business opportunities available.
Plantations
On the plantation sector, he said the present Chairman of the Group, Dr SenaYaddehige, took over the Richard Pieris Group through the stock market 12 years ago. A Sri Lankan born British scientist, he has plans to diversify this company, which was earlier a plastic and rubber manufacturing company. The company is already diversified into super markets, pharmaceuticals, etc. and will move into the hospitality sector too.
The plantation sector too was begun in 2002 mainly with Tea and Rubber. In the plantation sector alone, there are 22,000 employees. It is also the Chairman’s vision to uplift the standards of our employees in the plantations sector. We want to provide them with micro loans from our finance company to uplift their standards of living by financing their efforts to cultivate vegetables and milk farming, for which the company will provide them with cows.
Their produce, vegetables and milk will be supplied to the Arpico Supercentres sans intermediaries resulting in the standards of employees’ economy going up and consumers not paying a high price for vegetables and milk products. For that we are setting up a supply chain for the process and with that established, we will start financing our own employees to start their own businesses while working within the Group.
Jabir also said the company is into oil palm cultivation too and added that cultivation has already started in areas like Matugama and Horana.
On the Company exports, he said the Arpifoam, exporting natural foam, brings in considerable foreign exchange to the country. Arpifoam is the best in the world and naturally has a very high demand, said CEO Jabir.
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