By Channa Fernandopulle
Cargills (Ceylon) Plc is looking forward to its next wave of expansion consequent to a capital infusion of Rs. 2.6 billion by the International Finance Corporation (IFC) in exchange for an 8% equity stake in the company’s retail subsidiary, Cargills Foods Ltd.
The investment from IFC – the private sector arm of the World Bank Group – is to be directed towards strengthening the company’s extensive supply chain network and expanding its retail footprint through the opening of new Food City outlets while further investments are expected through the partnership, according to Cargills (Ceylon) Plc
Deputy Chairman, Ranjit Page.
Cargills upbeat…
“Through this investment we hope to improve our front-end and open new retail outlets while strengthening our supply chain as well. Organised retail still has a lot of potential for development and we hope to be leading player in this process. Already we invest approximately Rs. 1 billion annually into the retail business and these investments will continue as we hope to improve our supply chain further.
“This endorsement of our retail business by an institution of the calibre of IFC is a major positive for our Group. Our business model is driven by the principle of value creation for consumers, producers and communities through sustainable investment and growth across Sri Lanka. When choosing partners or investors, we are very careful to ensure that our philosophy matches that of our investor and that was one of the main reasons we decided to go with IFC,” he explained.
Cargills Foods is the owner and operator of Cargills Food City, Sri Lanka’s largest private supermarket chain. The franchise sources produce from over 10,000 Sri Lankan farmers across the country and employs over 5,000 people, 80% of which are below the age of 25.
Elaborating on the rationale behind IFC’s investment into Cargills, Country Manager for Sri Lanka and the MaldivesAdam Sacknoted that while growth in the organised retail sector enables benefits in terms of job creation and economic growth, it also has the potential to improve the livelihood of agricultural communities across the island while driving raising Government tax revenue.
“Currently we’ve invested approximately $ 600 million into retail around the world and there are a number of reasons why we focus on the retail sector including the fact that it has the potential to create jobs and drive development. Cargills is already a very large contributor to tax revenue and as Cargills grows, the Government can also grow their revenue but another critical factor is that Cargills can contribute to economic growth outside the Western Province.
“Sri Lanka has enjoyed tremendous growth and there has been a strong GDP growth figure but that hasn’t benefited all parts of the country and all communities in the country equally. Through the expansion of Food City, we see many more benefiting, so we hope to contribute to regional growth, especially in terms of supply chains, so it’s not just the shops but the strengthening of supply chains that we see as a critical element to this project,” Sack noted.
He added that the partnership between IFC and Cargills was also expected to expand into other parts of the Cargills business over the long term with discussions to this effect already having been initiated.
“I’ve been in Sri Lanka for a while now and it’s a sophisticated and complex place to live but surprisingly, modern retail is still somewhat underdeveloped. Only 16% of retail goes through the modern trade, whereas in Thailand its 40%, and in China its 60%, so there’s clearly a lot more opportunity to develop the modern trade in Sri Lanka and that’s another reason why we are investing.
“Part of our objective is to support communities and part of it is to support good business opportunities and we’re convinced there is a terrific growth story ahead for what is already one of the leading firms in Sri Lanka,” Sack affirmed.
www.ft.lk
Cargills (Ceylon) Plc is looking forward to its next wave of expansion consequent to a capital infusion of Rs. 2.6 billion by the International Finance Corporation (IFC) in exchange for an 8% equity stake in the company’s retail subsidiary, Cargills Foods Ltd.
The investment from IFC – the private sector arm of the World Bank Group – is to be directed towards strengthening the company’s extensive supply chain network and expanding its retail footprint through the opening of new Food City outlets while further investments are expected through the partnership, according to Cargills (Ceylon) Plc
Deputy Chairman, Ranjit Page.
Cargills upbeat…
“Through this investment we hope to improve our front-end and open new retail outlets while strengthening our supply chain as well. Organised retail still has a lot of potential for development and we hope to be leading player in this process. Already we invest approximately Rs. 1 billion annually into the retail business and these investments will continue as we hope to improve our supply chain further.
“This endorsement of our retail business by an institution of the calibre of IFC is a major positive for our Group. Our business model is driven by the principle of value creation for consumers, producers and communities through sustainable investment and growth across Sri Lanka. When choosing partners or investors, we are very careful to ensure that our philosophy matches that of our investor and that was one of the main reasons we decided to go with IFC,” he explained.
Cargills Foods is the owner and operator of Cargills Food City, Sri Lanka’s largest private supermarket chain. The franchise sources produce from over 10,000 Sri Lankan farmers across the country and employs over 5,000 people, 80% of which are below the age of 25.
Elaborating on the rationale behind IFC’s investment into Cargills, Country Manager for Sri Lanka and the MaldivesAdam Sacknoted that while growth in the organised retail sector enables benefits in terms of job creation and economic growth, it also has the potential to improve the livelihood of agricultural communities across the island while driving raising Government tax revenue.
“Currently we’ve invested approximately $ 600 million into retail around the world and there are a number of reasons why we focus on the retail sector including the fact that it has the potential to create jobs and drive development. Cargills is already a very large contributor to tax revenue and as Cargills grows, the Government can also grow their revenue but another critical factor is that Cargills can contribute to economic growth outside the Western Province.
“Sri Lanka has enjoyed tremendous growth and there has been a strong GDP growth figure but that hasn’t benefited all parts of the country and all communities in the country equally. Through the expansion of Food City, we see many more benefiting, so we hope to contribute to regional growth, especially in terms of supply chains, so it’s not just the shops but the strengthening of supply chains that we see as a critical element to this project,” Sack noted.
He added that the partnership between IFC and Cargills was also expected to expand into other parts of the Cargills business over the long term with discussions to this effect already having been initiated.
“I’ve been in Sri Lanka for a while now and it’s a sophisticated and complex place to live but surprisingly, modern retail is still somewhat underdeveloped. Only 16% of retail goes through the modern trade, whereas in Thailand its 40%, and in China its 60%, so there’s clearly a lot more opportunity to develop the modern trade in Sri Lanka and that’s another reason why we are investing.
“Part of our objective is to support communities and part of it is to support good business opportunities and we’re convinced there is a terrific growth story ahead for what is already one of the leading firms in Sri Lanka,” Sack affirmed.
www.ft.lk
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