|
|
| Acquisitions, new business and divestments |
| |
Acquisition in the BPO space |
On 9th April 2008, JKH acquired a 44 per cent equity stake in Quatrro Finance & Accounting Solutions Private Limited (Quatrro F&A) for a value of USD 5.72 million. Quatrro F&A is the India based Financial and Accounting (F&A) business of the Quatrro group, headed by Raman Roy. Quatrro F&A recently acquired the Chicago based Financial Process Outsourcing LLC (FPO) in a structured financing transaction using a combination of instruments including debt and equity. FPO is a niche player in the F&A outsourcing vertical, focusing on small and medium enterprises. FPO currently has facilities in the USA and Mumbai with approximately 500 staff.
The F&A outsourcing vertical has grown rapidly over the last few years as the cost advantages from labour arbitrage are compelling. The investment in Quatrro F&A is a step forward in JKH's plans of building a regional BPO business. JKH currently has BPO facilities located in Gurgaon and Colombo with approximately 550 staff. With the investment in Quatrro F&A, we believe that our presence in the BPO business will be significantly enhanced. |
| |
Investment in the Indian processed meats industry |
| In April 2008, Keells Food Products PLC (KFP) incorporated a 100 per cent subsidiary in India, John Keells Foods India Pvt Ltd (JKFIL), to manufacture and market processed meats in India. The planned initial investment totaling USD 2 million over a period of about a year would involve establishing manufacturing operations as well as a marketing and distribution network in key metros. Initial distribution will also be supported by exports of selected products of our range from Sri Lanka. We target to have our products present in the top 20 metros in India comprising of both tier 1 and tier 2 cities by the end of 2009/10. There is significant potential for the processed meats industry in India, which is in a very early stage of development in comparison to the rapid growth in modern retail formats, presenting an opportunity for the group to leverage its expertise. |
| |
Sale of Unawatuna Walk Inn |
| In April 2007, JKH and its subsidiaries sold Unawatuna Walk Inn, of which the group had an effective stake of 87.29 per cent for Rs. 81.0 million. The group made a book profit of Rs. 43.55 million from the sale. Unawatuna Walk Inn, the owning company of a 20.5 acres of freehold land on Unawatuna beach, which, did not fit with the group’s leisure portfolio development plans. |
| |
Sale of a majority stake in Keells Business Systems |
| During March 2008, JKH sold a 74 per cent stake in Keells Business Systems Limited (KBSL), its systems integration and solutions provider in the IT industry group for Rs. 70.7 million to Co Serv (Pvt) Limited (CSL), which has diversification plans in the South Asian region. The group made a book profit of Rs. 11.6 million from the sale. The sale is a result of the group's portfolio evaluation process whereby we look to dispose of businesses that take up a disproportionate amount of management time. |
| |
Lease on Velidhu Island in the Maldives expires |
| On 25th March 2008 the lease held by the group on the Velidhu resort island, in the Ari Atoll, Maldives, expired. The lease was held by Travel Club Maldives (Pvt) Limited (TCM), a 100 per cent subsidiary of John Keells Maldivian resorts. The 120room resort, operated since 1995/96, was the group's first investment in the Maldives. The group at present has 440 rooms in the Maldives. During the financial year 2006/07, TCM acquired a 14year lease on the 94room Ellaidhoo island resort, which is also located in the Ari Atoll, Maldives, in anticipation of the expiry of the Velidhu lease. The Ellaidhoo island resort was closed for a full refurbishment since May 2007 and was reopened in January 2008, as Chaaya Reef Ellaidhoo, with 112 rooms including 24 water bungalows. We expect the new resort to fully compensate for the loss of earnings from Velidhu by its second year of operations. Earnings from the Maldivian resort cluster is expected to achieve healthy growth in the year 2008/09 given the first full year of earnings of our three new resorts, Chaaya Reef Ellaidhoo, Chaaya Island Dhonveli (also acquired during 2006/07) and the group's first premium luxury resort, Cinnamon Island Alidhoo. |
| |
| |
|
