|
|
| Economic performance |
| |
Management approach
The John Keells group is committed to sustainable value creation, for its shareholders, varied stakeholder groups and the geographies in which we operate. Our rapid growth in the past 5 years now requires us to increase our investment exposure in the Asian region in order to maintain the momentum of returns our stakeholders have begun to expect of us, and we believe, to do this, we need to improve the competencies of Sri Lankan industry as well as its workforce. Our aspiration to create enduring value for the nation drives us to achieve regional competencies within each of our businesses and our people.
Value creation
JKH's value addition has grown from Rs. 3.45 billion in FY 1997/98 to Rs. 16.23 billion in FY 2007/08; a compound annual growth rate of 16.7 per cent. Of the total value created during the decade, 15.6 per cent accrued to the state coffers while 36.8 per cent was distributed to employees. Total revenue of JKH during the period grew from Rs. 8.68 billion in FY 1997/98 to Rs. 41.81 billion in FY 2007/08.
JKH and its subsidiaries, employ 9,992 persons while creating indirect employability and benefits for an even larger number. While our total numbers of staff have declined compared to 19,834 in FY 1997/98, this is mainly as a result of the group's strategic decision to exit its cyclical tea/rubber plantations businesses. Excluding this sector, the group's employment creation has grown by 37.3 per cent in the last decade.
JKH is on a constant drive to be a superior value creator for its shareholders. Details of our performance in this regard are included in the Investor Information section of the comprehensive Annual Report.
Infrastructure investment
JKH's total investments have grown from Rs. 2.22 billion in 1997/98 to Rs. 23.66 billion in 2007/08, of which 25 per cent is in the ports and bunkering
Additionally, JKH has, as part of activities undertaken by the John Keells Social Responsibility Foundation, invested in public infrastructure relating to irrigation, schools, maintenance of roads and railways, the details of which are included in the Social Performance section of this report.
Reaping economic gains of responsible sourcing
The Group Initiatives function had another successful year with Rs. 220 million of savings derived from the group sourcing initiative. The savings were achieved from 32 categories under term contracts with preferred suppliers, of which 13 categories were renewed in this financial year. The group sourcing initiative is currently in its fifth year of being implemented and is in its second year of being institutionalised across the group. Institutionalisation of the group sourcing initiative was carried out by means of empowering user groups to manage and carry out the sourcing of various high valued products and services. The institutionalisation process has resulted in the standardisation of all sourcing documentation such as requests for proposals, supplier contracts for all sourcing categories and the setting up of systems and processes for vendor management.
The crossselling initiative focused on the reduction of customer acquisition cost to the group companies whilst increasing the overall customer retention by consolidating the group's existing customer database. The crossselling initiative was initially launched in the Transportation and Financial Services sectors with the formation of a groupwide crossselling team. This initiative resulted in incremental sales of Rs. 286 million during the financial year, predominantly from the above two sectors.
Supporting smallscale suppliers
The nature and diversity of JKH's businesses enable the group to bring communities living on the periphery of society into mainstream businesses. The group's engagement across diverse value chains spans the farming community, smallscale distributors and shop owners, among others, in the small and unorganised business sectors, as illustrated below. Our involvement has enabled these smaller suppliers to benefit from technological knowhow, fair prices, market access and sustainable livelihoods.
Sustainable livelihoods for farming communities
Some of our best internal case study examples in the area of supporting smallscale suppliers come from our Consumer Foods and Retail industry group. As a key player in the national consumer food industry, we are heavily dependent on an adequate and safe supply of agricultural raw material inputs at required standards. Accordingly, over the past few years, companies in the industry group have developed sustainable sourcing initiatives and outgrower programmes that have empowered and provided livelihoods to targeted farming communities.
Companies in this industry group have worked with various farming communities over the past few years and been instrumental in rolling out sustainable sourcing programmes for ginger, vanilla, treacle, dairy, and most recently mango and cashew farming communities. These initiatives have involved often creating new supply systems, facilitating financial assistance for farmers, involving the relevant state or other institutions, providing technical and other supports, as well as guaranteed prices and volumes for farmers. The companies, in turn, are guaranteed of good quality and continuous supply.
|
No of participants
as at 31 March 2008 |
No of at participants
commencement of initiative |
| Ginger |
230 |
35 |
| Vanilla |
2,300 |
80 |
| Treacle |
14 |
12 |
| Dairy |
1,200 |
900 |
| Cashew |
40 |
10 |
Creating selfemployment opportunities
Commenced as an experimental move by John Keells Office Automation (JKOA) in 2006 in Colombo, this selfemployment initiative has since grown islandwide to cover a number of the company's key distribution centres.
The programme was designed to enable technically trained JKOA employees to evolve into successful entrepreneurs and carry out outsourced operations. Currently, 40 per cent of the active photocopier machine base is maintained by such outsource partners, while receiving supports and regular monitoring of service quality standards by JKOA to ensure compliance with required quality standards. The model has enabled the company to successfully control the growth in fixed costs and headcount in spite of growth in installed equipment base. The programme has grown to cover 13 service providers as at 31st March 2008 compared to 2, as at 31st March 2006.
Developing small scale service providers
Keells Tours has partnered with 75 of its drivers in a project that assisted them to purchase modern vehicles on a self-financed model. Having negotiated preferred rates on behalf of the 75 chauffeurs, Keells Tours also provided a guaranteed minimum income each month. The programme has been very successful, with all 75 drivers nearing the completion of their four-year lease period, at the end of which they will take full ownership of the vehicles, each worth over Rs. 2 million.
|
| |
|
