This is Sri Lanka's Millionaire & a Billionaire
Businessman, one of the Wealthiest person,Dhammika Perera's Success Story.
This article was extracted from World famous Business
Magazine “Forbes” .
Dhammika Perera didn’t become one of Sri Lanka’s richest
people by luck. It was actually by design.
Back in 1999, when he was 32, he developed a 20-year plan
for his fledgling businesses with the help of a mentor. His audacious goal:
Become the country’s leader in each of 12 sectors by 2019. He’s already
succeeded in 9 of the sectors, building best-in-class companies in tourism,
banking, apparel and other industries. Indeed, his Royal Ceramics Lanka
appeared in 2010 and last year on FORBES ASIA’s list of the best 200 listed
Asia-Pacific companies with under $1 billion in annual sales.
Empire
Today his empire boasts 23 listed companies–that’s 8
percent of all companies traded on the Colombo Stock Exchange–and dozens of
private ones. His reach extends to Thailand, Indonesia, Japan, the U.K. and
elsewhere, and those outfits employ some 62,000 people.
He supplies Wal-Marts in Canada, makes blue jeans for
Levi’s and produces tea that’s shipped worldwide. With Sri Lanka growing fast
since its 26-year civil war ended four years ago, his companies are taking off.
His listed stakes are worth $190 million. But his three Colombo casinos and
other unlisted assets boost his wealth to roughly $550 million, one of the
country’s four biggest fortunes (see below). He says his companies pay 5
percent of all corporate taxes in Sri Lanka, and his goal is to raise that number
to 10 percent because “more taxes mean [his companies are getting] more
business and a bigger market share.”
Perera, 45, works from a cavernous and spartan office on
the 29th floor of the west tower of Colombo’s World Trade Center, the country’s
tallest building. But this isn’t an executive suite; it’s an investment office.
He doesn’t run his companies–he buys controlling stakes in them. Using
mathematical models that he’s developed over the years, he’s a numbers guy who
hunts for undervalued assets and then swoops in. Once he has the right managers
in place, he gives them their head. A turnaround artist, he gets credit for
revamping much of corporate Sri Lanka, which stagnated during the long years of
war as foreign investors stayed away and competition shriveled.
There are only a handful of pictures in his office, and
two of them are of Perera shaking hands with President Mahinda Rajapaksa. He is
a big fan of Rajapaksa. “Only he had the guts to end terrorism,” says Perera.
“He put himself in harm’s way.” The president, in turn, has appointed Perera to
top government positions. He was chairman of Sri Lanka’s Board of Investment
for three years, until 2010, where he would meet with anyone looking to invest
$50,000 or more in the country. He’s now Sri Lanka’s secretary of transport,
working to develop the highway system as part of a 25-year master plan. He’s
also one of five board members of the Strategic Enterprise Management Agency,
which oversees state-owned enterprises. These posts, all unpaid, have generated
criticism from some for the appearance of conflicts of interest and praise from
others for his service to the country.
Business background
Perera’s story isn’t rags-to-riches. He says his
great-grandfather was the richest person in his home village of Payagala, an
hour’s drive south of Colombo. He owned most of the farmland in the area, but
being rich in poor, rural Sri Lanka was like being middle class in Colombo,
which is how Perera grew up. His father was in the grocery business. He credits
his mother, a schoolteacher, with teaching him cash-management skills. She
began giving him an allowance of $3 a month at age 11, and for eight years he
had to stretch that money to pay for drinks, food and school fees.
A born investor, he started as a teenager by putting
money into a street hawker’s business in front of his uncle’s café. Then he
rented slot machines and installed them inside the café. In 1987, with the
country four years into the civil war, Perera dropped out of the University of
Moratuwa, a top technology school south of Colombo.
Instead, he went to Taiwan for three months of technical
training, then returned home and started a business making slot machines,
instead of just renting them. He hired his 17-year-old brother, Harindra, as
the floor supervisor of their new factory. (Their youngest brother, Anuradha,
was only 15 at the time but now is also in business with them; they have one
sister.) In 1993 he moved into the gambling business itself, opening his first
casino. He’s replacing the casinos now, starting with construction of the
40-story, 500-room Queensbury Integrated Resort & Casino, which will cost
$350 million. But he no longer makes slot machines, and he likes to downplay
his involvement with casinos, saying they account for only 3 to 4 percent of
the total profits of his companies.
New turn
In 1999 his career took a new direction when he found a
mentor in Nadeem ul Haque, the senior resident representative of the
International Monetary Fund in Sri Lanka. Perera says ul Haque, “encouraged
[him] on how to behave, how aggressive to be.” Ul Haque organized a seminar for
him on infrastructure and business development at KfW bank in Germany. Perera
came back “with a new perspective on mathematical models.” He had earned a
better appreciation “for how to avoid risk factors and for cash-flow management.”
Ul Haque and Perera then sat down and drew up the 20-year
plan. With six years to go Perera still needs to conquer 3 of the 12 sectors:
health care, insurance and telecoms. He has plans for the health care and
insurance sectors, but he is still pondering what the right business model will
be for telecoms because the technology changes so rapidly.
Today ul Haque, now the deputy chairman of Pakistan’s
planning commission, looks back at how Perera has been able to maneuver around
Sri Lanka’s often business-stifling government: “I was particularly impressed
by how he converted limited regulatory space into a financial empire. Even more
interesting, he was able to lever his business empire into politics and
established himself at the policy level in Sri Lanka.”
One of the 12 sectors is tourism, and Perera began
investing there in 2000 in anticipation of the war ending. He now has a number
of luxury resorts and hotels–600 rooms in all, with another 1,200 in the
pipeline. Sri Lanka got more than 1 million visitors last year for the first
time. He envisions 2.5 million visitors by 2016 and 5 million by 2020.
A chat with Perera begins with math. He has built his
empire largely through acquisitions–15 in all–and for him, fixing companies
comes down to getting their mathematical models right. His staff researches
business models and balance sheets. “With that knowledge, [we] can identify
companies” that are good acquisitions. He makes it sound easy. “Of course!” he
says.
Failure and success
Some purchases, however, don’t pan out, and Perera isn’t
shy about discussing them. There was a clothing and department store business
he exited after one year because custom duties made the business model
unworkable. He had a small interest in three ships for a decade, but the global
recession that began in 2008 made the shipping business “no longer worth the
headache.” There was a local bank he bought with the idea of using it to buy
other assets and then turning it around. But reviving it turned out to be more
complex than he anticipated, and it failed to give him access to other deals he
wanted, so he sold out after 2 years.
Perera is also proud to recite his successes. Royal
Ceramics Lanka, which makes ceramic tiles and porcelain bathroom fixtures,
earned only $400,000 in 2000, when he bought it; it’s expected to post $18
million in profits on $127 million in revenue for the year ending Mar. 31.
Local bank Sampath went from a $10 million profit in 2007 to a $41 million
profit last year. He saw untapped value in 135-year-old conglomerate Hayley’s
and began buying up stock. He’s now the largest shareholder; Hayley’s is his
biggest deal and, with $615 million in revenue for the 12 months ended Sept.
30, it’s his biggest company. Profits have soared from $2.8 million in the year
ended Mar. 31, 2009, when he joined the board, to $20.5 million over the
12-month period.
Association with Nimal
His right-hand man in deal making is Nimal Perera, who is
unrelated. He met Nimal after buying Pan Asia Bank in 2000. Nimal, 54, worked
there and advised Dhammika on buying shares. After he decides on a purchase,
Nimal closes the deal. Dhammika sets annual goals for each company, and if it
meets the goals, then the management is left alone and “we’re just investors,”
he says. If the company doesn’t perform, then the two “interfere in the
business” to bring it up to par. Turning around a company begins by changing
the management and changing the business model, says Dhammika. He compares a
company with world standards by looking at the best company in that sector and
aiming for that level.
Many of Perera’s private holdings are waiting to reach a
certain size before they’re packaged for an initial public offering. His first
holding company, Vallibel One, contains stakes in seven of his listed companies
and went public in June 2011. He plans to create a Vallibel Two, Three, Four
and Five. Three of these will be for his children, all daughters, ages 13, 10
and 7. “They will own the business, but professionals will manage it,” he says.
And the other two Vallibels? “For charity.”
As a Buddhist, as is most of the country, Perera
meditated regularly for two years beginning in 1999. He credits meditation with
increasing his focus, but he felt that the experience was becoming too intense
and he stopped. He doesn’t like to drink or watch movies. He likes cars but
only Mercedes–he has six of them. He says he’s owned only two watches in his
life, both Rolexes. But these signs of wealth don’t seem important to him. What
he really enjoys is spending his leisure time studying the business models of
companies around the world.
“I need a little pressure on my mind to be happy,” he
says. “Then I feel aggressive, able to work and feel pressure. Otherwise, I’m
lazy, too relaxed.”
The Wealthiest Sri
Lankans
Dhammika Perera’s estimated $550 million fortune is most
likely one of the four biggest in Sri Lanka. It’s impossible to rank the four
piles because much of the wealth is held in private assets, but in alphabetical
order, here are the other three:
Sohli and Rusi Captain
Family is the largest shareholder in conglomerate John
Keells Holdings and Chemical Industries Colombo. Investments include banking,
paint, agribusiness, raw materials, packaging and pharmaceuticals. Stock market
wealth totals $185 million. Father Sohli turned 80 in September; son Rusi, 48,
a graduate of the University of Miami in Florida, is an entrepreneur and
investor.
Harry Jayawardena
Chairman of the Stassen Group, which he founded as a tea
exporter in 1977, and conglomerate Distilleries Co. of Sri Lanka. The
71-year-old was awarded the Knight’s Cross of Dannebrog by Queen Margrethe II
of Denmark for his contributions to Danish arts, sciences and business.
Hari and Mano Selvanathan
The brothers’ empire is largely private. Their listed
companies Carson Cumberbatch, Bukit Darah, Ceylon Beverage Holdings and others
are involved in palm oil, financial management, brewing, real estate and
hotels. Hari, 64, and Mano, 66, are the grandsons of an Indian immigrant who
arrived in Colombo nearly 100 years ago, started a petrol station and never
stopped expanding.
This article Extracted from Forbes.com.
(This story appears in the December 2, 2013 issue of
Forbes Asia)
www.lankauniversity-news.com
