Several Indian companies have planned investments in Sri Lanka in the coming years. According to data from the High Commission of Sri Lanka in India, some big Indian companies operating in the Sri Lankan market include CEAT, Gujarat Glass, Indian Oil Corporation, Neelkamal Plastics, Gujarat Ambuja, Bharti Airtel, National Thermal Power Corporation, Welcome Hotels, Larsen & Toubro, Carin India, and Mphasis, among others.
As Sanjay Tiwari, Founder and Past President of the Indian CEO Forum (ICF), Sri Lanka, and Executive Director & CEO, Piramal Glass Ceylon Plc, says, "We (Indian companies) have a significant presence in almost all fields. In the ICF, we have 65 members running either Indian companies, multinational companies or local companies. Indian companies are successful in Sri Lanka, be it energy, packaging, infrastructure, automobile, pharmaceuticals, food, beauty care, rail, tourism, etc. Energy is one area where one can see a lot of opportunity in Sri Lanka. The second most important area of investment is education."
Sri Lanka promises a conducive atmosphere for Indian companies to invest in the market. Several renowned Indian names such as UltraTech (Aditya Birla Group), TATA Group, Piramal Group, Indian Oil Corporation, Ashok Leyland and Asian Paints have been operating in the country for a long time.
As Keshav Hegde, Country Head, UltraTech Cement Lanka, a company that began operations in Sri Lanka almost two decades ago, says: "During the past decades, most of us have been expanding our businesses, and we are well supported by both the government and the Indian High Commission. There are interactions with various government agencies; overall, it is a conducive business environment for Indian companies to invest in the manufacturing and tourism industries. Further, now that a lot of emphasis is given to infrastructure development, there is a big scope for the Indian construction industry to participate in this growth journey. Indian products are considered premium quality and there is a greater level of appreciation with respect to our culture, cinema and music."
Speaking on the country's upcoming infrastructure activities, Rajeev Mehrotra, Chairman & Managing Director, RITES, shares, "Sri Lanka has good infrastructure and the country is certainly focusing on quality infrastructure."
Tiwari adds, "There are a lot of opportunities for investments in Sri Lanka as most things are imported. Looking at the strategic location, port efficiency, and proximity as close as any state in India, Sri Lanka can be the base for any big set-up, provided investments are fully automated.
Sri Lanka is a business-friendly, small and quality-conscious market. One of the main challenges, though, is the availability of skilled and unskilled labour. There are many loose ends from both sides if we refer to the FTA, which is under negotiation for a long time."
The Lanka set-up
UltraTech started operations in the Sri Lankan market almost two decades ago. "Our volumes have grown threefold during this period," says Hegde. The company has a bulk terminal with an installed capacity of 1.5 million tonne, and sells two types of cement in the Lankan market: UltraTech OPC and PPC cement. "Our bulk cement terminal was set up in Sri Lanka in 1999; thereafter, for the past 18-19 years, we have progressed year-on-year in terms of volume output and turnover."
The company started with an installed capacity of 0.6 million tonne per annum and has now expanded its cement packing capacity to 1.2 million tonne. It has four cement storage silos with about 8,000 mt capacity, which ensures cement is available for customers in Sri Lanka 24+7 throughout the year. UltraTech operates with three chartered cement bulk carriers with capacity from 17,000-20,000 mt; these ships exclusively engage in getting the cement from its mother company's manufacturing plant in Gujarat. The company has a distribution network of 120 dealers spread across the island nation.
Its plant is located at Peliyagoda, Kelaniya, where cement is stored in 4 + 7,500 tonne capacity concrete silos. A sophisticated bulk cement terminal, which subscribes to all environmental norms and ensures good value-addition, dispatches cement in bulk form to ready-mix concrete (RMC) and asbestos plants. A modern Italian, Ventomatic machine helps pack cement in 50 kg paper bags to service customers. Through its principals, the company operates a fleet of chartered ships to transport cement. A fleet of dedicated cement bowsers is also in operation for transportation from Colombo port to the plant.
As Hegde avers, "In Sri Lanka, UltraTech is the only one single-source cement supplier in the market and, owing to its consistently superior quality, has become the first choice among discerning users and construction professionals. We have a market share of close to 18 per cent, and are one of the valued suppliers for several infrastructure projects in Sri Lanka, such as the Southern Expressway, Sino Hydro, Colombo Port expansion project, Moragahakanda Irrigation Project, Kaluganga Irrigation Project, Outer Circular Highway Phase-3, Central Expressway, and Colombo-Katunayake expressway, among others."
For its part, Piramal Glass Ceylon (PGC) has been present in the Sri Lankan market since 1999-2000; it acquired Ceylon Glass, a listed company, during that time. "We are into the manufacturing of glass containers for all segments, namely food, pharmaceuticals, agro chemicals, beverages, cosmetics and perfume, wine and liquor," says Tiwari.
"PGC started with a 100 mt per day capacity until 2006. In 2007, we invested $30 million in the relocation of our manufacturing facility and expansion to 250 mt per day; we further invested $20 million to expand to 300 mt per day in 2016-17." Notably, PGC has also invested in the renewable energy space by putting up the country's biggest rooftop solar installation of 3 MW at Horana.
Meanwhile, of the total projects executed by RITES, 353 ongoing projects in domestic and international markets have a value of over Rs 10 million, indicating strong revenue visibility. Speaking of its international presence Mehrotra says, "There are several countries we are working with, including Sri Lanka, Bangladesh, Myanmar, Nepal, Mauritius, etc." Specific to Sri Lanka, the company has been involved in the supply of six sets of broad-gauge diesel electric multiple units and 10 broad-gauge diesel electric locomotives to Sri Lanka Railways. "We have completed two railway workshops in Sri Lanka and are in the process of completing a Rs 6.7-6.9 billion export order of 10 locomotives of 3,000 hp for the country," he adds. "They have a line from Jaffna to Colombo and a new line coming up in the entire west coast."
UltraTech has been looking for good opportunities to expand its capacity and set up manufacturing facilities in the northern and eastern markets, depending on feasibility. "We consider Sri Lanka our strategic core market and would like to grow and have a strong footprint in both the B2B and trade spaces," shares Hegde. "We have grown more than double digits in the past two years and have a similar growth target for this market." The company is open to associations with Lankan companies in the areas of ready-mix concrete, building materials and construction-related business opportunities within the framework of its corporate vision of being
'The Leader in Construction Solution'.
PGC, too, has expanded its capacity to 300 mt keeping in mind domestic market growth in all segments, which means growth in volumes by over 20 per cent.
"At Piramal, we always look out for strategic partnerships and investments related to our industry or any sector that complements our core strategy," says Tiwari.
Clearly, with the historic legacy between both countries, opportunities unveiling are aplenty!
"We require collaboration of foreign investors."
India is a very important market for Sri Lanka because it is its No. 1 trading partner, No. 1 generator in terms of tourism arrivals and among the top five foreign investors in Sri Lanka, says Upekkha Samaratunga, Minister (Commercial), High Commission of Sri Lanka in India.
She shares more on the bilateral relationship between both countries.
Trade: Total trade between the two countries stood at US$ 5 billion in 2017. Of that, we have exported goods to the value of $689 million and India has supplied goods to the value of $4,498 million.
Construction: In Sri Lanka, we have over 2,500 registered local construction firms. Government policy encourages private investment in several infrastructure projects such as water supply, wastewater disposal, power generation, roads, industrial estates and car parks, etc. The sector is being constantly innovative with services that set or match global trends such as green construction, soil and geo-technology, which have helped place it higher on the global construction map. We require the collaboration of foreign investors to develop the construction industry and, therefore, encourage Indian companies to invest in construction and infrastructure development projects in Sri Lanka.
Investment opportunities for Indian companies include: Mixed development complexes and other commercial facilities in Colombo and other cities; housing -apartments; export processing zones with state-of-the-art technology; warehousing and logistic centres, etc; recreational activities (theme parks).
Indian companies have a considerable presence in Sri Lanka: We have the Tatas in the hotel industry; CEAT; Welcome Hotels; Ambuja Cement; Bharti Airtel; Lanka IOC (Indian Oil Corporation); to name a few Indian investments in Sri Lanka. There are Indian banks, such as State Bank of India, Indian Bank, ICICI Bank, Indian Overseas Bank, operating in Sri Lanka as well.
Sanjay Tiwari, Executive Director & CEO, Piramal Glass Ceylon Plc, explains the support extended by both the Indian and Sri Lankan governments to support Indian companies in establishing a presence in the Lankan market:
The Board of Investment (BOI) of Sri Lanka, which is a one-stop shop for any foreign investor, helps companies set up and establish their base in the country. The government and agencies are friendly and welcome foreign investment. You need investment approvals with all the benefits of taxes and import concessions; all these approvals are given by BOI. Approval for visa and employment eligibility is also facilitated by BOI, thus easing out the process.
From the Indian side, you need the RBI's approval for offshore investments, which is easily possible provided all documents are in place.
- SERAPHINA D'SOUZA
Avenues of Investment
Land of Opportunities