Lanka Sathosa under goes restructuring soon to minimise losses
Sri Lanka’s loss-making state-run retail store chain Lanka Sathosa, which has made billions of rupees of losses amid allegations of mismanagement and corruption is to be restructured soon.
The retail store network registered an annual loss of around Rs.779 million in 2020, significantly lower than the Rs.1.9 billion lose recorded in 2019 while the net loss from 2015 – 2019 amounts to Rs. 11.9 billion and accumulated debt was around Rs.28 billion, finance ministry data shows.
But in 2021 it has recorded trade turnover of Rs. 41 billion as a result of increasing sales of essential commodities at control prices imposed by the Consumer Affairs Authority.
The Sathosa restructuring process will be carried out following the establishment of State-Owned Enterprise Restructuring Unit” with the allocation Rs. 200 million proposed in interim budget 2022.
This will be given priority in accordance with the government’s food security programme under the social security net proposed in interim budget 2022, a senior Trade Ministry official said.
He noted that Sathosa retail outlets numbering around 420 countrywide will be transformed in to profit making entities to sell fast moving food products for the benefit of urban and rural consumers at reasonable prices.
“We have to sell essential goods below cost because as a state enterprise we are required to do so, “he said adding that by restructuring it, the ministry hopes to reduce overhead costs passing its benefit to consumers.
“We have a duty to provide a service to the people to provide food items easing the cost of living, but it is essential to tackle a mismatch via restructuring to make it profitable, “he said.
It has been proposed to introduce modern technology such as an enterprise resource planning system, and controls to cut waste, staff and logistics costs, he disclosed.
Lanka Sathosa is planning to expand the retail chain by another 100 countrywide including the North and East.
20 ‘mega stores’ to sell a wide range of consumer goods and provide banking and provide dining facilities will be opened to meet the competition of super market chains like Arpico, Cargills and Keells Super.