The company has reported double year on year (YoY) growth over the past three years and sentiment amongst its personnel is high. During the conflict years the Group made what appeared then to be a risky investment when they started “Northern Power Company” supplying electricity to Jaffna, especially as access at the time was only by sea or air. Discussing this aspect and the MTD Walkers corporate experience with Faraz Shauketaly was MTD Walkers Plc Deputy Chairman Jehan Ameratunga. Excerpts:
Question (Q): What does MTD-Walkers do?
Answer (A): MTD Walkers is a turnkey infrastructure solution provider. The group has the skills to undertake any type of infrastructure project-highways, bridges, water supply and drainage, breakwater, harbours and power projects. The company is also involved in steel fabrication and mechanical engineering services which support Infrastructure projects.
By our latest acquisition, the company now has skills to undertake marine engineering works which will open up a new vista of business for Sri Lanka.
We are involved in all spheres of infrastructure with design capability. Complementing this activity the company has inhouse skills to structure financing and promote public-private partnerships (PPP) and BOT projects covering the full infrastructure cycle.
Q: How Do You View Sri Lanka’s construction industry?
A: As you are aware, Sri Lanka’s development has taken off, recording a7-7.5% GDP growth year on year which demonstrates the infrastructure development that is taking place within the country. Also, any infrastructure development revolves round construction activity and if we are to achieve the goals set by the Government of Sri Lanka (GoSL), the construction industry will expand many fold in Sri Lanka.
In a country such as Sri Lanka where we don’t have resources such as steel and oil for development of heavy industry, the construction industry plays a vital role in translating growth countrywide with a multiplying effect and affecting major sectors of the country’s workforce across the land.
If I may explain further, the construction industry is the single largest employer of machinery & HR in Sri Lanka and with infrastructure development countrywide, this will have an effect on the people in all the provinces.
Q: What level of investment has Walkers made?
A: Our balance sheet reflects the considerable investments made over the past three years. We have doubled our turnover YoY for the past three years and such achievements cannot be obtained unless a significant investment has been made in men and machinery, which is the philosophy that drives our forward march.
Q: What is the level of employment at MTD Walkers?
A: The Group employs 2,000 skilled and unskilled workers.
As an industry rule of thumb every direct employment accounts for another three or four indirect employment opportunity. I would also like to elaborate on the fact that we are an equal opportunity employer and we place emphasis to our human capital development, which is one of the group’s major philosophies.
Q: What can GoSL do to make doing business easier?
A: In my view GoSL must look at three aspects in order to develop the construction industry. Firstly open up more funding sources to the industry which co-relate to the projects. There are no made to measure packages in this industry when it comes to financing and hence innovative funding needs to be looked at.
Secondly, the government should introduce a good skills training authority and Institutes in order to feed the industry with the required human resources and thirdly, the government should drive PPP.
We in the industry see great potential for export and expansion within the region and even to a lesser extent globally. The government should try to provide support services and necessary financial bonds for Sri Lankan companies to set up and participate in the international construction market.
Q: How does the current tax regime impact on your business and what are the amendments you lobby for?
A: Taxes in the industry are by and large fair. Most construction equipment can be imported at a lower tax/duty rate. What is important is to provide benefits for human capital development, investment in training, manufacture of construction materials et al.
Q: What is the company’s business model?
A: As explained earlier we see ourselves as a total infrastructure developer. Our business model is to design, build & finance large infrastructure development projects.
We would like to migrate from a contractor to a developer and partner with the government for large infrastructure developments. We intend making available those services to large scale private infrastructure developers as well, who may develop townships, airports, marinas, etc.
Q: And your vision for the Company?
A: To be Sri Lanka’s No 1 infrastructure developer and to be regarded as the country’s choice employer and a socially responsible corporate citizen.
Additionally our vision is to attract the world’s large scale infrastructure development funds to partner the Government and in doing so ease GoSL’s burden in this regard.
Q: What of your Expansion Strategy?
A: We are always hungry and constantly looking for opportunities to grow horizontally and vertically. At this stage I cannot be specific to you but we do have the appetite to grow. If you look at our history our growth has been mainly driven by acquisitions vs. organic growth.
As we speak now, our civil engineering company leads the pack but I certainly believe that all the other industries such as mechanical engineering, fabrication and piling are all in growth mode and all will develop to be stars in the years to come. Our newest acquisition in marine engineering will be our medium term star as the potential for such an industry in Sri Lanka being an Island is tremendous and I expect this to be a fastest growing industry.
Q: Medium term analysis of Sri Lanka’s economy?
A: As I mentioned earlier, GoSL has set its medium term goals which is to achieve a 7% YoY growth and a USD 4000 per capita income. I think the economic policies have been laid down and have been fairly consistent. An economy that is expected to grow at this pace cannot be supported by internally generated funds alone.
We must generate FDIs. Further, long term foreign borrowings, corporate bonds and other such instruments should be utilized.
The banking sector needs to expand to support such growth strategies laid out by GoSL. However in the last year there was some setbacks due to all the variables not moving in tandem and was aggravated by the economic crisis and the general slowdown of the world economy.
Q: What is your contribution to re-building the economy in conflict areas?
A: There is no better company to showcase support for the former conflict areas other than Northern Power Company. I’m proud of the achievement of this company of ours. We invested our own funds in setting up the power plant amidst great difficulties during the conflict period as no financial institutions were ready to provide us with project finance.
We set the plant up when access to the area was only either by air or by sea. Our commitment to the people of the area is amply demonstrated and we were recently awarded the Global Commerce Excellence Award from The Central Bank for Excellence.
We set up this plant in order to provide much needed electricity to Jaffna’s residents which I believe built a bridge between the Government and the people of the North-it exemplifies the commitment of this government towards rebuilding the North. The world must know that despite all the odds, our staff braved those odds and our shareholders braved those risks in order that we delivered what the government wanted us to do. It is a singularly terrific undertaking which we have delivered with pride.
Q: Are there any innovative instruments that you can suggest which can be used to develop infrastructure?
A: Yes, I believe that it is an opportune time for the country to set up an infrastructure development fund. Infrastructure development funds in and around this region have been successful models which have been operating without Government finance and have been attracting funding from Regional Infrastructure funds, REITs, etc. They maybe a catalyst to draw in foreign development funds and to develop BoT models for PPP. India has implemented this concept successfully and Sri Lanka can use this as a model of development. Indian model has attracted NRI (Non Resident Investment) funds which may be another idea for Sri Lanka to follow.
Q: Do you believe that your company’s financial position offers investors value for money?
A: As you know we have given the lead -we were the first company to seek a listing on the CSE and we are now one of two companies to be listed on the CSE.
We believe our investors have seen a growth in their share value and sentiments expressed by shareholders at AGMs have been encouraging. We are a company with good corporate governance and transparency.
The other objective is to give our shareholders value for their investments which we believe we are doing. So yes, our company does offer value for money. faraz@thesundayleader.lk.
source - www.sundayleader.lk
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