#10 MANJULA MATHEWS

JOINT MANAGING DIRECTOR, Dunamis Capital

Dunamis Capital has three subsidiaries, First Capital,Kelsey Homes and Premier Leather. First Capital is currently the most profitable, but the group is quickly scaling up Kelsey and Premier. Manjula Mathews runs Dunamis with her brother Dinesh Schafter. Excerpts of an interview…

What is the challenge before you right now at First Capital?

Our focus is to build First Capital as Sri Lanka’s leading investment bank. As part of that vision, we acquired a stockbroker last year, DNH Financial, and rebranded it as First Capital Equities. We’ve also explored widening our services to corporate finance and advisory. We’d like to be in mergers and acquisitions so we’re looking broadly in that direction. The primary dealership is a major contributor to our profits. We’re trying to balance that out by growing other parts of our business so they can also contribute effectively. This year we’re the leading manager to list debenture issues for the year. Our asset management portfolio has increased four or five times. First Capital has become a stable contributor to profits. If it can continue to have a bottom line of Rs.500 million each year, I’d be happy.

We’re heading into a low-interest regime. Primary dealers usually thrive in volatility not when rates are predictable?

Primary dealerships make more money when the rates are high. When the rates are low, you have significantly fewer opportunities. But if you’re attuned to the market and astute, you can make money on the volatility. You basically need to look for the small fluctuations and capitalize on these. We saw First Capital report Rs 870 million for the first six months this year, but due to the nature of our business, we don’t make that money all the time. We’re happy to keep treading water, stay in the game and make the small amounts of money that we can. We need to keep in sync and forecast what we think is going to happen. Because when the unexpected happens, you can lose money.

What’s the future of Kelsey?

At Kelsey, we’ve seen good progress this year. We’re building 50 houses right now in Mt. Lavinia, and will launch a similar project in December. We’ll continue to build luxury homes. There are lots of players in low-end housing so we won’t be looking at it. We’ll continue to focus on a few big projects as opposed to many little ones because that’s where we see an opportunity and that’s where we can maximize return.

Can you talk about your artificial leather business?

We launched Premier in November 2013 as a BOI company with Rs200 million of equity capital and funding. We started putting products out in June and have seen sales pick up monthly. Our research shows a huge market for artificial leather. There is no other manufacturer in Sri Lanka. All the artificial leather is imported – and it’s a significant amount – and has no real standard. We have some previous experience in this area from a joint venture with a vinyl flooring manufacturer, which uses similar technology, so we had some understanding of this market. The numbers have been good, and we expect to break even in the course of next year. We’re already supplying automotive companies and shoe manufacturers. We plan to introduce flooring as well. We’ve made contacts for exporting, but won’t pursue those till we make significant inroads into the local market.

What are your deliveries in the next two years?

Dunamis will continue to look at making selective investments. Right now we manage our own fairly significant equity portfolio because we saw opportunities there. We want to partner where we see opportunity for small stakes in well-managed companies. We might work with companies who need funding and expertise and help them maximize return.