JAT Holdings was founded in 1993 by Aelian Gunawardene, the group’s Managing Director, after he left his job to pursue a passion for visionary entrepreneurship, creative thinking, and innovation. Determined to build a global brand, Gunawardene, a marketing professional, is credited with building the company into a Rs9 billion revenue company by focusing on innovation, product diversification with a suite of top global and homegrown brands, and superior customer care. JAT is a leading brand in Sri Lanka and is well establishing itself in Bangladesh while growing its overseas presence across the rest of South Asia and Africa. Employing over 400 people, JAT holds market leadership status in wood coatings in Sri Lanka and is the largest partner for the American company Sherwin-Williams’ number one brand Sayerlack Waterbase in the world. Under his stewardship, JAT emerged as the only private company with an A+ rating issued by Moody’s ICRA for five consecutive years. Despite the unprecedented challenges from Covid-19 and the economic disruptions in its wake, JAT will have its Initial Public Offering on the 20th of July 2021 with an offering of Rs2.2 billion, giving the public the opportunity to be part of an organization that is expanding across South Asia. With the IPO proceeds, JAT plans to enhance its state-of-the-art R&D facility in Sri Lanka and develop manufacturing facilities in Bangladesh and East Africa.
Preliminary work on the Sri Lanka R&D facility upgrade will commence in the second quarter of the 2021/22 financial year. Around the same time in Bangladesh, where the company already has a well established brand presence, it will begin construction of a manufacturing plant. Both projects are expected to be completed by the fourth quarter of the year. JAT will then initiate work on a manufacturing facility in East Africa by the second quarter of the 2022/23 financial year aiming for a fourth quarter completion. Having steered the group through the pandemic storm unscathed, Gunawardene is quietly confident about JAT’s growth prospects because of the people-first strategy and innovative culture he has so assiduously established across the group.
While 2020/21 brought burnout, dismay, and the coronavirus infection to many, can you tell us how JAT Holdings is deepening its commitment to a people-first, purpose-driven approach to business?
We confronted many challenges in 2020 and 2021 due to the coronavirus pandemic and the economic crisis in its wake. We ended the previous financial year in March 2020 with Covid-19 adversely impacting our performance, followed by lockdowns for nearly two months. This year, we experienced the second lockdown for about a month, which again slowed down operations and also the recovery from the early 2020 lockdown. During the first near two-month lockdown in 2020 everything came to a standstill, no one had an idea about how the pandemic would unfold and how long the lockdown would last. Uncertainty had gripped the whole world and reality soon set in that Sri Lanka would be ensnared by this unprecedented global crisis not seen in a generation. When the lockdown dragged on for several weeks, businesses everywhere started taking measures that were often drastic, and sometimes painful, to contain dwindling cash flows. At JAT, the shareholders and directors decided to forgo a significant part of their rewards very early on, so as to spare the rest of the teams any pain during what was then clearly shaping up to be a prolonged crisis. As an organization that has firmly established our people at the heart of our growth strategy and success, we took a decision to continue to pay salaries despite the impact on the business. Many of our workers cannot absorb a pay cut, so, although we were aware of the impact that this would have on our profitability, we boldly decided to put their needs first instead.
With Covid-19 continuing to spread, and the lockdown stretching over several weeks, we were forced to introduce a temporary pay cut, which was implemented following discussions with the teams. At the time sustainability was a priority, and it was amazing to see everyone rallying together to come out of the crisis, and lay the foundations for growth beyond the pandemic. Even during the lockdown, we kept production going and ensured our customer requirements were fulfilled, with the same level of superior service. The commitment and passion of all our team members helped us in these toughest of times, and we in return have given back to them by reinstating full salaries by October last year, and also settling in full the arrears from the pay cuts.
Richard Branson put it very well when he said that if you look after your team, your team looks after your customers. At the end of the day, we are successful only if our customers treat us as their most trusted supplier in the market. Customers have a range of options based on price and quality, and we have positioned ourselves as a premium brand. JAT Holdings has the best quality products in the market, and this means that most of these are at a premium price point. However, we do have a range of products that cater to different market segments and needs from finishing and furnishing requirements, to water-based wood coatings, paints, brushes, and premium residential and office furniture.
Since our focus is on the delivery of superior quality products and services, we have invested in our teams to ensure they consistently deliver premium customer service and after-sales care, and this is one of the reasons why JAT is successful and continues to grow in the domestic market and our export markets India, Pakistan, Bangladesh, the Maldives, Ghana, Uganda, Kenya, Seychelles, and Mauritius. The outcomes of our people-first approach speak for themselves. Let me discuss two. First, despite the pandemic risks and economic challenges, our teams continued to innovate and drive business growth.
We recently launched White by JAT to be sold online through an exclusive website, whitebyjat.com. By selling online we have eliminated market intermediaries allowing us to offer this product at a 40% discount with free island-wide delivery, so the cost saving is enjoyed by customers. We also entered a new industry vertical with the launch of JAT Care, the latest contender in personal and home care products market in Sri Lanka. The first products we introduced were JAT Care Hand Sanitizer and JAT Care Disinfectant Surface Cleaner. We entered this space because we felt we had a duty to help the nation’s collective efforts in battling the Coronavirus. Second, amidst the adverse economic conditions, compounded by a month-long island-wide lockdown, we reported outstanding financial results in the first quarter of the 2022 financial year, with revenue reaching a record Rs1.4 billion, up nearly 30% from a year earlier, and after-tax consolidated profit increasing to Rs161 million compared to a Rs 107 million loss a year earlier impacted by the economic slowdown caused by 2019 Easter bombings. There is another aspect to our people-first strategy, the humane angle. Not everything is about the bottom line. We consider it a privilege to be a part of each member of the JAT Holding team’s lives, and we are conscious about their wellbeing and development, and how they cope during a crisis such as the unfolding pandemic. As long as we are able to look after their needs, we will certainly do so.
What is JAT Holdings’ approach to employee wellbeing, especially in the distressing times we now find ourselves in? What is your strategy to make the ‘People Experience’ a differentiator that brings better results to your business?
Our corporate culture embodies the values of work-life balance, and we have created a rewarding and challenging environment that has assured a high degree of employee engagement. There are ample learning and development opportunities to help our employees be innovative and achieve their full potential. Our state-of-the-art office complex at Thalawathugoda houses a gym, auditorium, pantry, and cafeteria that serves lunch to all employees which cost the company over Rs14 million a year. We have also given care and attention to working conditions. Workspaces are ergonomically designed, and the eco-friendly office complex which is surrounded by lush greenery. We always try to exceed employee expectations, and every time they walk through the door, they can be assured of finding counsel, encouragement, a mentor, and even a friend, helping them grow and be the best they can be. At JAT Holdings, employee wellbeing is not limited to mere policy, it’s a top priority across the organization.
During any crisis, resilient leadership matters the most. How are you leading your teams through this crisis, balancing the day-to-day needs of the company while securing future objectives?
Apart from the general mentoring programmes and setting teams achievable weekly targets, we also identify what we like to call Must-Win Battles. This intense engagement ensures teams are constantly improving and contributing towards the overall growth objectives of the company. I am certain we will overcome the ongoing crisis and emerge stronger than ever by the end of this year. Even in a situation like this, because we are so confident in what we will be able to achieve year on year, we have announced that JAT will be listed on the Colombo Stock Exchange. By the 13th of August, we will be a public listed company. We are a 28-year old company, and it gives me immense pleasure as the founder to have been able to drive a company to achieve this milestone. Being a publicly quoted company, all our stakeholders will be able to be a part of our journey and growth and share in our successes. The listing is a testament to our belief in our people and the opportunities we are creating for the company.
Our corporate culture embodies the values of work-life balance, and we have created a rewarding and challenging environment that has assured a high degree of employee engagement