S-lon's S.C. Weerasekera on fighting back against the economic crisis

S-lon is the only Sri Lankan thermoplastics brand to have achieved generic status since its inception. Most people refer to any PVC pipe as an S-lon pipe, indicating its generic status and incredible success. “Despite a multitude of challenges brought on by the many recent crises in Sri Lanka such as the 2019 Easter bombings, Covid-19, and the unfolding economic crunch, S-lon has performed very well because we have a culture that is geared to spot opportunity in every difficult situation,” says S.C. Weerasekera, Group Director/Chief Operating Officer of the Capital Maharaja Group, whilst reflecting on bold leadership and contrarian investment strategy during a constricting economic crisis.

Tell us how S-lon has performed over the last few years especially post-2019?

Since 2019, our revenue has grown by 40% annually despite many challenges and the adverse impact to the economy due to the Easter bombings, COVID-19, and the ongoing economic crisis (inflation). A glowing testament to our highly driven and self-motivated staff, who, with their extensive experience and knowledge, enable the company to thrive in challenging market conditions and ready to uncover new opportunities.

Even though we are producers of water management systems, there is a complete range of construction materials under the S-lon umbrella, such as, roofing sheets, water faucets, water pumps, wire mesh for fencing, to name a few. Under the brand name Kevilton we produce, wiring and, protection devices, a lighting range, electrical accessories, and home appliances. Kansai-S-lon markets a range of high quality Japanese non-toxic decorative paints which create a safe place for your home or office. PE+ produces high quality water tanks, ceiling sheets, power tools and cutting discs.

The water management business contributes 65% to the revenue, with the balance 35% coming from other products and brands. Our retail sales comprising households contribute 80% to the top line. All these brands have shown an exponential growth during the last few years amidst these challenges.

Due to the continuous investments dedicated to product quality improvements even amidst the crisis, the Sri Lanka Accreditation Board (SLAB) recently accredited our Mechanical Quality Assurance Laboratory against ISO 17025 standards for plastic pipe testing. Our laboratory is the only one in Sri Lanka to receive such accreditation for its ability to meet international standards for testing.

Can you paint us a picture of what the outlook for the industry is going forward? What will drive demand and growth for S-lon in the years ahead?

How the future pans out would depend on how much of disposable income consumers can set aside for construction, home improvements and repairs. Currently, those disposable incomes are shrinking with accelerating inflation and rising interest rates. However, despite the demand crunch, we continue to invest in R&D and capacity expansion because we believe in this market and its potential for a strong recovery, and we want to be able to catch the emerging growth wave early. Exploring opportunities to export is one of the key indicatives to help the country with foreign exchange earnings by identifying the markets for our value-added products. In other words, the severe crises post-2019 have not stopped us from creating wealth in terms of economic contribution and employment creation.

We are inherently optimistic that things will improve. Sri Lanka will turn around and with the economic revival, we expect exponential growth from the release of pent-up household demand and growth in the commercial segment with the recovery of the hospitality and leisure industry and the resumption of state-sector water and sanitation infrastructure development projects.

The company decided to build a PVC pelletising extrusion machine amidst unprecedented economic challenges and uncertainty post-Covid. Why was this so important?

All credit for this goes to our late Chairman, Mr R Rajamahendran and the current Chairman Mr Sashi Rajamahendran. During the pandemic, when most businesses shut down, our late Chairman motivated us to continue investing in R&D and innovation and to improve product distribution during the lockdowns. Being a visionary leader, he predicted the present debt crisis, encouraging me to consider the possibility of producing machinery locally and exploring export opportunities for our products. He wanted to prepare us for a time when we would face various foreign currency and import restrictions. The current Chairman gave us all the freedom and encouragement to make this project a reality.

That was when we decided to build a PVC Pelletising Extrusion machine in-house without expending resources on importing a machine. At first, my team was apprehensive because that would mean venturing into unchartered territory for the company. They reasoned that we would not be able to find the necessary raw materials locally and would even lack government support because of the import restrictions, which meant that there would not be a benefit in turning out a machine in-house. I convinced them otherwise and everyone plunged into the project wholeheartedly.

We completed the machine in 2022, recovered the investment in a matter of months and saved the company Rs114 million – and the saving keeps growing because it generates a saving of about 25% for each cycle of pelletising. The visionary leadership of Mr Rajamahendran and the dedication of our team have resulted in considerable value creation for the company, cost savings for our customers and foreign exchange preservation for the economy.

I believe this project is a beacon, a shining example to other businesses and engineering professionals in the country. A crisis should not prevent us from achieving great things, creating opportunities to grow and building wealth for our people and the nation by running successful businesses.

Attitude is everything. We need to be optimistic, determined, and tenacious to plot our roadmaps for the future – that would be the difference between wallowing in helplessness during a crisis and taking deliberate actions and assuming the responsibility to achieve sustainable growth.