Softlogic Holdings, which controls the Asiri Hospital group and is rapidly building a network of stores, is an emerging third player in the consumer electronics and white-goods retail business.  The top players in this business now are Abans and Singer. Rating agency Fitch Ratings sees Softlogic’s expanding retail chain around the island as a critical competitive advantage of the group.

Softlogic Holdings (SHL) plans to expand the store network to 300 by 2015 from over 150 today. Its electronics brands include distributorships for mainstream names such as Samsung (consumer electronics other than phones) and Panasonic, as well as a host of smaller names, Fitch noted.
“(Softlogic) is an emerging third player in the consumer electronics and white-goods retail business, and started retailing global clothing brands in 2009,” the rating agency said in a report.

“SHL has the third-largest retail network of over 150 multi-brand stores in the country, which Fitch considers to be its key competitive advantage.”

Softlogic Holdings owns a majority stake in Asiri Hospital Holdings which accounted for over half of SHL’s consolidated EBITDAR or earnings before interest, tax, depreciation, amortization and rent, in the first nine months of financial year ending March 2013.

“Asiri benefits from strong structural demand for private-sector healthcare services in Sri Lanka, and has low business risk. Robust demand should help increase dividend income to SHL from Asiri in the medium term,” Fitch said.

But SHL’s information technology segment experienced margin decline in the 2012 financial year owing to lower demand as consumer buying power weakened, and a revised pricing strategy aimed at reducing the substantial domestic grey market for such products.

Softlogic’s retail business performed better, supported by higher credit sales (through bank-cards, and in-house financing).

Fitch Ratings expects margins at both the retail and IT segments to come under pressure in 2013.

Softlogic has said it plans to expand its retail network in its drive to increase sales of consumer electronics.

At the time of its Rs 4.0 billion rupee initial public offering in June 2011 Softlogic group chairman Ashok Pathirage told reporters they were spending about two million rupees per store on average.He estimated at the time it would cost the group Rs500 million to build 250 stores.

Softlogic has the agency for Nokia, Dell and Samsung.