Softlogic to divest non-key sectors to overcome challenges

Softlogic Holdings Chairman Ashok Pathirage outlined a series of innovative approaches his company is adopting to navigate through significant financial challenges. Amidst an economic landscape marked by currency depreciation and a national financial crisis, Softlogic’s strategies offer a blueprint for corporate resilience and adaptability.

Pathirage highlighted the company’s shift from non-core sectors, emphasizing a strategic realignment. “Our business is not real estate,” Pathirage clarified, delineating Softlogic’s pivot towards its primary sectors – healthcare, retail, and insurance. Softlogic will exit businesses where it is not a market leader, notably tourism.

Pathirage was speaking on Friday 15 at the AGM for FY 2021-22 held at the Asiri Central Hospital. Softlogic has already begun discussions on negotiating down debt with the major banks. International financing options are also being actively explored. Pathirage noted that Softlogic’s major international shareholders are supportive of the restructuring efforts.

Softlogic has been compelled to innovate financially. One key strategy involves divesting certain assets to fortify the company’s balance sheet.

Pathirage mentioned plans for potentially listing its IT companies, reflecting a tactical move to capitalize on thriving sectors. This decision could unlock new funding streams, crucial for the company’s long-term financial health. Pathirage’s approach also involves a renewed focus on cost-efficiency and streamlining operations. By doing so, Softlogic aims to enhance its operational efficiency, ensuring that each business segment can withstand economic pressures and contribute positively to the company’s overall financial stability.

In the face of rising interest rates, which have added to the company’s financial strain, these innovative measures are seen as vital for survival and growth. Softlogic’s strategies could serve as a model for other companies facing similar challenges, demonstrating the importance of flexibility and strategic planning in turbulent economic times.

Pathirage highlighted how lower interest rates could significantly bolster the company’s profitability. “Last year, with interest rates at around 31%, our financial burden was immense, leading to a substantial loss of 20 billion,” Pathirage explained. He projected that if interest rates were to stabilize at a more manageable level, say around 12-13%, the company could see a dramatic turnaround in its financial health. “A reduction in interest rates to this level would mean a potential saving of approximately 17 billion in interest expenses over a year,” he added. (TP)

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