STO is the largest trading organisation in the country, and it’s slowly backing out of retailing. The company’s CEO and MD Husen Amru revealed a project that we think would be of great interest to resorts and potential investors: they are planning on buying produce from local farms and act as a distributor.
They intend to match the prices of imported produce and control quality – good news for those interested in quality local produce.
Hotel Insider: You’ve recently merged your electronics and home improvement operations, they now operate under the same roof again. Can you tell us why?
Husen Amru: We wanted to do two things. For one, we didn’t want to be involved in the sale of small electronic goods like headphones, phones or speakers. Secondly, home improvement, electronics and the supermarket are actually under one umbrella. And ideally, we want to have all those departments under one roof. That’s the plan.
Hotel Insider: That’s great. Now, can we talk about the Makita sales promotion that’s on-going? How has the reception been so far?
Husen Amru: It’s doing really well. Makita is one of the oldest brands in the country and it’s really gained customer loyalty and trust over the years. But recently we had a little issue with spare parts and inventory and it created a gap that was filled in by a few other brands. But we’ve since updated our inventory and got spare parts, and we maintained a strong presence before going ahead with the promotion. Sales have really picked up and we’re seeing some big shifts again towards Makita from clients who’ve chosen other brands.
Hotel Insider: And do you have anything exciting for your resort clients?
Husen Amru: Yes, air conditioners for example. We carry Hitachi products and we include servicing as well. We’re also selling Philips and Samsung TVs – Philips is a bit more sophisticated than Samsung but both brands are excellent.
We’re also undertaking a project that might be of interest to our resort clients. Our aim is to establish food security in the Maldives. We’re an import-heavy destination. You probably know that the attacks on Saudi oil fields have impacted petrol prices. They’ve risen by about 15 per cent. And this will affect imports, including food. We need to grow our own – we have the land, labour and know-how. The issue right now is that we don’t have a reliable way of selling what’s grown.
Take an island like Thoddoo for example. They’re known for their watermelons, but that’s seasonal. Year-round they grow crops like papaya and lettuce, and in enough quantity to feed the entire nation. They’re facing an issue in selling their produce, however. What we want is to purchase their produce and distribute it. We achieve two advantages, for one, we control their quality. And we can add value to it.
We are able to sell to resorts on credit, which farmers by themselves cannot do. We’ve taken the fisheries industry as our model. That industry enjoys its present position because all of the catch was bought at a fair price. That gave investors great confidence to invest in the industry. And we’ve seen an increase in private fishing vessels and enterprise over the years and they’ve eclipsed MIFCO [government fisheries company].
I believe that once farmers have confidence that their produce will be bought, the farming industry will also see that kind of growth.
We want to sell locally grown produce to the resort sector. In this way, resorts will be contributing to the community. Plus, they will be buying quality produce at a very competitive rate.
Hotel Insider: That’s a great project. So, you will be acting as a distributor for locally grown produce.
Husen Amru: Yes, we won’t be involved in the production though we will provide support to farmers through consultants, quality fertilisers and pesticides.
Hotel Insider: So, is the role of STO in the local economy growing or shrinking?
Husen Amru: What we really want is to touch on those areas that aren’t being explored by other local businesses. We don’t want to get into and compete with small enterprises. Like with the project I just mentioned, we don’t know if it will be profitable to us, and it’s not something that can be done by a business that intends to be profitable.
STO has certain responsibilities – like guaranteeing the availability of basic food items and ensuring their prices don’t fluctuate too much. Like in Ramadan, you’ll notice that the prices of eggs and potatoes skyrocket. We’re operating a supermarket because we want certain goods to be available and within a reasonable price-range. We can’t expect that from the market, obviously.
But we also want to move away from retailing. We’re leasing certain areas of the supermarket to private parties, so, in the end STO will be providing the space for private enterprises to carry out their business.
Hotel Insider: What other areas are you looking at exploring? Previously, the MD of STO told us that they were looking at fuel bunkering.
Husen Amru: Right now, we’re focussing on activities that will have an impact on the economy of the entire country. So, we’re looking at going into shipping.
The price of shipping is higher than it should be. Shipping a container from Sri Lanka to the Maldives costs as much or more than shipping one from China to Sri Lanka. The prices are kept artificially high. So, we want to get into that, keep prices reasonable and it will have a positive effect on the prices of imports.
Hotel Insider: OK. Lastly, what’s your vision for STO? Where do you see the company in five years?
Husen Amru: We have a lot of subsidiaries, and they’ve been performing very well so far. The challenge for us is MIFCO. Our goal is to turn MIFCO into a profitable company. There hasn’t been significant investment in the company for the past thirty years or so. The machinery at the Felivaru canning factory is the same as it was in the beginning. MIFCO’s capacity has remained unchanged too, at 50 tonnes per day. The company buys 150 tonnes and freezes and exports the remainder to Thailand. But the thing is, the export price is cheaper than the price of goods.
We can’t bring in any major investments to the company too quickly, and as you may know, MIFCO was brought under STO because the company was heavily in debt. So, that’s one of our big goals for now, to make it profitable.
Hotel Insider: Hotel Insider: Thank you, Amru. It was a pleasure.