Singer joins other consumer durable retailers in bolstering its domestic production capacity

• Company facing double whammy from toughened import conditions and weakening consumer demand

Singer (Sri Lanka) PLC has joined the bandwagon of consumer durable retailers in the country to deepen its reliance on domestic manufacturing capacity to navigate the current headwinds brought about by the toughened import conditions, due to the persistent dollar shortage in the country, which is expected to be more pronounced in the ensuing months. 

In his letter to the shareholders, the company’s Chief Executive Officer Mahesh Wijewardena announced this strategic pivot, as the company confronted significant challenges in importing products in the three months to March. 

Until the local capacity improves, Wijewardena said the company would rely on its existing inventories to ensure the continuity of its cash flows. 

Nevertheless, the significant erosion in the purchasing power amid hyperinflation could still blunt the revenues and thereby the cash flows, as consumer discretionary sector usually becomes the hardest-hit during economic downturns. 

“Against this backdrop, we will focus on optimising the inventory we hold at present to ensure continued cash flow generation, while actively pursuing means of expanding our local manufacturing capacities and capabilities as we seek to effectively capture opportunities arising from the vacuum created by the slowdown in imports,” Wijewardena said. 

Singer already has a robust assembly operation under its subsidiaries and the group at the end of its financial year in March 2022 had an inventory of Rs.23 billion, up from Rs.18.2 billion a year earlier.  

Last week, Softlogic Holdings PLC, a luxury retailer and another consumer durables player, announced its plans to tread in the same path by pivoting into local manufacturing and to offering local brands to blunt the impact coming from the toughed-up import conditions. 

It appears that the current economic crisis caused by the dollar shortage has forced the local companies, which predominantly depended on imports, to take a hard look at their business strategy and thereby use the current crisis as a launchpad to rebuild a stronger industrial base within the country, which will both preserve foreign exchange and also generate new foreign exchange through merchandise exports. 

Meanwhile, it could also generate more meaningful and skilled jobs, paying higher salaries, incentivising those who engage in three-wheel driving and others who waste time in government institutions to join these companies and industries for better and higher living standards. 

Besides, as inflation is said to be a great productivity puller, people will also be encouraged to think anew and creatively, provided they have the right attitude, to be more productive and enterprising to generate new income streams, which can beat inflationary pressures, while increasing the productive capacity of the country, resulting in eased price pressures in the medium term.