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ERP system to take Lanka Sathosa out of woods

Lanka Sathosa Limited (LSL) state owned retail store network consisting of 403 outlets currently running at a loss under commerce ministry is set to be revamped with the introduction of sophisticated system, Finance Ministry report revealed.

The new sophisticated Enterprise Resource Planning (ERP) system has been devised to increase the asset base in the company covering the entire outlets, warehouses and the Lanka Sathosa Head Office.

Under this Initiative the LSL will strengthen the marketing arm with a strong Sathosa brand and improve customer service in order to face competition arising from the private sector supermarket chains, a senior treasury official said.

Measures are underway towards strengthening the internal audit department with skilled audit staff and providing necessary resources while introducing proper internal control procedures are also lined up to improve the corporate governance of the LSL.

Lanka Sathosa has signed a four year contract with USAID on staff training and development on training the trainer basis.

Sri Lanka Institute of Marketing has been providing training for LSL staff on customer service, communication and effective selling to upgrade the state owned retail chain to next level , he added.

An exclusive training centre will be set up for the 4000 strong staff to provide a better service for consumers countrywide.

These measures will help the state owned entity to compete in the retail market with rapid expansion of the private sector supermarket networks, challenging to the growth of LSL.

LSL recorded an operating loss amounting to Rs. 618 million in 2018. As a result, the loss before taxation of the LSL increased to around 4 percent over 2017, latest financial statement showed.

Company’s gross profit ratio declined to 12.1 percent in 2018 from 16 percent in 2017.

Further, revenue generated by LSL drastically decreased to 8 percent to Rs. 29, 038 million in 2018 from Rs. 29,663 million in 2017.

However, the interest expense amounting to Rs. 1,545 million in 2018 is the main cause for the loss incurred of the LSL, finance ministry report disclosed.

Lanka Sathosa currently functioning under the Ministry of Industry and Commerce is facing allegations of financial misappropriation in importing 257,000 metric tonnes of rice during 2014/15.

It is alleged that of the approximately 250,000 mt of rice imported during this period around 80,000 mt was found unsuitable for human consumption.


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