The prevailing economic crisis has impacted all types of organisations ranging from blue chip conglomerates to micro traders. However, the impact on conglomerates is as diversified as their business portfolios.

In a recent interview on LMDtv, Managing Director and Group Chief Executive Officer of the Janashakthi Group Ramesh Schaffter explained that “a conglomerate has a diversified group of businesses, which allows you to balance risks better.”

He firmly believes that size and diversification matter, when it comes to surviving and thriving during a crisis: “Size is absolutely essential; and if you look at Sri Lanka, the largest companies on the stock market are diversified conglomerates.”

“Diversification for the sake of it is one strategy but it also builds critical mass,” he noted, adding: “It builds your balance sheet and asset base. In a climate like this, one sector may be badly affected; but being a diversified conglomerate, you can run a loss in one and make a profit on the other – and survive these stormy seas a lot easier than single business companies.”

While seeing potential for local exporters with the strengthening of the US Dollar, Schaffter cautioned businesses to be aware of the global slowdown impacting all countries from the US – Sri Lanka’s largest buyer of most exports – to those in the Middle East, and suggested offering products that others cannot.

“What does Sri Lanka have that someone else doesn’t?” he questioned.

Schaffter pointed out that “we have heavy rainfall, lush green land, the ability to grow crops and speed to market [to several regions].”

He stressed the need to seek value additions in agricultural products: “It could be value additions to fruits – such as dried fruit or fresh vegetables – or even in the fisheries sector because we are a large exporter of tuna and other fresh fish. There is huge potential but it’s not tapped to the fullest.”

“We need to play to our strengths and build on what we have,” he urged.

Elaborating on this, Schaffter explained: “Sri Lanka has a population with a literacy rate of 98 percent and is educated. I believe that Sri Lankans are very creative although that creativity is stifled.”

“What worked for us 100 years ago will not necessarily work for us today and we need to be ready to reinvent,” he mentioned, adding that Sri Lanka “needs to be ready to give up what we’ve held on to for dear life” while also emphasising that “we need to move on.”

Schaffter identified several sectors in which Sri Lanka holds leadership such as hard rubber tyres, surgical gloves and other rubber-based products.

He also called for more value additions in minerals and other natural resources, which will empower Sri Lanka to be more competitive. “There is no point trying to compete in the red ocean space where you are not competitive,” he explained.

Apart from this, Schaffter called for much needed change in several sectors, starting with education, if Sri Lanka is to realise its full potential.

He elaborated: “We’re teaching the wrong subjects in school. We have a tertiary education system that can only cope with a tenth of the output coming out of secondary education. We have a million people working overseas and we’re not exporting brains – we’re exporting housemaids. We’ve become comfortable running in the same mode.”

Shifting gears, Schaffter lauded LMD’s Refresh Sri Lanka campaign and stressed the need for corporates not to look at CSR initiatives as a box to be ticked.

He noted: “It’s about whether you’re doing something to change the environment, country and systems. Finally, it is also how you behave, what your employees think about you and whether you walk the talk.”

“There is no point in saying we don’t support corruption because corruption needs two hands to clap – if you continue to give, saying ‘that’s the way it is,’ then you’re not going to change the system,” Schaffter asserted.