Sri Lankan companies are announcing a wide range of cost-cutting measures to offset declining revenues and protect the cash balance during the economic slump related to the COVID-19 outbreak.

According to several listed entities, which had disclosed the COVID-19 impact on their businesses stated that they had already decided to defer capital expenditure (Capex) and imposed salary cuts at senior level to conserve cash during this challenging time.

"We have taken several measures to conserve cash during this challenging time including deferment of CAPEX, cancelation of company events, restructure of overheads, deferment of staff bonus payments, reduction in salaries of senior management during the period. We will continue to review these measures to ensure business sustainability and continuity in the coming months, " Watawala Plantations Managing Director Vish Govindasamy said.

" The company also has sufficient capital and low leverage, furthermore, the company has adequate bank facilities to operate and fund its working capital requirements," Govindasamy  added.

Speaking further Govindasamy  noted that their Palm oil business has been operating at sub par capacity due to labor shortages as a result of lock down. Nevertheless, the Dairy business has been operating at normal capacity.

"However, over the next few months, we expects the Palm oil sector to recover to normal levels once curfew is lifted, and the dairy sector will continue at current scale of operations and support local production and import substitution, he said.

Diversified blue chip Hemas Holdings PLC also announced that the group has initiated cost- cutting and cash conservation measures in order to protect business amid coronavirus pandemic.

The measures include:  freezing all discretionary expenditure, capital expenditure, recruitment and driving an efficiency program across the group.

Hemas Group CEO Steven Enderby stated that each of their businesses are working through a detailed plan on cash conservation and cost containment and they are also rebuilding demand and supply of key products and services.

“As such, we anticipate that the demand for our products and services will recover relatively quickly from the current levels. It is however not possible at this time to predict the exact timing or extent of recovery,” Enderby added. 

Meanwhile, Leading blue-chip conglomerate Aitken Spence PLC  stated that the management has assessed the extent of the impact on the performance and cashflows of the company in the 1st quarter of the financial year and taken several measures to cut costs including voluntary salary reductions across all sectors commencing with the Board of Directors and the leadership team and applied on a sliding scale to all grades of employees.

"Moreover, plans have been made to conduct operations in all sectors other than the hotels after the curfew is lifted, with arrangements to permit only the staff whose physical presence is required to come to the workplace with others working from home on a roster basis, in keeping with the directives of the Government," " Deputy Chairman and Managing Director of Aitken Spence  Dr. Parakrama Dissanayake said.

He also stated that the group is in discussion with several lending institutions to avail themselves of the relief measures that have been recommended by the Central Bank to support certain sectors which have been affected by the pandemic with moratoriums on the servicing of debt.

"This would relieve the Group of the cash constraints that would be borne during the next few months," he said.

"The Group has operations in sixteen segments under four main sectors in Sri Lanka and overseas. The impact of the pandemic on the different segments has been varied."

"With the spread of the virus on a global scale in mid-March 2020 and the stringent measures taken by the Government of Sri Lanka to contain the spread in the country together with the closure of the airport, the Group’s tourism sector has been severely impeded. Further, with the rapid spread of the pandemic in their generating markets,  inbound travel segment which has been responsible for bringing in the largest share of tourists to the country over several years has been compelled to temporarily cease operations."

"The Group’s hotels in Sri Lanka, Maldives and Oman also have been temporarily closed, while very limited operations are taking place in the hotel in India," the disclosure added.