CPL eyes expansion, but is waiting on Papua New Guinea’s economic recovery

eepurl.com

Papua New Guinea’s largest retailer is still only servicing about 30 per cent of Papua New Guineans, according to Chairman of CPL Group, Mahesh Patel. While it has product and store expansion plans, Patel says CPL is waiting on a general economic recovery before moving forward.


‘We have pushed the envelope with new products in recent times, but the last few years have been really tough—but we’re waiting for the economy to pick up in the next phase of growth in PNG before we start trialling anything,’ Patel says.

Speaking on Business Advantage Boardroom, which aired recently on the national broadcaster, EMTV, Patel said the company was still ‘struggling’ from the slowdown since the end of the construction of the PNG LNG project.

But the long-term strategy is one of expansion.

‘The strategy was to offer pharmacy, food, hardware, clothing, and high-end commodities all at the same site.’

‘We have pushed the envelope with regards the introduction of new products and lines, and we need to find out what worked, tidy up a few things, before expanding,’ he said.

CPL’s Mahesh Patel Source: EMTV

‘I’ve got about 100 ideas that I want (to do) but we’ve got a professional board and we just need to take it by measure.’

Story continues after advertisment...

Patel says the company currently caters to only about 25 to 30 per cent of the PNG population.

‘The rest are still out in remote areas where there is no development or retail set-ups. We’ve tried.

‘We’ve been to second-tier towns like Maprik [East Sepik Province] and Biala [West New Britain Province] and we struggled, firstly, to find proper retail outlets.’

Logistics

CPL’s subsidiaries include City Pharmacy, Stop N Shop supermarkets, Prouds Duty Free, Bon Café, Paradise Cinemas, Jacks of PNG clothing stores and Hardware Haus.

Patel said the strategy was to offer pharmacy, food, hardware, clothing, and high-end commodities all at the same site. But logistics make it difficult.

‘While it doesn’t make sense right now because some of the business is still evolving, long-term you could connect all the dots.’

‘We have struggled with some things; it is high risk and we still are struggling.’

Patel says, however, there is an appetite for quality products and lines.

‘For example, when we launched the digital cameras what occurred to us was that the biggest sales came from outstations, not in Port Moresby, which shows that people out there want quality products.

‘We have struggled with some things, it is high risk and we still are struggling.

‘Cinemas are a classic example. Worldwide, cinemas are on the sixth or seventh floor of a shopping centre. The rentals are virtually free of charge; it’s a drawcard.

‘He never imagined his original pharmacy would become the multi-faceted company it now is.’

‘Here, because of lack of development, we pay full market rental. And it really, really struggles to break even because of that factor.

CPL marks its 30th year of operating this year. Patel freely admits he never imagined his original pharmacy would become the multi-faceted company it now is, with 54 outlets across the country.

POMSOX listing

A key point, he said, was listing on the Port Moresby Stock Exchange in 2002. This provided an exit strategy for his original partner, Alan Jarvis (who died in 2009). It also allowed employees to invest, ‘and feel part of the company’.

Importantly, he said, it created discipline and governance.

‘It gave us credibility and transparency to the outside world.’

‘We were traders, we were individuals running the business and as we grew, we just knew we couldn’t keep growing using the model we had. So, dealing with the banks, dealing with suppliers, being publicly listed, there were strict rules about governance, audits, checks and balances.

‘It gave us credibility and transparency to the outside world.’

In March, Patel announced that he would be relinquishing his executive role and would transition to a non-executive chairman role. He said Joe Barberis will be appointed as Managing Director of CPL Group. Current CEO Ravi Singh will be Chief Executive of CPL’s subsidiaries and General Manager, Merchandise, of the Group.

Mahesh Patel will be a guest speaker at the Papua New Guinea Investment Conference, to be held on 7 & 8 September 2017 at the Shangri-La Hotel, Sydney, Australia.

Comments

  1. JEANMARIE KABAI says:

    1.What was your business investment in 2015 like?
    2. What was your cost analysis in 2015 like?
    3. What was your financial management in 2015 like?
    4. What was your profitability and liquidity ratios like in 2015?
    Thanks am a student doing my case study on COL and am desperately in need of these information to complete my case study assignment.
    Thank you so much and looking forward for your assistance.
    Jeanmarie Kabai
    Divine Word University

Speak Your Mind

*