Charting a course for growth in Sri Lanka

Reyaz Mihular, managing partner for KPMG Sri Lanka and Maldives, talks about talent, growth opportunities and managing the margins in a region emerging from more than two decades of civil war.

Reyaz Mihular, FCMA, CGMA, is managing partner of KPMG Sri Lanka and Maldives, a region which is now enjoying the benefits of a stable economic and political environment after 26 years of civil war ended in 2009.

In the years since, the challenges facing his clients have fundamentally changed. Organisations have begun to focus on longer-term planning, reassessing existing cost-structures and realising opportunities in developing markets such as tourism.

Mihular has been instrumental in working towards a more sustainable business model for his business, implementing several initiatives to maintain competitiveness and strategic focus – including a new approach to recovering fees from clients.

What follows are excerpts of his conversation with CGMA Magazine.

Can you describe the current economic environment in Sri Lanka?

Sri Lanka went through a civil war for almost 30 years, which concluded in 2009. Since then, significant improvements have been made in the economy of the country, with money previously tied up in the war now being invested into infrastructure. Although we still have some catching up to do, we are seeing significant foreign investment and there is an overall sense of optimism. Also, the business climate is positive, with sectors such as tourism beginning to take the lead. There are many opportunities opening up for companies, but there are still challenges to be overcome.

What are some of the obstacles to business growth?

At a basic logistical level, if we take the potential being offered by tourism for instance, Sri Lanka does not at present have many available hotel rooms. For this sector to really build, this will need to be addressed – but it cannot just happen overnight as businesses are being faced with increased rates alongside balancing the need for maintaining high standards. Also, there are other related gaps to be filled, such as improving our shopping centres and so on.

If we look wider, KPMG is working closely with new companies to assess where the best opportunities for investment are, alongside advising established enterprises as they reassess business models to achieve expected growth. Many are taking a close look at their cost structures, as top-line performance has at times masked issues with bottom-line revenue. There are a lot of restructures taking place.

How are you developing your people so they can help clients achieve their objectives?

During the war, many Sri Lankans moved to work overseas, but they are now returning. We have gone out of our way to bring ex-KPMG people back on board because they know the firm but have broadened their horizons, which is very valuable. Sri Lankan companies are interested in competing globally, so they are looking for us to assess business structures from all over the world to establish best practice in supply-chain, distribution and manufacturing. Then, of course, we continually invest in training – we have a dedicated training floor, something which is unique in Sri Lanka. This is very important to us.

Have you made changes within your own business to meet increased demand?

Data has been important in informing where we should focus attention. Last year, we began to look more closely at the margins of jobs and in particular how our people were managing recoveries. We implemented a new practice management system to allow assessment of recovery in real-time and this is already showing signs of dividends in that managers are more focused on not just pulling people onto jobs but instead managing the margins. Our profitability relies on how effectively our managers use their time to deliver solutions to clients and if we can be more organised in how we do this, we can ensure the cost of our services remains competitive.

What is your main focus for the coming year?

At the moment, an important area of development for us is building on our provision of solutions. We can provide a mix of audit, tax and advisory – but the main thing is fixing problems that are being experienced by our clients, using a more multi-discipline approach. We are also working on creating more market-focused teams, with specific sector knowledge.

How would you describe your management style?

I believe in taking people along with me, sharing a vision with them. I have a transparent system where people know how budgets are set and therefore what their performance should be. Our reward process is also transparent. I take my people into my confidence, tell them what my aims are and how we are going to achieve them and I leave it to them to rise to the challenge.

What advice would you give to people at the beginning of their career?

If you want to excel in your work you must demonstrate passion. If you do this it will ultimately be reflected in the numbers you produce and people will take notice. Passion is the one characteristic I look for above all else when recruiting. If you keep an open mind and are keen to challenge yourself, you can achieve everything you want to in one firm.