As one of the driving forces behind the company’s financial stability and growth, PAMUDITH GUNAWARDANA, THE CHIEF FINANCIAL OFFICER (CFO) OF HAYLEYS FENTONS LIMITED, has implemented rigorous financial discipline and provided strong leadership to establish best practices that maximize revenue streams and drive long-term profitability and financial robustness. Through strategic financial stewardship, he has guided the company through uncertain times, enabling it to adapt, innovate, and flourish despite economic challenges.

STRATEGIC FINANCIAL INTERVENTIONS

Pamudith has been a key driver in implementing essential financial strategies, representing one of several critical factors that have contributed to the company’s success and growth in recent years. He highlights four major methods that have been pivotal. Firstly, the alignment of financial strategy with business strategy is critical for organizational success. Typically, these strategies function in isolation, leading to inefficiencies and suboptimal performance. At Hayleys Fentons, key components of the business strategy including expedited project delivery, sustainable profit margins, optimized cash flow management, and tracking of performance necessitate a synergistic collaboration with the financial strategy. By integrating these strategic elements, the company effectively mitigates operational silos and enhances process efficiencies, thereby converting previously stalled initiatives into profitable outcomes. Secondly, maintaining a positive bottom line has been a priority. When Hayleys acquired Fentons, some projects were unprofitable due to a lack of financial visibility among those executing them. By providing comprehensive financial insights and creating an analytical mindset, the company turned this around, converting most projects into profitable ventures and reducing losses on older projects. This visibility empowered project teams to make informed decisions, enhancing overall profitability. The third strategy focused on improving cash flow. Historically, the company struggled with negative operating cash flow, leading to liquidity shortages. Under the guidance of the leadership team, the company achieved positive cash flow for the first time in its history. Pamudith’s proactive approach of prudent cash flow management, reducing dependency on borrowings, and avoiding over-geared situations, supported this milestone and helped stabilise the company’s financial health. Lastly, optimisation of working capital and overheads was vital. By reducing uncollected debtors and excess inventory, and pruning unnecessary overheads, the company streamlined its operations, becoming more agile and efficient. Additionally, effective capital structure management transformed the company from a negative equity situation to a robust positive equity position, enhancing financial stability and investor confidence.

Furthermore, “Safe Mode Business Plan” was introduced to navigate the uncertain economic climate. This plan comprised several critical components aimed at mitigating risk and ensuring financial prudence, such as steering away from high-risk business ventures. Additionally, the plan emphasised the importance of collecting advances from customers to secure upfront payments, thereby improving cash flow and reducing financial exposure. To mitigate exchange rate volatility, the company has implemented hedging strategies and built a foreign exchange buffer, ensuring stability in response to currency fluctuations. Fixed income streams, such as annual maintenance contracts, have helped balance revenue and cover overhead costs, maintaining financial stability despite policy shifts.

ADAPTING TO A VOLATILE ECONOMIC ENVIRONMENT

Working closely with the leadership team, Pamudith has applied a pragmatic and strategic approach to reshape Hayleys Fentons Limited’s financial planning and budgeting processes, enabling the company to effectively manage the challenges of a volatile economic environment. In response to the fluctuations in the macroeconomic landscape, the Hayleys Fentons team collectively devised several key measures that have been critical in maintaining the company’s stability. One significant strategy was focusing on shortterm projects. Given the high volatility in the exchange rate, with rates swinging dramatically, the company avoided long-term projects that could expose them to excessive exchange risk. Instead, they concentrated on projects that could be completed within two to six months. This approach minimised exposure to economic fluctuations, allowing the company to better manage and absorb risks associated with longer project durations.

COMMITMENT TO ESG

At Hayleys Fentons, ESG principles are a key focus and are integrated into business strategy. One notable project is the Kirulu tree planting initiative organised by parent company Hayleys PLC, launched in 2022-2023, where the company invested half a million rupees to restore ecosystems and enhance biodiversity. Another key initiative, “Roots of Resilience,” involved planting a thousand mangroves to prevent soil erosion and support marine ecosystems, with continuous care to ensure their growth and impact. To make solar power more accessible, Hayleys Fentons collaborated with banks to develop a loan scheme for solar installations. This initiative offers loans at reduced interest rates, significantly lowering monthly payments. Promoted through the “Nayak Nowena Nayak” campaign, this program allows even modest-income households to afford solar systems, reducing reliance on coal and thermal electricity while ensuring long-term savings. These initiatives demonstrate Hayleys Fentons integration of ESG principles into their financial practices, contributing positively to the environment and society. In essence, Pamudith’s proactive approach to addressing financial challenges as Chief Financial Officer has helped to position Hayleys Fentons as a resilient and forward-thinking company. Through these initiatives, he is effectively steering Hayleys Fentons toward long-term financial sustainability in a complex economic landscape. Pamudith also extended his gratitude for the visionary leadership of Mr. Mohan Pandithage, Chairman and Chief Executive of Hayleys PLC; Mr. Sarath Ganegoda, Executive Director of Hayleys PLC; and Mr. Hasith Prematillake, Managing Director of Hayleys Fentons Limited, whose guidance has been pivotal in shaping the company’s direction.