Dhanusha Muthukumarana takes over today as Group Managing Director and Group Chief Executive Officer of LAUGFS Holdings. The company talks about transformation, operational excellence and sustainable growth. Those are impressive words. The more interesting question is what transformation actually means for a sprawling Sri Lankan group operating across more than 20 industries.
LAUGFS Holdings begins October with a significant change at the top, appointing Dhanusha Muthukumarana as Group Managing Director and Group Chief Executive Officer with effect from today. He arrives with more than 26 years of experience spanning banking, consumer goods, manufacturing, healthcare, logistics, enterprise software, technology consulting and diversified businesses.
The appointment becomes more interesting when placed against the company he is being asked to lead. LAUGFS began life in 1995 as Gas Auto Lanka but has developed into a diversified group employing more than 3,500 people and operating across oil and gas, renewable energy, industrial and engineering businesses, logistics, retail and consumer operations, healthcare and services.
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Diversification can be a great strength. A business exposed to several industries is not entirely dependent upon the fortunes of one. Cash generated in a mature operation can support investment in a growing business, while management expertise and infrastructure can sometimes be shared across the group.
Diversification can also become complexity. A conglomerate operating across more than 20 industries has to decide continually where capital produces the best return, which businesses deserve additional investment, which require restructuring and whether every operation still belongs inside the same group.
That makes Muthukumarana’s background particularly relevant. He is not arriving principally as an oil and gas executive. Much of his career has been built around technology, enterprise architecture, business transformation and aligning operating systems with corporate strategy.
Before joining LAUGFS leadership he founded technology consultancy POTENZA and previously held senior technology positions at the London Stock Exchange Group, Hatton National Bank, Hemas Holdings, Microsoft and John Keells Holdings. LAUGFS itself describes his appointment in the language of transformation, innovation, operational excellence and long-term value creation.
The temptation with such appointments is to concentrate upon the biography. The more useful approach is to watch what happens next.
Does LAUGFS simplify parts of its portfolio? Does it invest more aggressively in businesses where it possesses a competitive advantage? Does technology substantially alter how the group manages customers, logistics, inventory and capital? Does renewable energy become more important inside the portfolio? Are underperforming operations restructured, sold or combined?
There is also a larger Sri Lankan corporate question here. Many of the country’s diversified businesses grew by entering opportunities as they appeared, producing groups containing businesses that can sometimes have remarkably little relationship with each other. The next phase of corporate growth may require considerably more discipline about where scarce capital is deployed.
LAUGFS operates in areas directly exposed to some of Sri Lanka’s largest economic changes. Energy security has again become a national issue because of the Middle East crisis. Renewable energy is expanding. Consumer spending is recovering after the economic collapse. Logistics has become strategically important while digital technology is altering almost every conventional business model.
That gives the incoming chief executive plenty to work with.
It also gives him plenty to prove.
Corporate announcements invariably promise growth, transformation and value creation. Shareholders, employees and customers eventually require those words to become numbers.
The appointment takes effect today.
