Sri Lanka’s largest state-owned retail chain, Lanka Sathosa, is grappling with a financial crisis, having incurred a staggering Rs. 24 billion in losses, according to Deputy Minister of Trade, Commerce, and Food Security, R.M. Jayawardana.
The Deputy Minister revealed that, in addition to the accumulated losses, Sathosa has failed to repay Rs. 5 billion in loans and owes over Rs. 11 billion to suppliers.
The financial strain has disrupted supply chains, with vendors now prioritising other clients before delivering to Sathosa.
Of the 454 Sathosa branches across the country, roughly 250 are reportedly operating at a loss.
The Deputy Minister blamed politically motivated decisions for the expansion, claiming that many outlets were opened in low-footfall areas or on property owned by politicians.
“These branches simply don’t generate income. We intend to relocate them in the coming months,” he added.
A comprehensive audit into financial irregularities and alleged corruption at Sathosa and other cooperative institutions is currently underway.
While some entities under the ministry generate significant revenue, Jayawardana acknowledged they are also highly vulnerable to fraud and mismanagement.
Founded in 2005, Lanka Sathosa was intended to enhance food security and provide affordable goods to the public. It currently employs over 4,500 people nationwide.
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