Cargills (Ceylon) Ltd., the owners of the 153-year old department store and the leader of the supermarket industry in the country today plans to acquire the Safemart chain comprising three outlets at Rajagiriya, Boralesgamuwa and Moratuwa, company sources said.

They declined to reveal the purchase consideration but knowledgeable business sources placed a price of around Rs. 30 million on the deal.

Cargills' Food City chain which currently comprises 12 outlets will open the thirteenth at Negombo within the next few weeks. With the acquisition of Safemart, the company will be operating 16 supermarkets by the end of this year, Cargills Chairman Albert Page said in the company's just published annual report.

Company sources also said that a plan for refurbishing its prime Fort building is on the cards but the familiar old facade will be maintained. The company is targeting 40 retail outlets in the medium term.

A controlling 72% of Cargills is owned by its sister company, Millers. Cargills owns the solidly constructed old building which both department stores occupy. Both companies are members of the Ceylon Theatres group.

The Food Cities contributed the major share of Cargills' 1997/98 turnover exceeding over Rs. 1.6 billion. They continue to enhance their market share and maintain the dominant position in the country's supermarket industry, Page said.

Cargills which lost in the previous financial year has reported what Page called a "group turnaround'' with improved profitability attributed to management steps to increase efficiencies and minimise shrinkage.

Turnover was up 17% to Rs. 1.64 billion and the bottom line was back in the black with an operating profit before interest of Rs. 34.8 million, up from a loss of Rs. 9 million a year earlier. Interest, however, guzzled more than the operating profit with a Rs. 51.7 million charge (down from Rs. 59.6 million the previous year) doing the damage.

However, the picture during the year under review was decidedly rosier with the loss after interest of Rs. 16.9 million comparing with a hefty Rs. 68.6 million loss the previous year.

But dividend income (Rs. 3.1 million) and profit on the sale of a Nuwara Eliya property, plant and equipment (Rs. 14.9 million) and a tax write-back (Rs. 8.5 million) made good the deficit despite a Rs. 8.4 million loss on the disposal of Victoria Stores, the accounts reveal.

Although a profit of Rs. 2.7 million was available for appropriation,, a tax free dividend of 10% absorbing is being paid by the company compensating shareholders who got no dividend the previous year. The deficit is being carried forward as a retained loss.

Page expressed his board's confidence that a strategy of focusing on retailing food and beverages and related activities will enhance the group's growth and profitability.

"With the growth of the economy, the outlook for retail distribution is positive and there are excellent opportunities for increasing our market share in core activities,'' he said, noting that results for the first five months of the current year are way ahead of the comparative period the previous year.

As Cargills has a very modest issued capital of Rs. 28 million, the directors have recommended a bonus issue of one new share for every one held by capitalising Rs. 28 million from the reserves.

The directors of the company are Messrs. Albert Page (Chairman), Anthony Page (Deputy Chairman), V.R. Page (Managing Director) M.I. Wahid (Executive Director), Dr. D.J. Aloysius, A.T.P. Edirisinghe, Sanjiv Gardiner, L.R. Page, C.J. Samaraweera, R. Senathi Rajah, Mrs. S.R. Thambiaiah and C. Wijenaike.