Lucky Yoghurt growing from small beginnings; planning CSE entry

He started with only one cow and just a bicycle in 1991 but 16 years later rural entrepreneur Lal Keerthi Gunawardene owns one of Sri Lanka’s biggest yoghurt plants and plans to list the company on the Colombo Stock Exchange. As Gunawardene, Managing Director of Lucky Lanka Dairies (Pvt) Ltd explained to the media at a briefing this week to celebrate the company’s 15th anniversary and its simple beginnings, the business that started with a single cow, has now spread out across the country with the involvement of thousands of milk farmers, hundreds of employees and many suppliers.

The Lucky Yoghurt plant at Kamburupitiya, Gunawardene’s hometown, produces 7,000 cups of Yoghurt per hour and now the young entrepreneur who started out business life as a 22 year old, plans to set up a fully fledged modern factory at a cost of Rs. 300 million as well as float his company on the Colombo bourse to broad base its ownership.

The company pays Rs 110 million per annum to purchase fresh liquid milk from milk farmers in the island, and in its recognition of the services of farmers is planning to introduce an insurance scheme for them. It conducts awareness programmes on productive farming methods and obtaining good quality high milk yield and positive thinking programmes for dealers.

He expressed optimism that opportunities might exist for the implementation of a dairy development strategy in Sri Lanka that would create a framework of economic incentives for dairy producers while balancing the interests of producers and consumers. The consumption of dairy products in Sri Lanka has increased over the last two decades. However, the growth in demand has been largely met by imports, particularly of milk powder. Since the mid-1980s Sri Lanka's imports of milk powder have exceeded a three-year moving average by 25 percent several times.

Possible causal factors for these surges include economic and trade liberalization, surplus conditions in world dairy markets and the provision of subsidies by exporting countries. Other factors were also at play to encourage the growth of imports, including domestic production and marketing constraints, civil strife in some producing areas, declining profit margins due partly to increased feed prices and inadequate consumer information regarding the attributes of fresh milk. The country is spending Rs 13 billion per annum to import milk powder.

It was under this environment, that Gunawardene as a young man in a remote village in Kamburupitiya and his courageous four sisters initiated their self employment project with no capital at all to change the path of Sri Lanka’s yoghurt industry. They started with 10 Yoghurt cups and one delivery bicycle in 1991 but by 2005 it reached 60,000, yoghurt cups and 70 delivery vehicles.