Sunshine’s Watawala Plantations expands with US$11.5 mln dairy investment, plans to own brand
Diversified Sunshine Holdings PLC, on the back of announcing plans to set up a mega commercial dairy operation worth US$ 11.5 million through its member firm, Watawala Plantations PLC, has plans to enter the market with its own milk brand in the longer term, officials said.
“It’ll take 2-3 years to set up this farm, during which time we’ll be selling commercially but eventually we’ll add value,” Sunshine Holdings PLC Group Managing Director, Vish Govindasamy told the Business Times. He said that the company is bullish on its FMCG and retailing and that they won’t look away if there’s a dairy related acquisition. The new Board of Investment (BoI) approved venture, Watawala Dairy Ltd, a subsidiary of Watawala Plantations PLC, is expected to further diversify and strengthen the revenue streams of the main company which has benefited from strategic diversification into palm oil.
Of this funding, most (US$4.3 million) has been committed by Watawala Plantations PLC while a 3-million share represents Foreign Direct Investment (FDI) by Duxton Asset Management, a leading Singapore – based international and boutique asset manager. This is the first-ever agricultural FDI in Sri Lanka by Duxton Asset Management, which manages and advises assets of approximately US$690 million, of which US$460 million are in agricultural investments. With the new investments, once it is in full operation, Watawala Dairy will expand its herd to 1,000 dairy cattle and is forecast to generate over Rs. 1 billion in revenue from the fourth year of operation.
Thereafter it sees significant potential for further expansion as well. The present small-scale dairy farm operated by Watawala Plantations – consisting of 75 dairy cattle and generating annual sales of Rs. 30 million – has been brought under Watawala Dairy Ltd. The new investment recognizes the strong economic potential for dairy in the country and is also expected to support the country in its vision of achieving self-sufficiency in fresh milk production. Sunshine Holdings PLC is a diversified holding company into healthcare, agribusiness, fast moving consumer goods and renewable energy. The group, which provides employment to approximately 12,000, generates over US$120 million in revenue. The group is one of the country’s largest tax payers – contributing over Rs. 500 million to the state’s coffers annually.