As macroeconomic conditions in Sri Lanka continue to stabilise, Sunshine Holdings PLC is entering a new strategic phase. The group is positioning itself to move from a period of operational resilience to one of capacity expansion. This includes a sharpened focus on domestic manufacturing, export diversification, and technology-driven efficiency, all aimed at enhancing competitiveness and long-term value, as noted in the company’s 2024/25 annual report. In the fiscal year 2024/25, Sunshine Holdings reported consolidated revenue of Rs 59 billion.
This represented a 7% increase from the previous year. Profit after tax remained steady at Rs6 billion, while gross profit margins held at approximately 30%, with performance supported by margin gains in healthcare and operational discipline in agribusiness. Internal transformations included digitisation of processes, integration of shared services, and upgrades to enterprise resource planning systems, laying the groundwork for more agile decision-making.
“Our strong performance this year was the result of thoughtful leadership transitions, investments made over many years, and a deliberate push to deepen resilience across all parts of the group. We did not merely react to market shifts; we acted with conviction, leaned into our strengths, and laid new foundations for scale, stability and synergy,” Group Chief Executive Shyam Sathasivam said in a note to shareholders.
As at 31 March 2025, the group reported total assets of Rs48 billion, reflecting the full value of its owned resources across operations. Retained earnings amounted to Rs 16 billion, representing profits reinvested into the business over time rather than distributed as dividends. Total shareholder funds stood at Rs 20.3 billion, indicating the residual interest held by equity investors after accounting for liabilities.
Borrowings remained modest, with non-current debt at Rs 5 billion and current borrowings at Rs1.9 billion, highlighting a disciplined capital structure. Gearing was maintained within a conservative band of 20 to 24%, well below the internal threshold of 40%, signaling prudent leverage and financial resilience. With improved visibility in capital markets and a stabilising macroeconomic environment, Sunshine is actively evaluating opportunities to increase external financing.
This move aims to optimise capital costs and support the group’s next phase of expansion without compromising balance sheet strength, its annual report noted.Healthcare accounts for approximately 55% of consolidated revenue. Sunshine Healthcare Lanka retained its position as the third-largest pharmaceutical distributor in the country. Healthguard Distribution expanded its logistics network to over 4,500 customer points, and the group continued to integrate its healthcare value chain to enhance resilience through control over distribution, retail, and manufacturing. Lina Manufacturing doubled its capacity for metered dose inhalers during the year.
The company commissioned a second production line, enabling it to meet government procurement needs while also entering the private respiratory care market. New business development teams were deployed to increase visibility among private sector providers, and Lina strengthened its position as a regional contract manufacturer through partnerships with Zydus Cadila and Kalbe Pharmaceuticals.
Healthguard, the group’s retail pharmacy chain, focused on service-led differentiation and digital integration. New initiatives, including home pharmacist consultations and a structured customer experience protocol, were rolled out across 16 outlets in the Colombo metropolitan area. These developments supported segment growth and were underpinned by digital supply chain visibility and high compliance standards. The consumer goods segment accounted for 32% of revenue.
Tea remained the largest contributor within the segment, maintaining market leadership with a combined share of over 50% across the Watawala, Zesta, and Ran Kahata brands. Despite cost pressures and an 18% VAT on branded tea, Sunshine Consumer Lanka implemented modest price increases and prioritised brand equity investment over promotional pricing. Export performance in tea was driven by value-added formats, particularly in East Asia, with export volumes rising 11% and revenue growing 22% in US dollar terms.
The group integrated the tea and confectionery sales teams during the year. This shift created a unified FMCG unit, which enhanced execution, reduced redundancies, and expanded retail reach across more than 99 stock-keeping units. In confectionery, the group focused on long-term brand building under the Daintee portfolio by piloting new cocoa-based products and reducing reliance on trade discounts.
The agribusiness segment contributed 13% of consolidated revenue. Palm oil operations led by Watawala Plantations PLC drove performance, with fresh fruit bunch output rising to 16 metric tons per hectare and extraction rates improving to 24.4%. These results were supported by agronomic interventions and disciplined harvesting practices. More than 95% of the mill’s energy requirements were met through biomass generated from processing by-products, reinforcing the group’s decarbonisation objectives.
The national ban on oil palm replanting remains in place. However, Watawala has invested in nurseries and field infrastructure to maintain readiness should policy conditions change. Palm oil accounted for approximately 50% of Sri Lanka’s domestic production and supplied over 15,000 metric tons to local refiners during the reporting period. Environmental safeguards, including water table monitoring and wastewater reuse, were further strengthened. Sunshine’s dairy business, Lonach Dairy Ltd, produced around five million litres of fresh milk.
This represents approximately 1.5% of national output. While the operation remained at break-even, improved feed sourcing and herd management preserved margins amid soft consumer demand and competition from imported milk powder. The herd of over 700 milking cows is monitored through automated sensors that track temperature, feeding, and rumination, allowing for data-driven herd management. Waste-to-compost integration supports the group’s circular resource goals. The group also invested in the processing of cinnamon.
A new facility was commissioned to support the traceability and certification of spice exports. These initiatives are part of a broader agribusiness strategy focused on higher-value segments with export potential. Supply chain traceability and farmer engagement are being strengthened to meet international standards. Digital upgrades were implemented across all segments.
Forecasting, inventory planning, and customer engagement tools were enhanced to support quicker response times and better alignment with market conditions. Shared services for Treasury, HR, Taxation, and IT were introduced to improve coordination and reduce administrative overheads. Sunshine Holdings and Watawala Plantations completed share subdivisions during the year.
These actions were aimed at improving market liquidity and broadening investor participation. In light of weak capital market conditions, the group views this as part of a long-term strategy to enhance investor access and confidence. Sunshine is prioritising three objectives moving forward. The first is to expand domestic capacity in healthcare manufacturing.
The second is to diversify consumer goods into wellness-related products. The third is to develop agribusiness into a certified, traceable export platform. Investments in digital systems and workforce training will continue to enhance resilience and operational efficiency. External risks remain. These include subdued consumer sentiment, weak capital markets, and exposure to regulatory and fiscal changes.
Sunshine’s balanced portfolio, operational discipline, and strategic readiness position it to manage continued volatility. Its growth plans reflect a pragmatic response to structural challenges, with an emphasis on long-term value creation over short-term gains.