The following are excerpts of the interview. Sunshine Holdings’ acquisition of Daintee Ltd. was mainly to expand your operations in the fast-moving consumer goods (FMCG) sector. Are you planning to expand the current product portfolio of Daintee? Broadly, Sunshine Holdings is primarily in healthcare, consumer, agri, and renewable energy. In healthcare, we are a significant player. Consumer is a space we are looking to expand. We are Sri Lanka’s number one branded tea company and Watawala Tea is the largest brand in Sri Lanka, followed by Ran Kahata and Zesta. We are a large player in the tea segment. Our aspiration was to grow, so we looked for an acquisition in the local market. Our customer base is primarily Sri Lankan and Daintee was one such opportunity, so we made this investment for the brand. The Daintee brand is a very strong local brand. We all grew up with Milady and all of those products from Daintee. So, we bought it for what we thought was a very strong brand with a wide range of products. We will work with the team to see what opportunities there are to expand on. What are the other FMCG sectors you are looking to venture into at the moment? For now, I think food and beverages is the area of interest for us and that is what we have past experience in. Now with confectionery, that is a new space for us. We will take some time to study that space and then will continue to look into opportunities. We are conscious about weighing in segments that can sell across Sri Lanka. We are in value-conscious segments, so our Watawala Tea and Daintee’s Choco Mint reaches the majority of Sri Lanka. Therefore, if we expand, it will be more in terms of products that reach across the market. What would be the marketing strategies that will be used to transition Daintee to a more premium product category? Are you looking at any partnerships for this purpose? Sunshine has been very successful because of our partnerships. In the healthcare space we partner with global leaders in pharmaceuticals and medical devices. We entered the agri business in partnership with Tata Tea in India as well as Wilmar International in Singapore. We are always open to partnerships; they have been part of our business. So, the same goes for the Daintee business. For now, it is a successful domestic business, but we will look into opportunities where we will bring in exciting new products to the Sri Lankan market. Nevertheless, we are very keen to ensure that our products have a Sri Lankan flavour. For example, one of Daintee’s biggest successes was its tamarind flavour. Our innovation would be flavours our local population fancy. At the moment, Daintee has a market share of 40%, mainly in rural areas. How much of a market share are you targeting for Daintee islandwide? Sri Lanka has a large enough population that can sustain significant food and beverage spaces. We have seen this in tea. We have continued to grow because there are so many unbranded opportunities. We experience the same thing in the confectionery space. Here, people either make at home or buy at home. There are less and less people making it at home so it will be more about introducing new products as consumers become urbanised and look for packaged products of what they used to make at home or what others would make. It is more about market size and market growth. The overall market will expand within the confectionery space and there will be new segments. People are looking for multiple segments and healthy food is one of those areas. Now that the President has advised officials to implement plans to meet the local demand for liquid milk, what are the new plans you have for Watawala’s dairy unit? In the agri business, we do two segments. One is the palm oil and the other one is dairy. For dairy, it is a greenfield project, in that we have invested significantly to start a brand new, modern dairy farm. We have more than 1,500 herd animals. Most of them are imported and high yielding. We are one of the largest single sources of fresh milk. We believe more and more consumers will convert from milk powder to fresh milk and consume more dairy. Overall, Sri Lankans consume less dairy, but they will gradually consume more. Yoghurt is becoming a healthy snack and there is more consumption of fresh milk. At this point we are still at the farm stage, where the focus is on stabilising the farm, but we are talking to multiple people in the market. We have brand-building experience. We are piloting a farm fresh product in Colombo. We will learn from that and look at opportunities and also partnerships. Has Watawala’s palm oil unit had any discussions with the authorities with regard to the recent ban on cultivating oil palm trees? How much of an impact will it have on your business? We continuously engage with the Government and other stakeholders. Watawala has been in the palm oil business prior to privatisation. We were the largest palm oil company before; we have only continued to develop. So for us, it is not about planting afresh, it is more about renewing what we have. We will engage with them. Planting anew is the area of discussion of the Government, but we are continuing to engage with the authorities. We have not experienced any disruption to our current operations. Last November, Sunshine’s energy contribution to the national grid was increased by 2.4 MW to 7.7 MW. Are you planning to increase your contribution further? We have entered the renewable energy space because we felt that it was an area of opportunity. The country is looking to grow its energy capacity. It was a sector we felt that we can contribute significantly to. We have ventured beyond the hydropower and solar as well. We have partnered with our Japanese shareholder SBI Holdings and are investing more in solar. Therefore, we continue to invest in the energy sector. Solar is where most of the focus is now. There has been more technology improvement with regard to panels. We are working with our local technical partners, the Japanese company, and local manufacturers of panels. What you will see is low-cost solar panels. There will be lot of opportunities for renewable energy. Is your healthcare arm affected by the ongoing import restrictions? No, it is not. Sunshine Healthcare is a significantly large part of the group. It is a large player in the market. We cut across three areas. Firstly, pharmaceutical imports across the world as well as cost-effective products from the region; from India, Pakistan, and Bangladesh as well. So what we see is availability through Covid-19, because we have an excellent distribution system of our own. We ensure that our products are available. For example, we represent and work with the authorities to ensure that a particular product is available across the country. The second space for us in healthcare is medical devices; we are a large player in diagnostic lab equipment, so we run on Siemens equipment which the company has invested in. Here again, we have not seen any disruption. The third part of our business is the Healthguard pharmacy chain. We have 20-plus pharmacies in Colombo. Our focus again has been to provide a very qualitative environment for people to buy pharmaceutical products. Due to Covid-19, of course there were restrictions, but what we have done is make products available, especially immunity products. Are you looking at any local production in the healthcare sector? Definitely, we are exploring it. We are keen to explore and expand the healthcare sector. Local production is definitely on our radar. I think the Government has announced lots of new plans to strengthen the sector, so we are going to explore that further. We are also open to partnerships. How did the lockdown impact your company? Have your businesses bounced back to their previous levels post lockdown? Lockdown was a shock for all Sri Lankan businesses. For example, tea is freshly manufactured. In this case, it took us two weeks to get the factory up and running and the packaging back out. There was a huge demand for our national brand Watawala Tea, so we had to scramble and settle down, but we were able to work with Ministry of Defence and get essential service permits. Healthcare from day one was a priority sector of the Government, so we had the Ministry to help as well. Quarter one was a difficult quarter for all our businesses, but we have bounced back well. Even during the last few months of the second quarter we bounced back well. Things are settling down now, but we are continuing to make plans to ensure that we can sustain. We are quietly bullish. How do you expect the third quarter to be? There is greater awareness about the healthcare challenges while we wait for a long-term solution like a vaccine, whereas in the short term there are self-precautionary measures as well as anti-viral products. We are in the healthcare space and we represent the multinationals that are manufacturing these products. When Hydroxychloroquine was put out as a potential medicine, we had that. And now we have other anti-viral products. We have Covid-19 testing kits. I think what will happen is that we will all have to deal with the virus as it is. Amidst a strict ban on imports, what would be your marketing strategies going ahead? When it comes to healthcare products, we have not been impacted by imports per se, because they are necessary essential goods. We will look into alternate production options and local production. Our consumer category is 100% locally manufactured. Therefore, there is no impact. Imports for these categories have always been small. Overall, the Government’s policy of import control stabilises the exchange rate. That gives us a more positive economic outlook.