Diversified conglomerate Sunshine Holdings PLC’s subs idiary Watawala Plantations PLC yesterday entered into a joint venture with Singapore-based asset manager Duxton Asset Management to set up a US$ 11.5 million dairy operation in Lonach Estate in Watawala. “Today we have signed a joint venture of approximately US$ 11.5 million for a dairy farm in Lonach Estate in Watawala Plantations” Sunshine Holdings Managing Director Vish Gowindasamy said.

He noted that half of the investment will be through equity equally invested by Sunshine Holdings and Duxton Asset Management— while the remaining half will be raised through debt. Gowindasamy added that the farm, set up under the Board of Investment (BoI) entity Watawala Dairy Limited, will begin full operations by end-2016, and will have a 17 percent return on investment.

Watawala Plantations already has a pilot farm in the area with 75 dairy cows which had been set up with an investment of Rs.20 million and generates Rs. 30 million in revenue annually. “It’s in the same place, but in a larger area. The pilot farm produces 1,500 litres of milk a day, and this project will produce 30,000 litres a day,” Gowindasamy said. Watawala Dairy Farm Manager Jacques du Plessis said that the new farm will have 1,700 cows, of which 1,000 will be dairy cows. Initially, fresh produce will be sold to commercial buyers, while the company will be seeking opportunities for branding and value addition in the future.

“This is our first investment in Sri Lanka, and hopefully not our last. A country like Sri Lanka shouldn’t be importing food products. Most of it can be grown here. Many world class food products are made here,” Duxton Asset Management CIO Desmond Sheehy said. Sri Lanka’s annual dairy demand is around 741 million litres, with a supply of around 358 million. Sheehy noted that the local dairy industry is in its nascent stage, and that the new venture will help the country increase its capacities by creating a better gene pool for dairy cows, better dairy management practices and by creating side industries which will make use of the dairy. “We would not expect to have any foreigners in the farm, except some foreigners who would come here to learn.

We also expect Sri Lankans to go to our farms in other countries to learn,” Sheehy said. According to Gowindasamy, the farm will take up 50 hectares within the 260 hectare Lonach Estate of Watawala Plantations, and will provide better employment for its staff through herd and feedstock management, since some of the tea operations within the estate have been lagging. Du Plessis said that 120 Watawala Plantations staff will be employed initially. Watawala Plantations is the one of the most profitable regional plantation companies, and is the largest producer of oil palm in the country. Sunshine Holdings is an industry leader in many areas, including pharmaceuticals, fastmoving consumer goods, agribusiness and renewable energy. Duxton Asset Management has over US$690 million assets in management, US$460 million of which are in agricultural investments.