Group Strategy

Strategic enablers

2024-25 was a year of strategic consolidation, with Sunshine maintaining its commitment to focus on healthcare, consumer goods, and agribusiness. Capital and leadership bandwidth were directed toward scaling manufacturing capacity, improving operational efficiency, and strengthening market presence across these core sectors.

The Group’s shared services model – spanning governance, risk, finance, IT, HR, and sustainability – continued to drive alignment and efficiency across business units. Structural consolidation and balance sheet strengthening supported agile capital allocation and clearer strategic execution.

Sunshine advanced its ESG agenda in 2024-25 through a structured gap assessment and readiness work for IFRS S1 and S2 compliance. The Group remains committed to embedding sustainability into decision-making and risk management as a cornerstone of long-term resilience and stakeholder trust.

Innovation remained a key enabler of Sunshine’s growth agenda, with focus on capacity expansion, operational streamlining, and digital readiness. The Group prioritised efficiency-led innovation, strengthening competitiveness in an evolving market landscape. Digital readiness and process optimisation also remained central to the Group’s innovation agenda in 2024-25, with investments in systems integration, analytics, and capacity building to support long-term competitiveness.

Group parenting functions

Governance takes the form of independent boards, an Audit Committee, an Investment Committee, Remuneration Committee and Risk Committee, all of which come under the central Sunshine Holdings Board of Directors which appoints the boards of each respective company. High calibre Independent Directors of the Holding board also sit on the subsidiary boards.

Risk assessment is done centrally at the Group level for all business segments. A risk management system developed with the consultation of the Audit Committee and Risk Review Committee is also implemented across the Group. Headline risks including political/regulatory risks, external risks, strategic risks and business risks are all assessed and managed by this committee.

Finance’s parenting function in our group is crucial for establishing financial policies, resource allocation, risk management, and performance evaluation. It ensures consistency, transparency, and optimal utilisation of financial resources across subsidiaries, fostering growth and strategic alignment. By effectively fulfilling these roles, our finance function supports the Group’s financial stability, accountability, and overall success.

The Group runs a centralised HR operation as it was decided early on to achieve cost synergies by using centralised talent. A majority of functions universally applicable across all strategic business units are centrally managed, with individual HR units also overseeing human capital related matters at the business unit level.

The Group’s information infrastructure is primarily cloud-based, across each business unit, including Enterprise Resource Planning (ERP) systems. All businesses utilise data and analytics resources in a shared service model that is run centrally for cost sharing purposes.

Strategic outlook in 2024-25

Consolidation and clarity in structure

Whereas the fiscal year 2023-24 saw selective expansion, the year under review was defined by a concerted effort towards consolidation and strategic realignment. A series of structural reforms served to simplify legal entities, harmonise shareholdings, and strengthen balance sheets across our core businesses. Perhaps the most notable of these reforms was the streamlining of the pharma manufacturing arm into a single, majority-controlled entity. The consumer segment, meanwhile, with its various units, was also unified under one legal structure. Fully disclosed to the Colombo Stock Exchange (CSE), these changes reflect a decidedly disciplined approach to corporate architecture, taken with a view to delivering long-term resilience and facilitate capital efficiency.

At the Group level, Sunshine continued to operate as an investment holding company in 2024-25, orchestrating value creation through the Group’s interests in healthcare, consumer goods, and agribusiness, with assets such as land leased back to operating units where strategically optimal.

Focused growth amid selective expansion

Though consolidation was the focal point during much of the year, targeted growth initiatives remained a hallmark of the Group’s strategy in 2024-25. Most significantly, we secured a landmark equity infusion of approximately USD 11 Mn. from the International Finance Corporation (IFC) in October 2024 through the divestiture of a minority stake in the consumer business. This growth capital was channelled into expanding pharma manufacturing, particularly in the inhalers product segment, where Sunshine remains Sri Lanka’s sole domestic producer. For the first time in the Group’s history, Sunshine was able to fulfil the entirety of the state health sector’s requirement for dry powder inhalers in 2024, a milestone in advancing the national import substitution agenda, which also served to position Sunshine’s manufacturing business for future scale including contract manufacturing for the private sector.

In conjunction with these efforts, operational improvements were also gradually introduced throughout the reporting period, most notably in the consumer segment. Sales teams in tea and confectionery who had previously worked in isolation were integrated in 2024-25 to drive up efficiency and margin improvement. Though it was not without some short-term challenges, this transformation, long overdue, showed early signs of operational stability which are now emerging at the time of preparing this report.

Centralised direction, decentralised execution

Sunshine’s six parenting functions continued to provide the backbone for coordinated execution in 2024-25. Finance led capital structure optimisation throughout the year and worked closely with the Board to align leverage with prudent risk appetite, while Information Technology advanced digitalisation efforts building on the ERP and cloud-first architecture outlined in FY24. Human Resources focused on leadership development and succession planning, while Sustainability formalised ESG data capture to meet forthcoming SLFRS S1 and S2 disclosure mandates. Governance and Risk Management, meanwhile, reinforced the Group’s culture of compliance and transparency, ensuring that operational decision-making remained intertwined with strategic intent.

Navigating a stabilising but uncertain environment

The macroeconomic backdrop in 2024-25 provided both opportunities and constraints for the Group. Rising private credit growth and a rebound in consumer spending meant there was some room for cautious optimism, with with white goods and mass-market FMCG categories showing signs of pent-up demand. At the same time, global volatility, from trade tensions to shifting supply chains, required a flexible, risk-aware approach. In light of this, Sunshine continued its eastward diversification in tea exports, gradually reducing exposure to the Middle East and Russia while building volumes in China and Japan in line with our three-year strategy.

Domestically, as mentioned previously, the year’s political transition prompted a prudent, “wait and see” approach. With Sri Lanka’s ongoing commitment to IMF-supported reforms, the policy environment remained largely stable, enabling the Group to focus on execution rather than contingency planning.

Regulatory and ESG responsiveness

In healthcare, the Group continued to navigate complex regulatory headwinds, notably price controls on essential pharmaceuticals that remain decoupled from currency realities. During the reporting period, Sunshine absorbed significant cost shocks, participated in industry-level legal interventions, and engaged with global principals to secure sustainable supply. While some international brands withdrew, generics remained available, ensuring continued market presence.

On the ESG front, sustainability continued to move from implicit practice to explicit reporting. While social engagement and governance excellence have long been embedded in Sunshine’s culture, the new reporting era – driven by SLFRS S1 and S2 – prompted a formalisation of metrics, processes, and disclosures. Work is underway to align data capture and reporting systems, with the Group poised to meet compliance requirements for top-100 listed companies in the upcoming reporting cycle.