Sunshine Holdings to exit packaging biz

Sunshine Holdings Plc has decided to consider the cessation of manufacturing operations of packaging subsidiary by 31 August.

The company said it is continuing to evaluate restructuring options and the deployment of the assets of Sunshine Packaging Lanka Ltd. The fully owned subsidiary is engaged in metal packaging for tea and confectionery industries.

The latest move follows plans to forge a joint venture with a foreign party failing and prospects turning dimmer. 

Sunshine Holdings in 2004/5 financial year diversified into Printing and Packaging solution for Beverages and Confectionery industry via acquisition of Sunshine Packaging.

In FY17, Sunshine Group revenue was Rs. 19.2 billion whilst packaging business contributed Rs. 326 million, slightly lower from Rs. 362 million in the previous year. Profit had declined to Rs. 3.8 million from Rs. 16.7 million in FY16.

In FY17 Annual Report, Sunshine Holdings said the board of Sunshine Packaging Lanka Ltd., is considering the restructure of its business operations. Further, a provision of Rs. 21.8 million has been made in the company for probable impairment of investment arising on accumulated loss of Sunshine Packaging.

Its assets were Rs. 590 million as at 31 March, down from Rs. 617 million a year earlier. Liabilities amounted to Rs. 250 million. Issued capital of Sunshine Packaging is 35.65 million shares.

In FY2016, Sunshine announced plans to sell 40% stake in packaging subsidiary to Primeco Holdings but plans fell off. If the joint venture was successful, subsidiary was confident of continuing positive performance of 2016/17 following a strong order book which will result in improved machine utilisation. Rise in global tin metal prices, and an increase from current levels as well as a further depreciation of the Rupee were major issues. Previous plans were to expand the business during 2016/17 with a capital infusion of $ 2 million from Primeco Group, Hong Kong (FDI) taking up 40% stake.

In FY16, the packaging business saw revenue grow by 34% to reach Rs. 362 million and achieved a remarkable turnaround to record a PAT of Rs. 16 million vis-à-vis a loss of Rs. 24 million in 2014/15.