Sri Lanka wraps up valuation process for NLDB and Milco divestiture
The Morning: All preliminary preparations for the divestiture of the Government’s stake in the National Livestock Development Board (NLDB) and Milco Ltd. have been completed and the divestiture of the two entities is expected to be completed in two months’ time, the Ministry of Agriculture and Plantation Industries reveals.
Speaking to The Sunday Morning Business, Ministry of Agriculture and Plantation Industries Director Media W.M.D. Wanninayake revealed that all preliminary preparation, including the valuation process of NLDB and Milco, had been completed.
He added that the two entities were ready to be divested to the proposed Joint Venture (JV) comprising the National Dairy Development Board (NDDB) of India, Gujarat Cooperative Milk Marketing Federation Ltd. (GCMMF), and Cargills (Ceylon) PLC.
However, he conceded that although the preliminary preparations had been completed, it would in fact take about two months more to complete the divestiture of the two entities.
Commenting on the future of the current employees of the entities, he stated: “I can confirm that nothing will happen to the employees. In fact, I can confirm that there will be no impact on their employment and their families.”
In September 2023, the Cabinet of Ministers approved a joint Cabinet memorandum granting approval to commence the valuation process of NLDB and Milco, further instructing the respective boards of the two entities to refrain from making any key decisions in respect of their immovable and movable assets and the respective staff, going forward.
It was further revealed that the Government intended to retain a golden share without rights for dividends or liabilities and the partners of the JV company had proved amicable to this proposal, provided that the golden shareholder had no control over the company’s affairs.
According to the proposal made by the JV company, it will take over 31 NLDB farms and is expected to invest heavily on the production of high-genetic-potential heifers, supplying high-quality bulls for semen production, intensive fodder production, training of farmers, and for precision feeding interventions at the farms.
Accordingly, it is targeting an increase in milk production of more than 50% in the country during the first five years and more than 100% within a decade. The company also intends to commence the stalled construction of Milco’s Badalgama dairy plant.
OSL take:
Sri Lanka’s ongoing programme to restructure a selected group of state-owned enterprises (SOEs) has presented business/investment opportunities for foreign businesses/investors exploring opportunities in the region. With the country’s ongoing economic expansion programme and Sri Lanka working towards becoming a hub in the South Asian region, the business/investment opportunities presented by the country would see a further increase in the coming months as well as years. The move by the local authorities to divest NLDB and Milco, two main state-owned dairy businesses, provide lucrative business opportunities given the growing market in Sri Lanka for fresh milk and milk-based produce. The Sri Lankan government is working towards making the country self-sufficient in fresh milk and has continuously ensured the growth in the country’s dairy milk industry. Given the growth potential in Sri Lanka’s dairy industry, which has also received financial assistance from multilateral donor agencies, foreign businesses/investors could explore the growing business/investment opportunities in the industry by participating in the divestiture of NLDB and Milco.