Leaders and teams
Ensuring that our strategic business units had leaders and teams in place capable of delivering on the plans coupled with rigorous review of performance was key to delivery.
It is my pleasure to report that CIC Holdings has delivered a profit of Rs.1,040.84 Mn for the year 2014/15 as the result of a carefully orchestrated turnaround in a year that went to plan. The story was about getting back to our
core strengths after the painful restructuring in the previous year. Top line growth of 3%, asset growth of 2% and a return to profitability demonstrate our commitment to our corporate vision, efficiency of our business
processes,strength of our governance structure and most importantly efforts of our staff.
The Board implemented rigorous performance evaluation systems and strengthened governance structures with a strong focus on the results achieved as well as how it was achieved, ensuring that process changes agreed were delivered to ensure efficient value creation. Reconstitution of the Board in 2013/14 brought in a collective wealth of experience in the corporate sector of the country with diverse perspectives enhancing the objectivity in review of business processes. Ensuring that our strategic business units had leaders and teams in place capable of delivering on the plans coupled with rigorous review of performance was key to delivery. The Chairman played a key role in bringing about greater understanding between the Board and the management which ensured that areas of concern were addressed quickly. High levels of stakeholder engagement in our turnaround resulted in valuable feedback, positive encouragement and support during a period of fast paced change.
The main objective of restructuring was about getting back to our core competencies in 6 industries selected for their growth potential, namely Pharmaceuticals, Dairy, Seeds, Rice, Industrial Chemicals and Strategic Initiaitives.
The Consumer and Pharmaceuticals segment has turned
around focusing on a selective growth strategy. The
Pharmaceuticals segment focused on surgical products in
niche areas introducing cutting edge technology in an ethical
manner by educating the medical profession of potential
applications of the product range. Whilst the pharmaceuticals
division consolidated on its diverse portfolio of Pharma
Agencies, the consumer division turned into profitability with
careful management of the distributor system and market
Link Natural has taken on leading fast moving consumer
goods giants with Link Sudantha and has made significant
inroads in capturing market share. Samahan is a trusted
household name with Sri Lankans all over the world who
have opened new avenues in key migrant markets. The Link
Naturals distribution network is ranked among the top ten
networks in the country and this company is well poised
for growth in a sector that has high potential. The company
continues to innovate and has launched a further improved,
new product range catering to the needs of higher income
segments of the market.
Consolidation of Agriculture involved taking a strategic
view at where our strengths lie and ensuring that we
stayed in businesses that continued to create value for our
stakeholders. Consequently, we have focussed on dairy,
grain, rice and seeds. Dairy and grain dovetails into our
animal feeds presenting opportunities for cross sell and
growth. Rice exports have been a success with CIC Red
Basmathi which has health benefits being a major success.
CIC has been the leading producer of seed paddy in the
country. CIC constantly innovates to produce new varieties of
rice which are appealing to the high end local and overseas
consumers. Our focus on land productivity ensures that CIC
gets some of the highest yields in rice which are around
three times the national average through sustainable means,
managing waste to nourish the soil as an integral part of
The performance of the Construction industry segment
was below expectations due to an extremely challenging,
environment which curtailed top line growth but the segment
has shown signs of improvement in the last quarter. Cisco
Packaging had a good year as consumer demand remained
strong delivering growth in top line and profitability. Industrial
raw materials segment has also performed according to plan
supported by strong growth in the industry sector turning in
the planned profit.
This has also been a period of significant change for our staff
and maintaining morale was critical to implementing enduring
change. Many of our staff are experts in their fields making
retention and on boarding of key value creators a high priority.
Communicating change, inspiring and motivating our team
has paved the way for a stronger company.
Delivering Expectations of Stakeholders
CIC has a large number of stakeholders and we are
committed to delivering their expectations as many rely on
CIC to sustain their quality of life.
We have continued to maintain our promise of quality to
our consumers who include our products in their regular
shopping lists. CIC is the largest producer of fruits and
curd and one of the leading players in eggs and chicken.
We practice the farm to fork concept in order to guarantee
traceability. Key B2B customers have entered in to special
programmes with CIC to source chicken and vegetables for
their own production because of this promise of quality which
relies on a robust system of farmer education and quality
control audits of agricultural practices.
Over 20,000 farmers and 2,000 distributors who are located
throughout the island forming vital links in our supply chain.
Our projects on farmer education have continued unabated
and supported the education of over 350 children annually.
We carry out various initiatives to encourage youth into
farming through education and other social programs.
Our shareholders and bankers who provide capital have
been supportive throughout the period of restructuring.
We are sincerely appreciative of their understanding and
have delivered on our commitments made to our bankers
and our shareholders this year achieving the turnaround in
performance within the agreed timeframes.
Sri Lanka’s growth of 7.4% and in particular, the increasing
contribution to GDP from the provinces, provides a
sound platform for growth. Improvement of the country’s
infrastructure, particularly the road network, plays a key role
in connecting farmers to markets and also enables us to
expand distribution chains reaching every village. Agriculture
sector’s share of GDP reduced in 2014 to 10.1% turning in
a disappointing performance largely attributable to adverse
weather conditions. However, Sri Lanka’s self-sufficiency in
rice and increasing harvest of vegetables is encouraging as
the lustre of export crops dim due to declining prices in global
Government will continue to be a key player in the sector and
is also the policy maker which may impact potential entrants.
CIC has been a key player in this segment and has proven its
ability to compete effectively and profitably, contributing to the
country’s food security due to our expertise and experience.
It is also noteworthy that policy decisions have a considerable
impact on investment decisions such as regulating milk prices
and price control of yoghurts.
The country’s progress towards middle income status
supports the growth of our consumer segments as non-food
expenditure increases with the increased disposable income.
Strong distribution networks and a portfolio of brands that are
trusted enhance CIC’s competitive positioning in this lucrative
The Industrial Raw Materials, Packaging Materials and
Construction segments will benefit from the positive growth
observed in key export markets and the growth of the
industry segment. Lower oil prices are also expected to boost
industry in oil importing countries such as Sri Lanka and
this is also expected to support the growth of this business
We are encouraged by the results we have achieved but
understand that there is no room for complacency. New
opportunities in an environment that is increasingly more
favourable to Sri Lanka must be seized and realised without
delay. CIC Group continues to focus on innovation, product
development, market development and technology to drive
growth. Our grounding in sustainability principles facilitates
efficient resource allocation in delivering value to our
In a year of unprecedented challenge for CIC, having a strong
Board that provides encouragement balanced with a realistic
analysis of the ground situation is a solid foundation for
driving performance. I wish to thank especially the Chairman
for the role he played in this crucial year and the Board of
Directors for sharing their industry insights, expertise and
business acumen to develop appropriate strategies and
ensure that we stayed on track. Our Bankers who have
supported the group through our transformation have
my sincere respect for continuing to provide the umbrella
during the rains. My thanks to the team who have been
the implementers of our new corporate architecture and
transformation, for delivering the results presented in this