DIMO buys fruits, vegetables export firm for Rs. 450 m

Reinforcing its strategic shift to value-added agriculture Diesel and Motor Engineering PLC (DIMO) has acquired a fruits and vegetable export firm for Rs. 450 million.

The venture is Tropical Health Food Ltd., engaged in the business of processing and preparing fruits and vegetables for the export market. DIMO has acquired a 94.45% stake in the company from its German owner Orhan Yilmaz.

Tropical Health Food is a Board of Investment approved venture established in 1994 to process and export organic foods for the European market. The company is the first organic food exporting company in Sri Lanka under organic certification of Control Union-Netherland. As per its web site, Tropical Health Food produces 3000 MT of Pineapple, 100 MT of Mango, 100 MT of Banana, 115 MT of Ripe and Young Jackfruits. Its factory at Heraliyawala Industrial Park, Malkaduwawa, Kurunegala, has a capacity of 8,000 jars per day.

In recent years, DIMO has stepped up investments in agribusiness. In 2018 it bought 51% stake each in Plantchem Ltd., and Plant Seeds Ltd., for Rs. 345.5 million and last year it upped the stake to 70%. DIMO’s agriculture business includes import, sale and after sales services of agri-machinery, import, processing and distribution of agro chemicals, seeds and fertiliser, import producing, processing and sale of agricultural seeds.

Revenue from its agriculture business had grown to Rs. 7.6 billion in the first nine month of FY22 from Rs. 5.5 billion a year ago whilst profit before tax almost tripled to Rs. 1.5 billion and Rs. 123 million in the full financial year of 2020.

The greater focus on agriculture is also partly due to poor prospects for DIMO’s core business such as vehicles given the import ban.