Operations centred on two key growth verticals: international trading and Information Technology services.
Overview
The Group’s investment cluster involves operations in two key growth verticals of the Sri Lankan economy: Export of goods and Information Technology (IT) services.
Export operations
With 45 years in business, Tropikal International helms the Group’s international trading arm and is involved in trading of fresh produce, dried foods, and value added exports. Expanding focus to include organic products, the Company maintains compliance with a number of international certifications for food safety and quality, such as ISO 22000, HACCP, BRC, and GMP; and produces and exports organic, kosher, and halal-certified products to selected markets.
IT solutions
The Group’s offering in the IT sector is led by ITX360, an end-to-end IT solutions provider. What began as an internal shared-services function that overlooked the IT needs of the Group, has developed into a modern company with a wealth of experience and rich client-base consisting of some of Sri Lanka’s largest bluechip corporations. The Company employs over 130 professionals and offers a full suite of services. Backed by an extensive supplier ecosystem of global IT solutions providers, the Company is positioned to support digital transformation and organisational management requirements.
Financial highlights
| Key performance indicators |
FY 2022/23
Rs. Mn. |
FY 2021/22 Rs. Mn. |
Change % |
|
| Revenue | 6,532 | 3,644 | 79 |  |
| Gross profit | 1,569 | 647 | 143 | |
| Earnings before interest and taxes (EBIT) | 570 | 799 | -29 |  |
| Net finance cost | 16,369 | 2,720 | 502 |  |
| Profit before tax | 16,939 | 3,519 | 381 | |
| Profit after tax | 17,036 | 3,637 | 368 | |
| Total assets | 6,289 | 6,138 | 2 | |
| Total equity | 2,163 | 1,214 | 78 | |
| Total debt | 2,984 | 3,547 | -16 | |
| Capital employed | 5,147 | 4,761 | 8 | |
| Return on equity (%) | 1,008.9 | 1,740.2 | -42 | |
| Return on capital employed (%) | 13.5 | 30.1 | -55 | |
Sector performance
While representing a comparatively small business vertical within the Group, the investment arm was able to consolidate and produce a satisfactory performance despite market challenges and disruptions caused by the economic crisis in Sri Lanka. The Group’s investment sector posted a revenue of Rs. 6.5 Bn. during the year under review, up 79% from the previous year.
Sector strategy
Capability development
The Group retained a focus on strengthening capabilities; recruiting qualified and experienced talent, and continuing to invest in employee engagement. A dynamic workplace culture and growing visibility in the IT sector saw ITX360 recertified as a Great Place to Work and ranking amongst the top 10 enterprises in the IT sector.
Best-in-class systems and processes
ITX360 completed progress toward achieving ISO 27001 Information Security Management certification. This is addition to existing ISO 9001 certification for Quality Management and ISO 14001 certification for Environmental Management. Support service operations were strengthened during the year with ITX Care, a fully automated help-desk system put in place to enhance service quality. After-sales services and service engagements were also standardised to better meet customer requirements.
Growing global partner ecosystem
Strengthening a wide-reaching partner and supplier ecosystem, ITX360 continued to acquire new technology partnerships to deepen its solutions offering and provide cutting-edge professional services in transformation, digitalisation, automation, and cyber-security domains. Through strong partnerships and continuous investment, the Company is fast becoming a leader in ICT integration in Sri Lanka and the region.
ITX360 received two awards during the year under review, recognising the strength of partnerships and contribution to partner goals.
FUTURE OUTLOOK
Downtrend of the global economy coupled with the scale of Sri Lanka’s economic crisis presented a plethora of challenges during the year under review.
EXPORT OPERATIONS
Sri Lanka’s trade deficit narrowed to its lowest point in decades on the back of stringent curbs on imports. However, Sri Lanka’s economic crisis and resultant fuel shortages, aftershocks of the drastic ban on chemical fertiliser, and escalated costs coupled with scarcity of imported raw materials have served to dull the performance of the agriculture sector.
On the back of partnership with a new strategic management partner, the Business concentrated on fewer verticals and focused on a higher-yield, less-volatile portfolio of products. These steps have stabilised operations while ensuring the Group’s trading arm is well positioned to exploit new opportunities in the export sector.
A focus on market expansion has strengthened growth in new markets beyond the Middle East, thereby creating opportunities for growth in wallet-share with key customers in the years to come.
Efforts to restructure and improve efficiencies within the trading arm, while strengthening capabilities through investment in new competencies, ensure the Business is refitted and focused on long-term growth.
IT SOLUTIONS
The ICT industry remains a rapidly growing and evolving sector around the globe and in Sri Lanka. Sparked by pandemic-induced disruptions and changes to ways of doing business, digital transformation projects by corporations and upgrade of legacy systems creates strong prospects for growth.
Future opportunities abound in areas such as Machine Learning (ML) and Artificial Intelligence (AI), cloud and edge computing, and process automation. Industry disruptors such as decentralisation and Web3 are also seeing increased interest and more practical use-cases. Aligned with increased digitalisation and focus on competitiveness of Sri Lanka’s service industries overseas; data privacy and cybersecurity are areas in which corporations are increasingly concerned.
The Group’s IT solutions arm is focused on sustaining a formidable sales-drive to consolidate market presence in Sri Lanka in the short to medium-term, with long-term plans in place to grow internationally. New partnerships and capability development have strengthened cloud-services capability and delivery of digital transformation; with particular focus on digital workspaces and cybersecurity. Establishment of a fully-fledged data centre team with the capacity to design, implement, and manage data centres is a key step to grow the portfolio in Managed IT services. Further investments are also planned to strengthen the Company’s cybersecurity division and expand offering to a wider portfolio of clients.
Providing modern and efficient digital solutions that support Expolanka’s growth trajectory continues to be a priority in the years ahead. Plans are underway for formation of a standardised Security Operations Center (SOC) and Network Operations Centers (NOCs) that would enable better centralised management of the Group’s growing IT security and service reliability requirements.