Harischandra Annual Report Inner Pages 3
Transcript of Harischandra Annual Report Inner Pages 3
To provide the public with a
variety of high quality
foods and soaps.
Our Vision
To enhance our heritage
brand status and
serve the nation.
Our Mission
NoticeofMeeting 4
CorporateInformation 5
Chairman'sReview 6
ManagingDirector'sReport 7
CorporateGovernance 11
RiskManagement 16
RemunerationCommitteeReport 17
AuditCommitteeReport 18
RelatedPartyTransactionsReviewCommitteeReport 20
BoardofDirectors 21
AnnualReportoftheBoardofDirectors
-ontheAffairsoftheCompany 22
StatementofDirectors'Responsibilityfor
-FinancialReporting 28
IndependentAuditors'Report 29
StatementofPro�itorLossandOther
-ComprehensiveIncome 33
StatementofFinancialPosition 35
StatementofChangesinEquity 36
StatementofCashFlows 38
NotestotheFinancialStatements 39
StatementofValueAdded 75
TenYearsStatisticalSummary 76
InvestorInformation 77
FormofProxy 79
-03-
NOTICEOFMEETING
thNoticeisherebygiventhatthe68 AnnualGeneralMeetingofHarischandraMillsPLC,willbeheldattheregisteredof�iceofthe
Company,No.11,C.A.HarischandraMawatha,Mataraon14November2020at11.00a.m.forthefollowingpurposes.
1. ToreceiveandconsidertheReportoftheDirectorsandAuditedStatementofAccountsfortheyearended31March,2020
alongwiththereportoftheAuditorsthereon.
2. Todeclarea�inaldividendofRupeesThirty(Rs.30/-)pershareforthe�inancialyearended31March2020asrecommended
bytheDirectors.
3. Tore-electMr.S.A.S.JayasundaraasaDirector,whoretiresintermsofArticle98oftheArticlesofAssociation.
4. Tore-appointKPMG,CharteredAccountants,asAuditorsof theCompanyuntil thenextAnnualGeneralMeetingandto
authorisetheDirectorstodeterminetheirremuneration.
5. Toapprove thedonationsandcontributionsmadeby theDirectorsduring theyearunder review,and toauthorise the
Directorstodeterminecontributionstocharitiesfortheensuingyear.
ByOrderoftheBoard
CORPORATESERVICES(PRIVATE)LIMITED.
SecretariesthDated,onthis09 DayofOctober2020
Note
1. Amemberunabletoattendtheabovemeetingisentitledtoappointaproxywhoneednotbeamember.
2. AformofProxyisattachedtothereport.
3. Thecompleted formofProxyshouldbedepositedat theRegisteredOf�iceof thecompanyatNo.11,C.A.Harischandra
Mawatha,Matara,notlessthan48hoursbeforethetime�ixedforthemeeting.
th68AnnualGeneralMeeting
-04-
LegalForm
ApublicCompanywithlimitedliabilityincorporatedinSri
Lanka,whosesharesarelistedintheColomboStockExchange.
CompanyRegistrationNumber
PQ.225
DateofIncorporationth9 January,1953
RegisteredOf�ice
No.11,C.A.HarischandraMawatha,Matara.
Secretaries
CorporateServices(Private)Limited,
216,DeSaramPlace,
Colombo10.
Auditors
KPMG
CharteredAccountants
32A,SirMohamedMacanMarkerMawatha,
Colombo3.
InternalAuditors
Ernst&Young,
CharteredAccountants
201,DeSaramPlace,
Colombo10.
LegalAdvisors
FJ&GDeSaram
Attorneys-at-Law
216,DeSaramPlace,
Colombo10.
Bankers
SampathBankPLC
CommercialBankofCeylonPLC
HattonNationalBankPLC
NDBBankPLC
DFCCBankPLC
SubsidiaryCompany
HarischandraMills(Distributors)Limited(whollyowned)incorporatedinSriLanka.
BoardofDirectors
BastianszM.A.
(Chairman)
SamarasingheS.N.
(ManagingDirector)
DeSilvaG.S.V.
DeSilvaM.P.(Mrs.)
BandaranayakeT.K.
JayasundaraS.A.S.
SamarasingheR.K.(Mrs.)
ExecutiveManagement
GajanayakeC.T.
(ChiefFinancialOf�icer)
NanayakkaraS.N.K.
(SalesManager)
GaminiLokuralageD.S.
(CommercialManager)
KodithuwakkuA.P.R.
(HumanResourcesManager)
RanasingheN.P.
(ProductionEngineer)
SanjeewaH.M.R.S.(FinanceManager)
CORPORATEINFORMATION
-05-
CHAIRMAN'SREVIEW
ItiswithgreatpleasurethatIinviteyoutothe68thAnnualGeneralMeetingofHarischandraMillsPLC,andpresenttoyouthe
AnnualReportoftheCompanyfortheyearended31stMarch2020.
Itwouldnotbeanexaggerationtosaythattheeconomy,whichwasbeginningtoshowsomesignsofrecoveryattheturnofthe
year,sufferedadisastrousblowwiththetragicterroristattacksofApril2019,leadingtoaclimateofgravepoliticalandeconomic
uncertainty.Inthisenvironmentbusinessactivitywassluggishaffectingbothproductionandconsumerdemand.
Revenueinthefoodandsoapproductsincreasedby7%and8%respectively,whilstgrosspro�itwasupmarginallyby3%.
Howeverpro�itaftertaxwasdown14%overthepreviousyear.
ThecompanyhaspaidaninterimdividendofRs20/-pershareon23rdAugust2020.IamhappytoannouncethattheBoardof
Directorshasrecommendedthepaymentofa�inaldividendofRs30/-pershare.
Ithinkitwouldberemissofmenottomentionthefreshchallengesanduncertaintythatwewouldinevitablyfaceasaresultofthe
Covid19pandemic.Atthisstagewearenotfullyawareoftheeconomicconsequencesofthepandemicandhowtheseeventsmay
affectthecompany,butwearehopefulthatwewillhavesuitableproceduresinplacetodealwiththemasandwhentheyarise.
Thecompanycontinueditstraditionofmakinggenerouscontributionstoworthwhilecommunityprojectsintheregionwhich
hasbene�ittedmanylives.
OnbehalfoftheBoardofDirectorsIwouldliketothankthemanagementandallmembersofthestafffortheirbesteffortsin
contributingtothegrowthofthecompany.
MaxwellA.BastianszChairman09October2020
-06-
MANAGINGDIRECTOR'SREPORT
MACROECONOMICENVIRONMENT
ThegrowthofSriLankaneconomyin2019sloweddownto
2.3% compared to 3.3% in 2018mainly due to the Easter
Sundayattacks.Businesscon�idencehasdeclinedduetothis
tragedyandthisledsubdueddemandintheeconomy.Further,
extremeweatherconditionsduring2019adverselyaffectthe
agriculturalsector.
The Rupee, showed marginal appreciation of 0.6% during
2019. Earnings from exports grew by 0.4% and import
expenditure declined by 10.3% compared to 2018. This
resultedgreaterstabilityofexchangeratein2019despitethe
temporarypressure on the aftermath of theEaster Sunday
attacks.
Reduction in taxesat theendof2019by thenewlyelected
government resulted higher disposable income which
positivelyaffectedtheeconomy.Howeveratthelaterpartof
the�inancialyear,theeconomywasshockedbytheCOVID19
outbreak.Domesticviruscontainmentmeasureshasaffected
thekeyeconomicsectorsofthecountry.Especially,tourism,
exports,foreignremittancesandForeignDirectInvestments.
OPERATIONALREVIEW
Despite these challenges, Harischandra Mills PLC reported
beforetaxpro�itofRs.242millionaslightdropof2%from
previousyearandthesalesdeclineof1%toRs.3.65billion.
Foodproductssalesincreasedby7%andpro�itdeclinedby
6% due to the increase in material cost. Fluctuating
performance of agricultural sector of the country mainly
affectedtheincreasedmaterialcost.
Soap sales increased by 8% during the year with 18%
reduction of operating losses compared to previous year.
Being the only soap productwhich got SLSmark,we have
givenspecialfocuscontinuouslyforthesoapmanufacturing
processwhichyieldedimprovedoperatingresults.
Fuelandlubricantsegmentreporteddeclineofsalesby13%
mainlyduetothecompetitionfromtwonew�illingstationsin
Matara.
CORPORATESOCIALRESPONSIBILITY
WerenovatedtheResidentMothers'RoomintheUniversity
Pediatric Unit of the Karapitiya Teaching hospital by
introducingmodern technology and architectural expertise
regardinghealthcareinordertoprovidethehighestcomfort
to mothers. Further, Company donated heavy duty
commercialwashingmachinetoNeonatalIntensiveCareUnit
ofKarapitiyaHospital.
During the year, Company continuously focused its CSR
activities towards enhancing the education of southern
province.With this in view, Company donated Smart class
roomwithallfacilitiestoThelijjawilaCentralCollegeandfully
equippedMediaUnit to ThalpawilaMihinduModel School.
Further,CompanyrenovatedtheEnglishActivityUnitofMR/
Kokmaduwa Primary College by providing computers,
television and other facilities to create a better learning
environmentforthem.
S.N.SamarasingheManagingDirector09October2020
-07-
Asmartclassroomisaramped-upmodeofeducationwhich
spreadthenewtechnologicalexperienceswiththestudents
other than traditional class rooms. Since we are in a
technological era, future generations should be able to
competewiththis.
Byaimingthisconceptwedonatedasmartclassroomwithan
interactive whiteboard and a multimedia projector to the
studentsofMR/TelijjawilaCentralCollegebyopeninganew
pathtothenextgenerationtostepupwiththenewtechnology.
SmartClassRoomTelijjawilaCentralCollege
Wecanchangetheworldbyidentifyingtheneedsofothersand
simplymeetingthoseneeds.Thus,wecontinue investing in
our CSR projects to build a better future for the next
generationsbyenhancinghealthcarefacilities.
WerenovatedtheResidentMothers’RoomintheUniversity
Pediatric Unit of the Karapitiya Teaching hospital by
introducingmodern technology and architectural expertise
regardinghealthcareinordertoprovidethehighestcomfort
tomothers.
TheMothers’Roomwasrenovatedby increasing thespace,
providing reclining chairs, televisions, cupboards, air
conditioners and, other required facilities to make a
comfortableenvironmentwithintheward.
Since it was a necessary requirement for the Neonatal
Intensive Care Unit of Karapitiya Hospital, the company
donatedaHeavyDutyCommercialwashingmachineinorder
tocreatehealthierconditionsforbabies.
DonationsforKarapitiyaHospital
-08-
ThisisanannualeventoftheCompanystartedbyour
founderMr.C.A.Harischandratogiveahelpinghand
to the members of Harischandra staff in their
children’sstudies.
Accordingly,thecompanyprovidesallrequiredstudy
materialstochildrenofthestaff.Further,Company
providesscholarshipstochildrenofemployeeswho
entered forhigherstudiesand this continuesuntil
theycompletetheirstudies.
Distributionofstationerytothe
childrenofstaffmembers
ServiceAppreciation
ByfollowingtheconceptofMr.C.AHarischandra,the
company treats the employees as one of themost
valuable stakeholders of the company. Thus, we
felicitated a special ceremony to appreciate the
employeeswhocontinuouslyserved25yearsandwe
provided oil lamps and other gifts, in order to
appreciatetheirvaluableservicetothecompany.
Sr i Dhammananda Dhamma school o f Sr i
AbhinawaramaViharayahaslocatedinDeraniyagala,
Kegalledistrict.Sinceitisaruralarea,therewasa
lackoftechnicalknowledgeamongthestudents.We
donateddesktopcomputersandprintersinorderto
openanewwaytothemtowardthechangingworld.
Ithasbecomeagreateropportunityforanumberof
SinhalaandTamilchildrentobuildtheirfuturewith
newtechnology.
Computers&PrintersDonation
SriAbhinawaramaViharaya,
Maliboda
-09-
The future generations should be able to preserve the
effectiveness of communication, information sharing and
buildingnewcreationsbyusingmoderntechnology.
WedonatedalltherequiredequipmentandmachinerytoMR/
ThalpavilaMihinduModelSchoolinordertoopenapathfor
themtowardsthemoderntechnologicalworld
MediaUnitThalpavilaMihinduModelSchool
Thechangingworldalwaystriestocompetewitheachother
with international languages and the sound knowledge
regardingEnglishwillbeoneofthemostpowerfulweaponsto
ourchildrentochangetheworld.
Werenovated theEnglishActivityUnitofMR/Kokmaduwa
PrimaryCollegebyprovidingcomputers,televisionandother
facilitiestocreateabetterenvironmentforthem.
EnglishActivityUnitKokmaduwaPrimaryCollege
-10-
CORPORATEGOVERNANCE
"CorporateGovernance"isagenerictermthatdescribesthewaysinwhichrightsandresponsibilitiesaredistributedamongthe
variouscorporatebodiesaccordingtotherules,processesorlawstowhichtheyaresubject.Inpractice,corporategovernance
de�inesthedecision-makingsystemsandstructurethroughwhichownersdirectlyorindirectlycontrolacompany.TheBoardof
DirectorsofHarischandraMillsPLCiscommittedtoensuringbusinessintegrityandprofessionalisminallitsactivities.Asapart
ofthiscommitment,theBoardofDirectorshasproactivelyencouragedgoodcorporategovernancepracticewithintheCompany
basedonagenerallyacceptedpolicyframework,whichemphasizestransparency,controlandaccountability.
BoardofDirectorsanditsRole
TheBoardofDirectorsasof31March2020hassevenmembers;fourexecutiveandthreenon-executive.Threenonexecutive
directors are considered as independent in termsof the listing rules laiddownby theColomboStockExchange andhave
submittedannualindependencedeclarations.Thedirectorsactonafullyinformedbasis,ingoodfaith,withduediligenceand
care,andinthebestinterestofHarischandraMillsPLC.TheyarewellawareofyourCompany'sactivitiesandgivedirectionfor
long-termstrategy,seekingandcontributingviewsandopinionsonstrategicoptionsproposedbytheseniormanagementofthe
Company.ThedirectorsalsoensurethattheCompanyiscompliantwiththeprovisionsoftheCompaniesActNo.07of2007and
otherstatutoryregulatoryrequirements.
Theboardmeetsonaquarterlybasisandhastimelyaccesstoinformationneededtoeffectivelydischargeitsduties.Directors
receiveacomprehensivepackageofrelevantandtimelyinformationonallissuespriortoeachmeeting,thusprovidingthemwith
theopportunitytomakeeffectivecontributionstothedecisionsoftheboard.
SuchmeetingsareattendedbyboththeexecutiveaswellasthenonexecutiveboardmembersandareheadedbytheChairman.At
thesemeetingstheboardreviews;
- MonthlyperformanceoftheCompanyagainstthebudget
- Formulation,monitoringandimplementationofsoundbusinessstrategies,internalcontrolsandrisk
managementproceduresthatareinplaceandmonitortheireffectivenessandinitiatechangeswhererequired
- Secureeffectiveinformation,controlandauditsystems
- Compliancewithlegal/ethicalstandards
Thedetailsofattendanceofboardmeetingsareasfollows.
Mr.M.A.Bastiansz
Mr.S.N.Samarasinghe
Mr.G.S.V.DeSilva
Mrs.M.P.DeSilva
Mr.T.K.Bandaranayake
Mr.S.A.S.Jayasundara
Mrs.R.K.Samarasinghe
24.05.2019 19.07.2019 01.11.2019 07.02.2020
A�endance of Board Mee�ngs
02.04.2019
Excused Excused
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-11-
CORPORATEGOVERNANCE(CONTD.)
AttheAnnualGeneralMeetingineveryyear,oneofthedirectorsretiresbyrotationonthebasisprescribedintheArticlesof
AssociationoftheCompanyandiseligibleforre-election.Theretiringdirectoreligibleforre-electionthisyearismentionedin
theNoticeoftheAGMonpage04.
CompositionoftheBoard
NonExecutive,IndependentDirectors
- Mr.M.A.Bastiansz(Chairman)
- Mr.T.K.Bandaranayake
- Mr.S.A.S.Jayasundara
ExecutiveDirectors
- Mr.S.N.Samarasinghe(ManagingDirector/CEO)
- Mr.G.S.V.DeSilva
- Mrs.M.P.DeSilva
- Mrs.R.K.Samarasinghe
Atpresent,therearesevendirectorsontheboard,whosepro�ilesaregivenonpage21inthisAnnualReport.Allthedirectorshave
thenecessaryskillsandexperiencetodirectandleadtheCompany.
TheBoardhasdeterminedthatMr.M.A.BastianszisanindependentDirectorinspiteofservingontheBoardformorethan10
yearsas it isbene�icial to theCompanyand itsshareholdersandbecauseMr.M.A.Bastiansz isnotdirectly involved in the
managementoftheCompany.
BoardCommittees
AuditCommittee
TheBoard formally constituted theAuditCommittee comprisingofMr.T.K.Bandaranayakeas theChairmanandMr. S.A.S.
Jayasundara, non-executive directors to oversee the �inancial reporting and internal control systems of the Company. This
committee is also directedwith the task of ensuring that all statutory and regulatory requirements are compliedwith in
preparationoftheFinancialStatementsoftheCompanyinorderthattheygiveatrueandfairviewoftheCompany'sstateof
affairs.
TheManagingDirector(CEO)andChiefFinancialOf�icerareinvitedtothemeetingsoftheAuditCommitteeasitisrequiredbythe
membersofthecommittee.AttendanceoftheAuditCommitteemeetingswereasfollows.
ThedetailedAuditCommittee'sreportincludingareasreviewedduringthe�inancialyear2019/2020givenonPage18and19of
theAnnualReport.
AttendanceofAuditCommitteeMeetings
Mr.T.K.Bandaranayake
Mr.S.A.S.Jayasundara
17.05.2019 18.07.2019 01.11.2019 31.01.2020
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-12-
CORPORATEGOVERNANCE(CONTD.)
RemunerationCommittee
The board also has a Remuneration Committee comprising of following two non executive independent directors and its
responsibilityistoestablishanddeveloptheCompany'sgeneralpolicyonremunerationpackageforexecutivedirectors.
- Mr.M.A.Bastiansz(ChairmanoftheCommittee)
- Mr.S.A.S.Jayasundara
TheRemunerationCommitteemetinfollowingoccasionsduringtheyear.
RelatedPartyTransactionsReviewCommittee
Themainobjectiveofthecommitteeistoensureconsistencyofthetransactionswiththecodeofbestpracticesonrelatedparty
transactionsissuedbytheSEC.Followingdirectorsservedasmembersofthecommitteeduringthe�inancialyear.
- Mr.M.A.Bastiansz(ChairmanoftheCommittee)
- Mr.S.A.S.Jayasundara
- Mr.S.N.Samarasinghe
DuringtheFinancialyear2019/2020,theCommitteeheldfourmeetings.
Directors'InterestandResponsibilities
ThedirectorsoftheCompanyhavemadethegeneraldisclosuresprovidedforinSection199(2)oftheCompaniesActNo.07of
2007andhavebeendulyenteredintheinterestregisteroftheCompany.
Thedirectorsarerequiredbyrelevantstatutoryprovisiontoprepare�inancialstatementsforeach�inancialyear,whichgivesa
trueand fairviewof thestateofaffairsof theCompany for thatperiod. Inpreparingthe �inancialstatements,appropriate
accountingpolicieshavebeenselectedandappliedconsistentlyandreasonablyandprudentjudgmentsandestimateshavebeen
made.TheapplicableSriLankaAccountingStandardshavebeenfollowedandexplainedinthenotestothe�inancialstatements.
ThedirectorsareresponsibleforensuringthattheCompanykeepssuf�icientaccountingrecordstodisclosewithreasonable
accuracyof the �inancialpositionof theCompanyand to ensure that theCompany's �inancial statements complywith the
provisionsoftheCompaniesAct.No.07of2007,theSriLankaAccountingStandardsandtheListingRulesoftheColomboStock
Exchange.
ThedirectorsarealsoresponsibleforensuringthatreasonablemeasuresaretakentosafeguardtheassetsoftheCompanyatall
times.Inthiscontext,theyhaveestablishedappropriatesystemsofinternalcontrolswithaviewtopreventinganddetectingof
fraudsandotherirregularities.
Mr.M.A.Bastiansz
24.05.2019 19.07.2019 01.11.2019
Mr.S.A.S.Jayasundara
Mr.S.N.Samarasinghe
Director
AttendanceofRemunerationCommitteeMeetings
09.11.2019 14.02.2020
Mr.M.A.Bastiansz
Mr.S.A.S.Jayasundara
ü
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ü
ü ü
07.02.2020
-13-
CORPORATEGOVERNANCE(CONTD.)
Inpreparingaccounts,thedirectorscontinuetoadoptthegoingconcernbasis.ThedirectorsafterreviewingtheCompany's
budgetandborrowing facilitiesareof theview that theCompanyhasadequate resources tocontinue inoperation for the
foreseeablefuture.
CompliancewithLegalRequirements
Theboardisconsciousofitsresponsibilitiestotheshareholders,thegovernmentandthesocietyinwhichitoperatesandis
unequivocallycommittedtoupholdingethicalbehaviorinconductingitsbusiness.TheBoardofDirectorsrequiresthatFinancial
StatementsarepreparedinaccordancewiththeSriLankaAccountingStandardsandtherequirementsoftheColomboStock
Exchange.
RelationshipwithShareholders
HarischandraMillsPLCaimstoensurethatshareholdershaveaccesstorelevant,up-to-dateandconsistent�inancialandnon-
�inancial information pertaining to the Company. The Annual Report and quarterly Financial Statements provide the
shareholdersaswellasprospectiveinvestorswiththerequiredinformationtoassesstheCompany'spastperformanceand
analyzeitsfutureprospects.
CorporateGovernanceRequirementsundertheListingRulesofColomboStockExchange
Section7oftheListingRulesoftheColomboStockExchangerequiresallListedCompaniestoincludeintheirAnnualReportsan
af�irmativestatementrelatingtocompliancewiththeCorporateGovernanceRulesspeci�iedinthatsection.Thetableinpage15
containstherequiredaf�irmativestatementinthatregard.
CompanySecretary
TheCompanysecretaryisquali�iedtoactinthisroleaspertheprovisionsoftheCompaniesActNo.07of2007.
InternalandExternalAuditors
TheCompany'sInternalAuditfunctionhasbeenoutsourcedandquarterlyreportsaresubmittedbytheInternalAuditor.The
managementdecidesontheareasthatneedtobeauditedbytheInternalAuditorforagivenquarterundertheguidanceofAudit
Committee.
TheExternalAuditorsareappointedbytheshareholdersattheAnnualGeneralMeetingandareresponsibletogivetheiropinion
ontheFinancialStatementspreparedbytheCompany.
thAtthe67 AnnualGeneralMeetingofHarischandraMillsPLCheldon21September2019,theshareholdersreappointedthe
AuditorsM/s.KPMGandauthorisedthedirectorsto�ixtheirremuneration.Theindependentauditorsconducttheannualaudit
inordertoprovideanexternalandobjectiveassuranceonthewayinwhichtheFinancialStatementshavebeenpreparedand
presented.
TheCompanybelievesthattherealvalueofcorporategovernanceliesnotinblindlysatisfyingacodeofbestpracticeprinciplebut
ratherinactuallysecuringthecon�idenceoftheinvestorsandtherebyachievingalowercostofequitybyconductingitsaffairs
withutmostintegrity&fairnesstoallstakeholders.
-14-
7.10.1Non-ExecutiveDirectors
Atleastonethirdofthetotalnumberofdirectorsshouldbenon-executivedirectors
Therearethreenonexecutivedirectorsintheboard
Allthreenon-executivedirectorsareindependent.
Pleasereferpage12
Pleasereferpage21
Pleasereferpage17
Pleasereferpage17
Pleasereferpage17&64
Pleasereferpage12
Pleasereferpage12
Pleasereferpage18
Pleasereferpage18&19
Pleasereferpage18&19
NamesofthemembersofAuditCommitteearesetoutinPages18&19
Pleasereferpage17
Complied
Complied
Complied
Complied
Complied
Complied
Complied
Complied
Complied
Twooronethirdofnon-executivedirectors,whicheverishighershouldbeindependent
Eachnon-executivedirectorshouldsubmitadeclarationofindependence/non-independenceintheprescribedformat
NamesofindependentdirectorsshouldbedisclosedintheAnnualReport
AbriefresumeofeachdirectorshouldbeincludedintheAnnualReportincludingtheareasofexpertise
AlistedCompanyshallhaveaRemunerationCommittee
TheRemunerationCommitteeshallcompriseofnon-executivedirectorsamajorityofwhomwillbeindependent
TheRemunerationCommitteeshallrecommendtheremunerationofChiefExecutiveOf�icerandExecutiveDirectors
TheCompanyshallhaveanAuditCommittee
7.10.2aIndependentDirectors
7.10.2bIndependentDirectors
7.10.3cDisclosureRelatingtoDirectors
7.10.6aCompositionofAuditCommittee
TheAuditCommittee;ShouldbeasoutlinedintheSection7.10.6bofthelistingrules
7.10.6bAuditCommitteefunctions
7.10.6cDisclosureintheAnnualReportrelatingtoAuditComittee
7.10.3cDisclosureRelatingtoDirectors
7.10.5RemunerationCommittee
7.10.5aCompositionofRemunerationCommittee
7.10.5bFunctionsofRemunerationCommittee
7.10.5cDisclosureintheAnnualReportrelatingtoRemunerationCommittee
7.10.6AuditCommittee
TheAnnualReportshouldsetout;
NamesofdirectorscomprisingtheRemunerationCommitteeStatementofRemunerationPolicyAggregatedremunerationpaidtoexecutive&non-executivedirectors
a)
b)c)
TheAnnualReportshouldsetout;
NamesofdirectorscomprisingtheAuditCommittee
TheAuditCommitteeshallmakeadeterminationoftheindependenceoftheAuditorsanddisclosethebasisforsuchdetermination
TheAnnualReportshallcontainaReportoftheAuditCommitteesettingoutthemannerofcomplianceofthefunctions
c)
b)
a)
CORPORATEGOVERNANCE(CONTD.)
TheAuditCommittee;•
•
•
•
Shallcompriseofnon-executivedirectorsamajorityofwhomwillbeindependent.
Onenon-executiveindependentdirectorshallbeappointedastheChairmanofthecommittee
ChiefExecutiveOf�icerandtheChiefFinancialOf�icershouldattendAuditCommitteeMeetings
TheChairmanoftheAuditCommitteeoronemembershouldbeamemberofaprofessionalaccountingbody
Complied
Complied
Complied
Complied
Complied
Complied
Complied
Submittedtheindependentdeclarationsaccordingly.
Rule Requirement CompanyStatus
Remarks
-15-
Riskmanagement
Risk Management process is implemented in order to
understand,evaluateandaddresstheinheritedrisksforthe
Companytomaximizethechanceofobjectivesbeingachieved
whileensuringitssustainability.Asitisimpossibletomitigate
these risks completely, an effective process of this
management is required toexploit theopportunitiesbring
andallowCompany tobeawareofpossibilities.Hence the
following identi�ied risks are major to Company's
performance and position and are included in the risk
managementprocedure.
SupplyChainManagement
Constant supply of high quality materials, ef�icient and
effective manufacturing and the timely distribution of
productsisamustforthesuccessoftheCompany.
Further the cost of raw materials represents the largest
portion of manufacturing cost of the Company's product;
hencethequalityoftheproductisofparamountimportance.
The Company is inevitably exposed to the risk of
contaminated raw materials accidently or maliciously
throughoutthesupplychainorproductdefectswhichoccur
duetohumanerrororanequipmentfailure.
In order to mitigate and minimize these problems, the
Companyhasdevelopedcontingencyplansofhavingstrong
relationship with its key suppliers to control quality by
periodicalreviewstoensurethattheymeetrigoroustesting
andacceptanceprocedure.
MarketRisk
Loss of market share or market leadership in relevant
segmentsduetointensecompetition,newentrants,changes
incustomerattitudeandeconomicconditionsaretreatedas
identi�iablemarketrisk.
Successfulcustomerrelationshipsarevital toourbusiness
andcontinualgrowth.Maintainingastrongrelationshipwith
ourcustomersisnecessaryforourbrandtobewellpresented
andavailableforpurchasealltime.Further,greatcustomer
satisfaction and the con�idence in our products lead to
buildingbrandloyalty.
A Well maintained quality assurance department always
worksaccordingtotheproceduresandstandardstodeliver
thebesttothecustomer,itwillalsoensurecontinuousfocus
on innovation, regular monitoring of consumer trends,
enhance productivity or ef�iciency to improve price
competitiveness,AlsoMonitormarketdata, thecompetitor
prices and always strive to give the best price to our
customersandstrengthenthemarketpositionofourbrand.
Combinationofthesestrategiesminimizesthemarketriskto
aconsiderablelevel.
RegulatoryandLegalRisks
Potentiallossesarisingduetoviolationofornonconformance
with laws, rules, regulation, prescribed practices, internal
policiesandproceduresorethicalstandardsareincludedas
regulatory and legal risks. The company is governed by
VariouslawsandregulationsincludingCompaniesAct,Inland
RevenueAct,SECregulations,andCSErules.
Failure to complywith laws and regulations could expose
Companytocivilcriminalactionleadingtodamages,�inesand
criminal sanctions against our employees with possible
consequencestoourreputation.Andalsochangestolawsand
regulationscouldhaveamaterialimpactonthecostofdoing
business.
Therefore we have implemented strong risk management
processes to monitor and comply with all laws and
regulations applicable to the company.Managementof the
Company always coordinates with Company lawyers and
secretariestoensurecompliance.
Internalauditsalsocarriedouteveryquartertomitigatethe
possiblerisksofnotcomplyingwithrelevantstandards.
FinancialandLiquidityRisks
Theresponsibilityofthemanagementofthe�inancialrisks
throughcontinuousmonitoringalongwith�inancialriskhas
reducedexposuretocreditriskandexternal�inancingisvery
low.Alsotheliquidityrisks,theriskofbeingunabletofund
thebusinessbymaintainingadequatecash�lows.Cash�lows
arereviewedcontinuouslyandstrongrelationshiparebeing
maintained with �inancial institutions. The �inancial
indicators and the regular items on the board agenda and
emerging trendsofboth local andglobal are also takenas
waysofmanaging�inancialrisk.
HumanResources
TheCompanyplacesstrongemphasisonretainingkeytalent
throughitsemployeeengagementsandtalentmanagement
strategies including performance evaluation, career
guidance,traininganddevelopment.TheCompanyisaware
thatthelackofskillsandcompetenceinstaffcouldresultin
the ability of the Company to grow and sustain its
performanceinthefacecompetitioninthemarketandmay
also lead to lower productivity and increased costs. The
structuredandrelevanttraininganddevelopmentprograms
aredesignedtomitigateallrisksrelatedtoHumanResources.
RISKMANAGEMENT
-16-
REMUNERATIONCOMMITTEEREPORT
TheRemunerationCommitteeconsistsoftwononexecutivedirectors,Mr.M.A.Bastiansz(Chairmanofthecommittee)andMr.
S.A.S.Jayasundara.
TheroleoftheRemunerationCommitteeincludesthereviewandrecommendationtotheboardtotalremunerationforexecutive
andnonexecutivedirectorsaswellasseniormanagementfortheyear.Thecommitteeevaluatestheremunerationbyconsidering
theexistingmarketratesandcompensationpackagesofferedbyothersimilarcompanies.
Apartfromrecommendingremunerationofexecutivedirectors,thecommitteereviewstheremunerationpolicyoftheCompany.
TheremunerationpolicyoftheCompanytakesintoaccount;marketrates,experienceandskillsoftheemployees,employee
gradeandperformancewhendeterminingtheremunerationpackageofemployees.Thiswillhelpnotonlytoretaintheexisting
staffbutalsotoattracthighcalibreemployees.
Aggregateremunerationpaidtoexecutivedirectorsandnonexecutivedirectorsaredisclosedatpage64.
M.A.BastianszChairman-RemunerationCommittee09October2020
-17-
AUDITCOMMITTEEREPORT
RoleoftheCommittee
Theboardhasdelegated to the committee responsibility foroverseeing the �inancial reportingand internal controlof the
companyaswellas the internalauditprocessand theexternalaudit.Themainroleof theCommittee is toencourageand
safeguardthehigheststandardsofintegrity,�inancialreporting,riskmanagementandinternalcontrol.Indoingthistheprincipal
responsibilitiesofthecommitteeinclude:
- Reviewing the form and content and monitoring the integrity of the Company's and the Group's Financial
Statements.
- Monitoringandreviewingthearrangementsforensuringtheobjectivityandeffectivenessoftheexternaland
internalauditfunctionsandinparticular,theindependenceoftheExternalAuditors.
- RecommendingtotheBoard,theappointment,re-appointmentorremovaloftheExternalAuditorsandthefees
payabletothem.
- ReviewingtheadequacyandeffectivenessoftheCompany'sinternalcontrolsandriskmanagementsystems;and
ReviewingandmonitoringtheCompany'sethicalstandards,proceduresforensuringcompliancewithstatutory
andregulatoryrequirementsanditsrelationshipwiththerelevantregulatoryauthorities.
Composition
The Audit Committee consists of independent non-executive directors and presently comprises, Mr. T.K. Bandaranayake
(Chairman),aseniorCharteredAccountantwithextensiveauditexperience,particularlyaretiredseniorpartnerofErnst&
YoungSriLankaafter27yearsofservice,andMr.S.A.S.Jayasundara,anattorneyatlawwithmanyyearsofcommercialsector
experienceasanindependentdirectorofseveralothercompaniestoo.
MeetingsoftheCommittee
TheAuditcommitteemetfourtimesinthe�inancialyear.TheManagingDirector(ChiefExecutiveOf�icer)andChiefFinancial
Of�icerattendedbyinvitationandbriefedthecommitteeonspeci�icissues.Theexternalandinternalauditorswerealsorequired
toattendmeetingswhereconsiderednecessary.
Activities
Duringtheyearunderreviewthecommitteehascarriedoutthefollowingactivities.
FinancialReporting
Duringtheyear,thecommitteereviewed�inancialreportingandrelatedmattersincludingthequarterlyandannualFinancial
Statements,otherrelatedannualreport information,andannouncementspriortosubmissiontotheboard.Thecommittee
focusedinparticularonkeyaccountingpoliciesandpracticesadoptedbytheCompanyandanysigni�icantareasofjudgmentthat
materiallyimpactedonreportedresults.
WiththeintroductionofthenewAuditReportPreviousyear,theauditcommitteehasintroducedaprocesstodiscusstheareas
whichareidenti�iedasKeyAuditMattersbyMessrsKPMGforreportingintheAuditReportattheAuditplanningandcompletion
stage.
InternalAuditandControlIssues
Atitsmeetingsduringtheyear,thecommitteereviewedtheresultsoftheauditsundertakenbytheInternalAuditors,Messrs,
Ernst&Young,andconsideredtheadequacyofmanagement'sresponsetothemattersraised,includingtheimplementationof
recommendationsmadebytheauditors.Itreviewedandapprovedtheinternalauditplanforthecomingyearandthelevelof
resourcesallocatedtotheinternalauditfunction.
-18-
AUDITCOMMITTEEREPORT(CONTD.)
ExternalAudit
ThecommitteemetwiththeExternalAuditors,MessrsKPMGpriortocommencementoftheannualauditandapprovedtheaudit
planpresentedbythem.Attheconclusionoftheannualaudit,thecommitteemettheauditorstodiscussthe�indingsoftheaudit.
Non-executivedirectorshadseparatemeetingswithauditorstodiscussanysensitiveissuesandensuretheyhadnocauseto
compromiseontheirindependence.Auditors'ManagementLettertogetherwiththeManagement'sresponsetheretoandthe
AuditedFinancialStatementswerereviewedwiththeauditors.Havingsatis�iedthemselveswiththequalityandindependenceof
theauditorstheAuditCommitteehasrecommendedtotheBoardofDirectorsthatMessrs.KPMGbereappointedasAuditorsfor
the�inancialyearending31March2021subjecttotheapprovalofshareholdersatthenextAnnualGeneralMeetingatafeetobe
determinedbytheBoard.
T.K.Bandaranayake
Chairman-AuditCommittee
09October2020
-19-
RELATEDPARTYTRANSACTIONSREVIEWCOMMITTEEREPORT
TheRelatedPartyTransactionsReviewCommittee("TheCommittee")wasformedon01January2016intermsoftheCodeof
bestpracticeonRelatedPartytransactions("code")issuedbytheSecurities&ExchangeCommissionofSriLankaandSection9of
theListingRulesoftheColomboStockExchange("ListingRules").TheCommitteecomprisesthreeDirectorsincludingtwoNon
ExecutiveDirectors.ThecompositionoftheCommitteeasat31March2020is;
- MrM.A.Bastiansz(Chairman,NonExecutiveIndependentDirector)
- MrS.A.S.Jayasundara(NonExecutive,IndependentDirector)
- MrS.N.Samarasinghe(ExecutiveDirector)
ObjectiveoftheCommittee
TheobjectiveoftheCommitteeistoensurethattheinterestsofshareholdersasawholearetakenintoaccountbytheCompany
whenenteringintoRelatedPartyTransactions,incompliancewiththeprovisionsoftheCodeandListingRules.
RoleandResponsibilities
ThemandateoftheCommitteeisderivedfromtheCodeandtheListingRulesandincludesmainlythefollowing:
- DevelopingandmaintainingarelatedpartytransactionspolicyconsistentwiththeprovisionsoftheCodeandthe
ListingRules.
- ReviewingallproposedRelatedPartyTransactions("RPT")toensurecompliancewiththeprovisionsoftheCode
andtheListingRules.
- AdvisingtheBoardofDirectorsonmakingimmediatemarketdisclosuresanddisclosuresintheAnnualReport
wherenecessary,inrelationtonon-recurrentandrecurrentrelatedpartytransactions.
- Settingguidelinesforseniormanagementtofollowinsuchcircumstances.
ReportingtotheBoard
TheCommitteeheldmeetingseveryquarterandreviewedallrelatedpartytransactionsoftheCompanyinordertoensurethat
thosetransactionshavetakenplaceinaccordancewiththeguidelinesestablishedbytheCommitteeincompliancewiththeCode
andListingrules.TheCommitteewassatis�iedthatallrelatedpartytransactionswereincompliancewiththeCodeandListing
Rules.TheminutesofthemeetingsaretabledatBoardmeetings.
Declaration
TheBoardofDirectorscon�irmthattheCompanyhascompliedwiththerequirementsoftheListingRules(asrequiredbysection
9.3.2(d))oftheColomboStockExchangeonRelatedPartyTransactions.
OnbehalfoftheBoardRelatedPartyTransactionsReviewCommittee.
M.A.Bastiansz
Chairman-RelatedPartyTransactionsReviewCommittee
09October2020
-20-
Mr.M.A.Bastiansz
IndependentNonExecutiveChairman
Mr.BastianszwasappointedtotheBoardastheChairmanof
HarischandraMillsPLCinNovember2005.HeistheChairman
of the Remuneration Committee and Related Party
TransactionsReviewCommitteeoftheBoard.HeholdsaLLB
DegreefromtheUniversityofCeylonandisanAttorney-at-
Lawbyprofession.
Mr.S.N.Samarasinghe
ManagingDirector/ExecutiveDirector
Mr.SamarasinghejoinedtheCompanyin1990asCommercial
ManagerandwasappointedtotheBoardofDirectorsin1993.
InOctober2000hewasappointedastheManagingDirector.
He has overall responsibility for the production, �inance,
marketingandhumanresourcefunctionsoftheCompany.
He has a BSc.(Hons) from theUniversity of LeedsUK, Post
GraduateDiplomainBusinessandFinancialAdministration
awardedbytheInstituteofCharteredAccountantsofSriLanka
andaPostGraduateCerti�icateinCorporateBusinessFinance
fromthePostGraduateInstituteofManagement,Universityof
SriJayawardenapura.
Mr.G.S.V.DeSilva
ExecutiveDirector
Mr.DeSilvajoinedHarischandraMillsPLCasanNonexecutive
director in July 1978. He has gained wide and varied
experience in all aspects of the Company. Prior to joining
HarischandraMills PLC heworked as an Accountant at Sri
LankaTransportBoard.
Mrs.M.P.DeSilva
ExecutiveDirector
Mrs.DeSilvajoinedHarischandraMillsPLCasaNonexecutive
directorinJanuary1993,andwasappointedasanexecutive
director in February 1999. She currently heads the bakery
division of the Company. She has been responsible for the
innovation of a wide range of bottled and packeted Food
Productswhicharemadeunderhersupervision.
Mr.TissaK.Bandaranayake
IndependentNonExecutiveDirector
AFellowmemberoftheInstituteofCharteredAccountantsof
SriLanka.HoldsaBSc.degreefromtheUniversityofCeylon.
RetiredfromErnst&Youngasaseniorpartnerin2009after27
yearofservice.
A former Chairman of the Audit Faculty and the current
Chairman of the Quality Assurance Board of Sri Lanka
establishedbytheInstituteofCharteredAccountantsofSri
Lankacomprisingseniorprofessionalrepresentatives from
boththeprivatesectorandstateregulatorybodies.
Serves as an independent director of Overseas Realty
(Ceylon)PLC,NawalokaHospitalsPLC,SamsonInternational
PLC, Laugfs Gas PLC, Renuka Foods PLC, RenukaHoldings
PLC,MicroHoldingsLtdandBrown&CompanyPLC.
Alsoservesasaconsultant totheBoardofNoritakeLanka
Porcelain(Pvt)Ltd.
Mr.S.A.S.Jayasundara
IndependentNonExecutiveDirector
Mr.JayasundarajoinedtheBoardinJune2007.HeholdsaLLB
degreefromtheUniversityofColomboandisanAttorney-at-
Lawbyprofession.HeisamemberofAudit,Remuneration
and Related Party Transactions Review Committees of the
Board.
HeisthechairmanofLankaTransformersHoldings,Lanka
TransformersLtd,LankaTransformersGalvanizing(Pvt)Ltd.
BlueDiamondJewelleryLtd,ShraddhaMediaNetworkand
LakviruRadio(Pvt)Ltd.Heservesastheactingchairmanof
Bimputh Finance PLC. and a non executive director of
Bogawanthalawa Tea Estates PLC. Metropolitan Resource
Holdings(Pvt)Ltd.andSitharaLimited
Mrs.R.K.Samarasinghe
ExecutiveDirector
HoldsMasterofArtsfromUniversityofSussexandMasterof
Social Science from University of Birmingham, and a Post
GraduateDiplomainCounsellingPsychotherapy.Servedasa
CounsellorattheUniversityofFineArts,ColomboandMIND,
En�ield,London.
Mrs.SamarasinghealsoservedasalecturerinSocialScience
SuttonCold�ieldCollegeofFurtherEducation,Birmingham
EnglandandKingswayCollege,London.
BOARDOFDIRECTORS
-21-
ANNUALREPORTOFTHEBOARDOFDIRECTORSONTHEAFFAIRSOFTHECOMPANY
ThedirectorsoftheHarischandraMillsPLChavepleasureinpresentingtheirreportandtheauditedFinancialStatementsforthe
yearended31March2020.
PRINCIPALACTIVITIES
TheprincipalactivitiesofHarischandraMillsPLCandtheGrouparemanufacturinganddistributionofFoodProducts,Soapsand
FuelandLubricantswhicharedescribedunderNote1tothe�inancialStatementsonpage39.
GroupFinancialResults; 2019/2020 2018/2019
Rs.000 Rs.000
Pro�itbeforetaxation 242,372 247,644
Taxation (94,079) (74,848)
Aftertaxpro�itattributabletoshareholders 148,293 172,796
Capitalizationofreserves - -
Othercomprehensiveincome - -
Unappropriatedpro�itbroughtforwardfrompreviousyear 1,208,422 1,122,009
Pro�itavailableforappropriation 1,356,715 1,294,805
DistributionofPro�it:
Interimdividendpaidfor�inancialyear2018/2019 38,392 38,392
Finaldividendpaidfor�inancialyear2018/2019 57,588 47,991
Forfeitureofunclaimeddividend (297) -
95,683 86,383
1,261,032 1,208,422
AUDITORS'REPORT
Theauditors'reportonthe�inancialstatementsisgivenonpage29.
ACCOUNTINGPOLICIES
TheGroupandtheCompanypreparedtheirFinancialStatementsforallperiodsuptoandincludingtheyearended31March
2020,inaccordancewithSriLankaAccountingStandards(SLFRS/LKAS)whichhavemateriallyconvergedwiththeInternational
FinancialReportingStandards(IFRS),allexisting/newSriLankaAccountingStandardswerepre�ixedasSLFRSandLKAS.The
signi�icantAccountingPoliciesadoptedinthepreparationoftheFinancialStatementsoftheGroupandtheCompanyaregivenon
pages39to53ofAnnualReport.
REVIEWOFBUSINESS
TheChairman'sReview,theManagingDirector'sReportandtheCorporateGovernanceReportwhichformanintegralpartofthe
Director'sReportonthestateofaffairsoftheCompany,containadetaileddescriptionoftheoperationsofHarischandraMillsPLC
duringtheyearended31March2020andcontainafairreviewoftheaffairsofHarischandraMillsPLCandtheGroup.
-22-
ANNUALREPORTOFTHEBOARDOFDIRECTORSONTHEAFFAIRSOFTHECOMPANY(CONTD.)
DIRECTORS'RESPONSIBILITYFORFINANCIALREPORTING
ThedirectorsareresponsibleforthepreparationoftheFinancialstatementsofHarischandraMillsPLCtore�lectatrueandfair
viewofthestateofitsaffairs.Thedirectorscon�irmedthattheseFinancialStatementshavebeenpreparedinconformitywiththe
requirementsoftheSriLankaAccountingStandards,theCompaniesActNo.7of2007andtheListingRulesoftheColomboStock
Exchange.
Thedirectorsaresatis�iedthatFinancialStatementsgiveatrueandfairviewofthestateofaffairsofHarischandraMillsPLCand
theGroupasat31March2020aswellasthepro�itfortheyearthenended.
Thedirectorsconsiderthat,inpreparingtheseFinancialStatements,appropriateaccountingpolicieshavebeenusedwhichare
appliedconsistentlyandthatallapplicableaccountingstandardshavebeenfollowed.TheFinancialStatementsarepreparedona
goingconcernbasis.
CORPORATEGOVERNANCE
DetailreportoncorporategovernancepracticesandprinciplesoftheCompanyaresetoutonpages11to15ofthisreport.The
directorsareresponsibleforthegovernanceofHarischandraMillsPLCincludingtheestablishmentandmaintenanceofthe
systemsofinternal�inancialcontroloftheCompany.
Thedirectorsaresatis�iedthatastrongcontrolenvironmentisestablishedwithinHarischandraMillsPLCandthoseinternal
controlsystemsareoperatingeffectively.
CORPORATESOCIALRESPONSIBILITY
DetailsofsocialworkcarriedoutareincludedintheManagingDirector'sreportsetoutonPage07.
DONATIONS
DonationswereRs.6,010,267/-comparedtoRs.4,646,607/- donatedinthelastyear.Nodonationstopoliticalorganizations
weremadebythegroupduringtheyear.
GROUPTURNOVER
Theturnoverof theCompanyand itssubsidiarytogetherwiththesegmentalperformancearesetoutonthe"Notestothe
FinancialStatements".
FINALDIVIDEND
ThedirectorspaidaninterimdividendofRs.20/-pershareamountingtoRs.38,392,000/- on23August2020,andproposea
�inaldividendofRs.30/-pershare,tobepaidoutofthepro�itsofHarischandraMillsPLCanddividendreceivedforthe�inancial
yearended2019/2020.Inrecommendingthepaymentofthisdividend,thedirectorsunanimouslydeclarethat,intheiropinion,
theCompanywillsatisfythesolvencyteststipulatedinsection57oftheCompaniesActNo.07of2007immediatelyafterthe
distributionismadeandhaveobtainedacerti�icateofsolvencyfromtheAuditorstothiseffect.HarischandraMillsPLCpaidan
interimdividendofRs.20/=and�inaldividendofRs.30/=pershareforthepreviousyear.
-23-
ANNUALREPORTOFTHEBOARDOFDIRECTORSONTHEAFFAIRSOFTHECOMPANY(CONTD.)
PROVISIONFORTAXATION
Provisionmade for taxation considering the relevant tax rates laid down by the Inland Revenue Act No. 24 of 2017 and
subsequentamendmentsthereto,thedetailsarestatedinNote08totheFinancialStatements.
PROPERTY,PLANT&EQUIPMENTANDDEPRECIATION
Detailsoftheproperty,plant&equipmentofHarischandraMillsPLC,additionsmadeduringtheyearandthedepreciation
chargesfortheyearareshowninNote11totheFinancialStatementsonpage58.
STATEDCAPITAL&RESERVES
ThestatedcapitalofHarischandraMillsPLCatthebeginningoftheyearunderreviewwasRs.105,578,000/-,consistingof
1,919,600OrdinaryShares.
The total reserves of the Company as at 31 March 2020 amounted to Rs.1,297,887,471/- (as at 31 March 2019 -
Rs.1,242,966,929/-) where as the Group total reserve amounted to Rs.1,301,249,837/- (as at 31 March 2019 -
Rs.1,250,619,156/-)ThecompositionofthereservesisshownintheStatementofChangesinEquityanddetailsofreservesare
setoutinNote20and21totheFinancialStatements.
POSTBALANCESHEETEVENTS
InterimdividendofRs.20/-persharewerepaidon23August2020.
Otherthantheabove,therehavebeennosigni�icanteventssubsequenttothebalancesheetdatethatrequiresadjustmentsor
discloseinthe�inancialstatements.
GOINGCONCERN
Theboardissatis�iedthattheCompanyhasadequateresourcestocontinueitsoperationsintheforeseeablefutureandthe
directorshaveadoptedthegoingconcernbasisinpreparingtheFinancialStatements.
CAPITALCOMMITMENTSANDCONTINGENCIES
Therewerenosigni�icantcapitalcommitmentsandcontingenciesasat31March2020.
RELATEDPARTYTRANSACTIONS
ThecompanydidnotcarryoutanyNon-recurrentrelatedpartytransactionsduringtheyearunderreviewandallrecurrent
relatedpartytransactionswerelessthan10%ofthenetrevenue.
-24-
ANNUALREPORTOFTHEBOARDOFDIRECTORSONTHEAFFAIRSOFTHECOMPANY(CONTD.)
HUMANRESOURCES
Asat31March2020Companyemployed589employeeswhereasitwas589inthelastyearend.Aggregatetotalremunerationin
respectoftheyearwasRs.465MncomparedtoRs.416.1Mnforthelastyear.
ISSUESPERTAININGTOEMPLOYEESANDINDUSTRYRELATIONS
Therewerenomaterial issuespertaining toemployeesand industryrelationsduring theyearunderreviewtodiscloseas
requiredunderrule7.6(vii)oftheCSEListingrules.
SHAREHOLDERS'INFORMATION
Distributionoftheissuedsharesamongtheshareholdersandclassi�icationofshareholdersareindicatedinpage77oftheAnnual
Report.Therewere517(2018/19-527)registeredshareholdersasat31March2020.
DIRECTORATE
ThedirectorsofHarischandraMillsPLCduringtheyearended31.03.2020areasfollows.
Mr.M.A.Bastiansz(Chairman) -NonExecutive,IndependentDirector
Mr.S.N.Samarasinghe(ManagingDirector) -Executive,NonIndependentDirector
Mr.G.S.V.DeSilva -Executive,NonIndependentDirector
Mrs.M.P.DeSilva -Executive,NonIndependentDirector
Mrs.R.K.Samarasinghe -Executive,NonIndependentDirector
Mr.T.K.Bandaranayake -NonExecutive,IndependentDirector
Mr.S.A.S.Jayasundara -NonExecutive,IndependentDirector
Directorspro�ilesaresetoutonpage21intheAnnualReport.
MAJORSHAREHOLDERS
The20largestshareholdersofHarischandraMillsPLCasat31March2020aregivenonpage77togetherwithananalysisofthe
shareholdings.AsatthatdateHarischandraMillsPLChad517shareholders.
SUB-COMITTEESOFTHEBOARD
Therearethreepermanentsub-committeesoftheBoardwhichareasfollows:
01. AuditCommittee : Mr.T.K.Bandaranayake(Chairman)
Mr.S.A.S.Jayasundara
02. RemunerationCommittee : Mr.M.A.Bastiansz(Chairman)
Mr.S.A.S.Jayasundara
03. RelatedPartyTransactions
ReviewCommittee : Mr.M.A.Bastiansz(Chairman)
Mr.S.A.S.Jayasundara
Mr.S.N.Samarasinghe
-25-
ANNUALREPORTOFTHEBOARDOFDIRECTORSONTHEAFFAIRSOFTHECOMPANY(CONTD.)
INTERESTREGISTER
TheCompanyhasmaintainedinterestregisterasrequiredbyCompaniesActNo.07of2007.
Alldirectorshavemadedeclarationsasprovidedforinsection192(2)oftheCompaniesActaforesaid.Therelatedentrieswere
madeintheinterestregisterduringtheyearunderreview.
DIRECTORS'INTERESTINCONTRACTS
Details of directors' interests in contracts of the Company are disclosed below and provided in note 27 of the Financial
Statements.Thedirectorshavenodirectorindirectinterestorproposedcontractotherthanthosedisclosed.
FollowingdirectorsoftheCompanyarealsodirectorsoftheHarischandraMills(Distributors)Limited,whichisafullyowned
subsidiary.
NameofDirector Position Shareholding
Mr.M.A.Bastiansz Director(Non-Executive) Non
Mr.S.N.Samarasinghe ManagingDirector 1Share
Mr.G.S.V.DeSilva Director(Executive) 1Share
Mrs.M.P.DeSilva Director(Executive) 1Share
DIRECTORS'REMUNERATION
TheaggregateremunerationpaidtoexecutiveandnonexecutivedirectorsinrespectoftheGroupandtheCompanyforthe
�inancialyearended31March2020wererecordedasRs.46,685,668/-(2018/2019Rs.41,779,072/-).
DIRECTORSSHAREHOLDING
NameofDirector 31March2020 01April2019
NoofShares % NoofShares %
Mrs.R.K.Samarasinghe 270,120 14.07 270,120 14.07
Mr.S.N.Samarasinghe 76,670 3.99 76,670 3.99
Mr.G.S.V.DeSilva 2,000 0.10 2,000 0.10
Mrs.M.P.DeSilva 5,000 0.26 5,000 0.26
Mr.M.A.Bastiansz - - - -
Mr.T.K.Bandaranayake - - - -
Mr.S.A.S.Jayasundara - - - -
Total 353,790 18.42 353,790 18.42
APPLICATIONOFTHECORPORATEGOVERNANCERULESOFTHECOLOMBOSTOCKEXCHANGE
Asperthesection7oftheListingRulesoftheColomboStockExchangeonCorporateGovernance,thedetailsoncomplianceare
setoutonpage15inthisannualreport.
-26-
ANNUALREPORTOFTHEBOARDOFDIRECTORSONTHEAFFAIRSOFTHECOMPANY(CONTD.)
AUDITORS
TheFinancialStatements fortheyearended31March2020havebeenauditedbyM/s.KPMGCharteredAccountants.The
auditorsdonothaveanyrelationshipwithoranyinterestintheCompanyoritssubsidiaryotherthanauditors.
FeestoAuditors
ThefeesoftheAuditorsduringtheyearwereRs.1,072,500/-(2018/19-Rs.1,050,000/-)forauditwork,taxserviceRs.280,030
(2018/19-Rs.205,000)andRs.120,000/-(2018/19-Rs.110,000/-)forauditrelatedservices.
Re-AppointmentofAuditors
TheAuditorshaveindicatedtheirwillingnesstoofferthemselvesforre-appointment.AresolutionappointingM/s.KPMGas
Auditorsandauthorizingthedirectorsto�ixtheirremunerationwillbeproposedattheAnnualGeneralMeeting.
ANNUALGENERALMEETING
TheSixtyEighthAnnualGeneralMeetingoftheCompanywillbeheldattheregisteredof�iceoftheCompany,No.11,
C.A.HarischandraMawatha,Matara,onthe14November2020at11.00a.m.TheNoticeoftheSixtyEighthAnnualGeneral
Meetingisonpage04oftheAnnualReport.
ForandonbehalfoftheBoard
HarischandraMillsPLC
S.N.Samarasinghe G.S.V.DeSilva
ManagingDirector Director
CorporateServices(Private)Limited
Secretaries
09October2020
-27-
STATEMENTOFDIRECTORS'RESPONSIBILITYFORFINANCIALREPORTING
Thedirectorsareresponsible,UndertheCompaniesAct.No.07of2007,toensurecompliancewiththerequirementssetout
thereintoprepareFinancialStatementsforeach�inancialyeargivingatrueandfairviewofthestateofaffairsoftheCompanyand
theGroupasattheendofthe�inancialyearandofthepro�itorlossoftheCompanyandtheGroupforthe�inancialyear.The
directorsarealsoresponsibleforensuringthatproperaccountingrecordsarekepttodisclose,withreasonableaccuracy,the
�inancialpositionandtoenablethepreparationoftheFinancialStatements.
Thedirectorscon�irmthattheyhavecompliedwiththeserequirements.
TheBoardacceptsresponsibility for the integrityandobjectivityof theFinancialStatementspresented.Thedirectorsalso
con�irmthatinpreparingtheFinancialStatements,appropriateaccountingpolicieshavebeenselectedandappliedconsistently
andreasonableandprudentjudgmentshavebeenmadesothattheformandsubstanceoftransactionsareproperlyre�lected.
Theyalsocon�irmthattheFinancialStatementshavebeenpreparedandpresentedinaccordancewiththeSriLankaAccounting
Standards.TheFinancialStatementsprovidetheinformationrequiredbytheCompaniesAct,theListingRulesoftheColombo
StockExchangeandtheSriLankaAccountingStandards.
The directors have taken reasonable measures to safeguard the assets of the Group and, in that context, have instituted
appropriatesystemsofinternalcontrolwithaviewtopreventanddetectfraudandotherirregularities.
TheExternalAuditors,MessrsKPMGappointedinaccordancewiththeresolutionpassedatthelastAnnualGeneralMeetingwere
providedwitheveryopportunitytoundertakewhateverinspectionstheyconsiderappropriatetoenablethemtoformtheir
opinionontheFinancialStatements.ThereportoftheAuditors,shownonpage29to32setsouttheirresponsibilitiesinrelation
totheFinancialStatements
ByorderoftheBoard
CorporateServices(Private)Limited
Secretaries
09October2020
-28-
evidencewehaveobtainedissuf�icientandappropriatetoprovideabasisfor
ouropinion.
KeyAuditMatters
Keyauditmattersarethosemattersthat,inourprofessionaljudgment,were
ofmostsigni�icanceinourauditoftheCompany�inancialstatementsandthe
consolidated�inancialstatementsofthecurrentperiod.Thesematterswere
addressedinthecontextofourauditoftheCompany�inancialstatementsand
theconsolidated�inancialstatementsasawhole,andinformingouropinion
thereon,andwedonotprovideaseparateopiniononthesematters.
Revenuerecognition
Refer to theaccountingpolicies in “Note3.17 to the �inancial statements:
Revenuerecognition”and“Note4tothe�inancialstatements:Revenue”.
INDEPENDENTAUDITOR'SREPORT
TOTHESHAREHOLDERSOF
HARISCHANDRAMILLSPLC
ReportontheAuditoftheFinancial
Statements
Opinion
We have audited the �inancial statements of
HarischandraMillsPLC ("theCompany") and
the consolidated �inancial statements of the
Company and its subsidiary ("the Group"),
whichcomprisethestatementofpro�itorloss
andothercomprehensiveincome,statementof
�inancial position as at 31 March 2020,
statement of changes in equity, statement of
cash�lowsfortheyearthenended,andnotesto
the�inancialstatements,includingasummary
ofsigni�icantaccountingpoliciesassetouton
pages39to74ofthisAnnualReport.
In our opinion, the accompanying �inancial
statementsoftheCompanyandtheGroupgive
atrueandfairviewofthe�inancialpositionof
the Company and the Group as at 31 March
2020,andoftheir�inancialperformanceandits
cash �lows for the year then ended in
accordance with Sri Lanka Accounting
Standards.
BasisforOpinion
WeconductedourauditinaccordancewithSri
Lanka Auditing Standards (SLAuSs). Our
responsibilities under those standards are
f u r t h e r d e s c r i b e d i n t h e Aud i t o r ' s
Responsibilities for theAuditof theFinancial
Statements section of our report. We are
independentoftheGroupinaccordancewith
theCodeofEthicsissuedbyCASriLanka(Code
of Ethics), and we have ful�illed our other
ethicalresponsibilitiesinaccordancewiththe
Code of Ethics. We believe that the audit
KPMG , a Sri Lankan partnership and a member firm
of the KPMG network of independent member firms
affiliated with KPMG Interna�onal Coopera�ve
("KPMG Interna�onal"), a Swiss en�ty.
M.R. Mihular FCA
T.J.S. Rajakarier FCA
Ms. S.M.B. Jayasekara ACA
G.A.U. Karunaratne FCA
R.H. Rajan FCA
A.M.R.P. Alahakoon ACA
Principals - S.R.l. Perera FCMA (UK), LLB, A�orney-at-Law, H.S. Goonewardene ACA,
Ms. P.M.K. Sumanasekara FCA
P.Y.S. Perera FCA
W.W.J.C. Perera FCA
W.K.D.C. Abeyrathne FCA
R.M.D.B. Rajapakse FCA
M.N.M. Shameel ACA
C.P. Jaya�lake FCA
Ms. S. Joseph FCA
S.T.D.L. Perera FCA
Ms. B.K.D.T.N. Rodrigo FCA
Ms. C.T.K.N. Perera ACA
.
KPMG (Chartered Accountants)32A, Sir Mohamed Macan Markar Mawatha, P.O. Box 186, Colombo 00300, Sri Lanka.
Tel Fax
Internet
::
:
+94 - 11 542 6426 +94 - 11 244 5872 +94 - 11 244 6058 www.kpmg.com/lk
Revenuefromsaleofgoods(Rs.3,652,268,411/-)isrecognizedwhencontrolhasbeentransferredtothebuyer;andismeasuredatnetoftradediscountsandvolumerebates(tradespend)forwhichjudgementisrequiredbymanagementtoestimateaccruals.
Inaddition,theGroupconsidersrevenueasanimportantelementinmeasuring,managementperformanceandhowmanagementareincentivised.Thesefactorscouldcreateanincentiveforrevenuetoberecognisedpriortocontrolbeingtransferred.
Weidenti�iedtherecognitionofrevenueasakeyauditmatterbecauserevenueisasigni�icantauditriskandoneofthekeyperformanceindicatorsoftheGroupandthereforethereisaninherentriskofmanipulationofthetimingofrevenuerecognitionbymanagementtomeetspeci�ictargetsorexpectations.
Ourauditproceduresincluded;
• Assessingtheeffectivenessofkeyinternalcontrolsregardingtherecognitionofrevenuesuchasmatchingasampleofsalesinvoicesrecognisedtosalesordersanddispatchnotes.
• Testing,onasamplebasis,whetherspeci�icrevenuetransactionsaroundtheyearendhadbeenrecognisedintheappropriateperiodonthebasisofthetermsofsalewithintheassociatedcontracts,suchaswhethershippingtermshadbeenmet,goodsreceivednotescompletedand,or,customeracceptanceoftheproductreceived.
• Testingasampleofcreditnotesissuedaftertheyearendandchallengedthosethatwerenotrecordedbyobtainingevidenceandrationaleforsigni�icantreversals.
• Testthequanti�icationofadjustmentsarisingfrommanagement'srevenuerecognitionassessmentforcompliancewithSLFRS15duringtheyearanddisclosuresforthesame.
RiskDescription Ourresponse
-29-
CarryingvalueofInventories
Refertotheaccountingpoliciesin“Note3.10tothe�inancialstatements:Inventories”and“Note16tothe�inancialstatements:
Inventories”.
RiskDescription Ourresponse
Asatthereportingdate,theGrouphasrecognizedatotalprovisionofRs.6,887,199/-inrelationtothetotalinventoryvaluedatRs.317,072,545/-asat31March2020.AsdiscussedinNote3.10,managementjudgmentisappliedtothecostofinventoriesinordertoaccuratelyre�lectthemanufacturingcostsincurredinbringingthemtotheircurrentconditionandphysicallocation.Thisprimarilyrelatestotheassessmentofdirectlabourcostsincurred,manufacturingoverheadstobeabsorbedandotherrelevantproductioncosts.
Arisksurroundingthecarryingvalueofinventorywhencomparedtothenetrealizablevalueasaresultofinadequateprovisioninghasalsobeenidenti�ied.Establishingaprovisionforslow-moving,obsoleteanddamagedinventoryinvolvesestimatesandjudgments,takingintoaccountforecastsalesandhistoricalusageinformation.Further,COVID19outbreakresultedininterruptioninbusinessactivitiesandresultedinlossofincomeforsomeoftheindividuals/industrieswhichwouldadverselyaffecttheabilitytosellitsinventorieswithareasonablemarginwhichwouldpotentialimpactonthenetrealizablevalueadjustments.
Weidenti�iedassessingthecarryingvalueofinventoriesasakeyauditmatterbecauseoftheinherentriskthattheGroup'sinventoriesmaybecomeobsoleteormaybesoldatpricesbelowtheircarryingvaluesandbecausethejudgmentexercisedbymanagementindeterminingtheappropriateprovisionforinventoriesinvolvesmanagement'sbias.
Ourresponsesincluded,
• TestingthedesignandimplementationoftheGroup'skeycontrolsrelatingtotheassessmentofinventoryvaluationandinventoryprovisioning.
• Agreeingthecostofrawmaterialstothirdpartysupplierinvoices;
• Checkedtheparametersandsystemaccuracyof�irstin�irstout(FIFO)calculatedwiththeassistanceofinformationriskmanagementspecialist;
• Assessingthenetrealisablevalue(NRV)onasamplebasisofstockitemsbyagreeingtheirsubsequentsalespricetocustomerinvoicestoensurethattheitemswerebeingheldatthelowerofcostandNRV;
• Gaininganunderstandingofthemovementsintheinventoryfortheyearandassessthescaleoftheprovisionfornon-movingandslow-movinginventory;
• Wheremanualadjustmentshavebeenmadetotheprovision,wehaveunderstoodthesebygainingsupportingdocumentation;
• AssessingwhethertheGroup'spolicieshadbeenconsistentlyappliedandtheadequacyoftheGroup'sdisclosuresinrespectofthejudgmentandestimationmadeinrespectofinventoryprovisioning;
-30-
OtherInformation
Managementisresponsiblefortheotherinformation.Theother
informationcomprisestheinformationincludedintheannual
report but doesnot include the �inancial statements andour
auditor'sreportthereon.
Ouropiniononthe�inancialstatementsdoesnotcovertheother
information and we do not express any form of assurance
conclusionthereon.
In connectionwith our audit of the �inancial statements, our
responsibilityistoreadtheotherinformationand,indoingso,
consider whether the other information is materially
inconsistent with the �inancial statements or our knowledge
obtained in the audit or otherwise appears to be materially
misstated.
If,basedontheworkwehaveperformed,weconcludethatthere
isamaterialmisstatementofotherinformation,wearerequired
toreportthatfact.
Wehavenothingtoreportinthisregard.
ResponsibilitiesofManagementandThoseChargedwith
GovernancefortheFinancialStatements
Management is responsible for the preparation of �inancial
statementsthatgiveatrueandfairviewinaccordancewithSri
LankaAccountingStandards,andforsuchinternalcontrolas
management determines is necessary to enable the
preparationof�inancialstatementsthatarefreefrommaterial
misstatement,whetherduetofraudorerror.
In preparing the �inancial statements, management is
responsibleforassessingtheGroup'sabilitytocontinueasa
going concern, disclosing, as applicable, matters related to
goingconcernandusingthegoingconcernbasisofaccounting
unlessmanagementeitherintendstoliquidatetheGrouporto
ceaseoperations,orhasnorealisticalternativebuttodoso.
Thosechargedwithgovernanceareresponsibleforoverseeing
theCompany'sandGroup's�inancialreportingprocess.
Auditor's Responsibilities for the Audit of the Financial
Statements
Our objectives are to obtain reasonable assurance about
whether the �inancial statements as a whole are free from
materialmisstatement,whetherduetofraudorerror,andto
issueanauditor'sreportthatincludesouropinion.Reasonable
RiskDescription Ourresponse
AsdisclosedinNote17tothe�inancialstatements,theGrouphasrecognisedtradereceivablesbalanceofRs.303,634,441/-asat31March2020,afterprovisionforimpairmentofRs.4,258,479/-.
TheGroup'scustomersoperateinanumberofsectors,havingdifferentcreditpro�iles.SLFRS9–“FinancialInstruments”ECLModeltakesintoaccountjudgmentinsettingtheassumptionssuchasforward-lookingprobabilityofdefault(PD),lossgivendefault(LGD),macroeconomicscenariosincludingtheirweightingandjudgmentsovertheuseofdatainputsrequired.
Provisionforimpairmentoftradereceivablesremainsoneofthemostsigni�icantjudgmentmadebythemanagementparticularlyinlightoftheuncertaineconomicoutlookinSriLankaasatthereportingdateduetothepotentialimpactoftheCOVID19outbreak.
Weidenti�iedimpairmentoftradereceivablesasakeyauditmatterforouraudit,asitrequiresmanagementtoexercisesubjectivejudgmentinmakingassumptionsandestimatesfortheassessmentofprovisionforimpairmentoftradereceivables.
Ourresponsesincluded,
• EvaluatingtheappropriatenessoftheimpairmentmethodologyusedbytheGroupinaccordancewithSLFRS9andchallengingthekeyassumptionsandevaluatingthereasonablenessofthekeyjudgmentsandmethodologyusedbythemanagement.
• Evaluatingthecompleteness,accuracyandrelevanceofdatausedinpreparationoftheimpairmentprovision.
• Comparingtheeconomicfactorsusedinthemodelstomarketinformationtoassesswhethertheyarealignedwiththemarketandeconomicdevelopment.
• ChallenginghowmanagementhadassessedtheimpactofCOVID19withintheECLmodeltoassesswhetherthatitwasappropriatelyconsideredinthemeasurementofECLsatyearend.
• EvaluatingtheadequacyoftheGroup'sdisclosuresregardingthedegreeofjudgmentsandestimationinvolvedinarrivingattheprovisionforimpairmentoftradereceivables.
Recoverabilityoftradereceivables
Refertotheaccountingpoliciesin“Note3.4tothe�inancialstatements:Impairment”and“Note17tothe�inancialstatements:Trade
andotherreceivables”.
-31-
assuranceisahighlevelofassurance,butisnotaguarantee
thatanauditconductedinaccordancewithSLAuSswillalways
detectamaterialmisstatementwhenitexists.Misstatements
canarisefromfraudorerrorandareconsideredmaterialif,
individually or in the aggregate, they could reasonably be
expectedtoin�luencetheeconomicdecisionsofuserstakenon
thebasisofthese�inancialstatements.
Aspart of an audit in accordancewith SLAuSs,we exercise
professionaljudgmentandmaintainprofessionalskepticism
throughouttheaudit.
Wealso:
• Identifyandassesstherisksofmaterialmisstatementof
the �inancial statements,whether due to fraud or error,
designandperformauditproceduresresponsivetothose
risks, and obtain audit evidence that is suf�icient and
appropriatetoprovideabasisforouropinion.Theriskof
notdetectingamaterialmisstatementresultingfromfraud
ishigherthanforoneresultingfromerror,asfraudmay
involve collusion, forgery, intentional omissions,
misrepresentations,ortheoverrideofinternalcontrol.
• Obtainanunderstandingofinternalcontrolrelevanttothe
audit in order to design audit procedures that are
appropriateinthecircumstances,butnotforthepurpose
of expressing an opinion on the effectiveness of the
CompanyandGroup'sinternalcontrol.
• Evaluatetheappropriatenessofaccountingpoliciesused
and the reasonableness of accounting estimates and
relateddisclosuresmadebymanagement.
• Concludeontheappropriatenessofmanagement'suseof
thegoingconcernbasisofaccountingand,basedon the
auditevidenceobtained,whetheramaterialuncertainty
exists related to events or conditions that may cast
signi�icantdoubt on theGroup's ability to continue as a
goingconcern.Ifweconcludethatamaterialuncertainty
exists,wearerequiredtodrawattentioninourauditor's
reporttotherelateddisclosuresinthe�inancialstatements
or, if such disclosures are inadequate, to modify our
opinion.Ourconclusionsarebasedontheauditevidence
obtaineduptothedateofourauditor'sreport.However,
futureeventsorconditionsmaycausetheGrouptoceaseto
continueasagoingconcern.
• Evaluatetheoverallpresentation,structureandcontentof
the �inancial statements, including the disclosures, and
whetherthe�inancialstatementsrepresenttheunderlying
transactions and events in a manner that achieves fair
presentation.
• Obtainsuf�icientappropriateauditevidenceregardingthe
�inancialinformationoftheentitiesorbusinessactivities
withintheGrouptoexpressanopinionontheconsolidated
�inancialstatements.Weareresponsibleforthedirection,
supervision and performance of the group audit. We
remainsolelyresponsibleforourauditopinion.
We communicate with those charged with governance
regarding,amongothermatters,theplannedscopeandtiming
of the audit and signi�icant audit �indings, including any
signi�icant de�iciencies in internal control that we identify
duringouraudit.
We also provide those charged with governance with a
statementthatwehavecompliedwithethicalrequirementsin
accordancewiththeCodeofEthicsregardingindependence,
and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our
independence,andwhereapplicable,relatedsafeguards.
From the matters communicated with those charged with
governance,wedetermine thosematters thatwereofmost
signi�icance in the audit of the �inancial statements of the
current period and are therefore the key auditmatters.We
describethesemattersinourauditor'sreportunlesslawor
regulation precludes public disclosure about the matter or
when, inextremelyrarecircumstances,wedeterminethata
mattershouldnotbecommunicatedinourreportbecausethe
adverse consequences of doing so would reasonably be
expected to outweigh the public interest bene�its of such
communication.
ReportonOtherLegalandRegulatoryRequirements
Asrequiredbysection163(2)oftheCompaniesActNo.07of
2007,wehaveobtainedalltheinformationandexplanations
thatwererequiredfortheauditand,asfarasappearsfromour
examination,properaccountingrecordshavebeenkeptbythe
Company.
CASriLankamembershipnumberoftheengagementpartner
responsible for signing this independent auditor's report is
3707.
CHARTEREDACCOUNTANTS
Colombo,SriLanka
25September2020
-32-
STATEMENTOFPROFITORLOSSANDOTHERCOMPREHENSIVEINCOME
GROUP COMPANY
FORTHEYEARENDED31MARCH, 2020 2019 2020 2019
Note Rs. Rs. Rs. Rs.
Revenue 4 3,652,268,411 3,626,418,3603,652,268,411 3,626,418,360
Costofsales (2,928,452,487) (2,926,008,650)(2,928,452,487) (2,926,008,645)
Grosspro�it 723,815,924 700,409,710 723,815,924 700,409,715
Otherincome 5 43,497,065 35,756,807 46,657,542 101,976,334
Distributionexpenses (240,669,403) (244,763,588)(240,669,403) (244,763,588)
Administrativeexpenses (315,814,096) (271,924,151) (315,199,238) (271,522,157)
Operatingpro�it 6210,829,490 219,478,778 214,604,825 286,100,304
Financeincome 7.132,990,439 30,902,251 32,990,439 30,902,251
Financeexpenses 7.2 (1,447,979) (2,736,889) (1,447,979) (7,234,115)
Pro�itbeforetax 242,371,950 247,644,140 246,147,285 309,768,440
Incometaxexpense 8(94,079,038) (74,847,887)(93,564,538) (59,838,063)
Pro�itfortheyear 148,292,912 172,796,253 152,582,747 249,930,377
Pro�itattributabletoequityholders 148,292,912 172,796,253 152,582,747 249,930,377
-oftheCompany
Pro�itfortheyear 148,292,912 172,796,253152,582,747 249,930,377
Earningspershare 9 77.25 90.02 79.49 130.19
Figuresinbracketindicatedeductions.
Thenotestothe�inancialstatementsfrompage39to74formanintegralpartoftheseconsolidated�inancialstatements.
-33-
STATEMENTOFPROFITORLOSSANDOTHERCOMPREHENSIVEINCOME
GROUP COMPANY
FORTHEYEARENDED31MARCH, 2020 2019 2020 2019
Note Rs. Rs. Rs. Rs.
Pro�itfortheyear 148,292,912 172,796,253 152,582,747 249,930,377
OthercomprehensiveIncome
Itemsthatwillnotbereclassi�ied
subsequentlytopro�itorloss
Re-measurementof
de�inedbene�itobligation 23.1 (2,749,174) 3,504,501 (2,749,174) 3,504,501
Relatedtax 8.2 769,769 (981,260) 769,769 (981,260)
Totalothercomprehensive
incomenetoftax (1,979,405) 2,523,241 (1,979,405) 2,523,241
Totalcomprehensiveincomeattributable
toownersoftheCompany 146,313,507 175,319,494 150,603,342 252,453,618
Figuresinbracketindicatedeductions.
Thenotestothe�inancialstatementsfrompage39to74formanintegralpartoftheseconsolidated�inancialstatements.
-34-
STATEMENTOFFINANCIALPOSITION
GROUP COMPANYASAT31MARCH, 2020 2019 2020 2019 Note Rs. Rs. Rs. Rs. AssetsNon-currentassetsProperty,plantandequipment 11921,502,755 810,219,979 921,502,755 810,219,979Intangibleassets 12 1,387,376 1,532,058 1,387,376 1,532,058 Rightofuseasset 13 6,466,727 - 6,466,727 -Investmentinsubsidiary 14 - - 70 70Totalnon-currentassets 929,356,858 811,752,037 929,356,928 811,752,107
CurrentassetsInventories 16 310,185,346 188,847,495 310,185,346 188,847,495Tradeandotherreceivables 17 371,438,404 418,463,281 371,438,404 418,463,281Investmentinunittrusts 155,751,000 5,379,000 5,751,000 5,379,000Investmentin�ixeddeposits 239,565,685 221,143,528 239,565,685 221,143,528Cashandcashequivalents 1874,111,035 80,128,815 73,159,225 74,841,630 Totalcurrentassets 1,001,051,470 913,962,119 1,000,099,660 908,674,934Totalassets 1,930,408,328 1,725,714,156 1,929,456,588 1,720,427,041
EquityStatedcapital 19 105,578,000 105,578,000 105,578,000 105,578,000Othercapitalreserves 20 7,010,944 7,010,944 11,014 11,014Generalreserve 21 12,841,000 12,841,000 12,841,000 12,841,000Retainedearnings 1,281,397,893 1,230,767,212 1,285,035,457 1,230,114,915Totalequityattributabletoowners oftheCompany 1,406,827,837 1,356,197,156 1,403,465,471 1,348,544,929
LiabilitiesNon-currentliabilitiesDeferredtaxliabilities 22 41,818,461 41,250,53341,818,461 41,250,533Employeebene�itobligation 23 109,246,500 95,384,457 109,246,500 95,384,457Leasecreditor 25 440,479 - 440,479 -Totalnon-currentliabilities 151,505,440 136,634,990 151,505,440 136,634,990
CurrentliabilitiesTradeandotherpayables 24 239,091,211 190,806,556 238,918,415 190,588,247Leasecreditor 25 155,027 - 155,027 -Currenttaxliabilities 26 4,288,529 13,542,676 6,871,951 16,126,097Bankoverdraft 18 128,540,284 28,532,778 128,540,284 28,532,778Totalcurrentliabilities 372,075,051 232,882,010 374,485,677 235,247,122Totalliabilities 523,580,491 369,517,000 525,991,117 371,882,112Totalequityandliabilities 1,930,408,328 1,725,714,156 1,929,456,588 1,720,427,041
Thenotestothe�inancialstatementsfrompage39to74formanintegralpartoftheseconsolidated�inancialstatements.
Icertifythatthese�inancialstatementscomplywiththerequirementsofCompaniesAct.No.07of2007.
C.T.GajanayakeChiefFinancialOf�icer
TheBoardofDirectorsisresponsibleforthepreparationandpresentationoftheseconsolidated�inancialstatements.Approved&SignedonbehalfoftheBoard.
S.N.Samarasinghe G.S.V.DeSilvaManagingDirector Director25September2020
-35-
STATEMENTOFCHANGESINEQUITY
GROUP
StatedAvailablefo
rsale/
OtherCapital
General
Retained
Total
Capital
FVOCIR
eserve
Reserve
Reserve
Earn
ings
Equity
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Balanceasat0
1April2
018
105,578,000
19,820,705
7,010,944
12,841,000
1,122,009,5631,267,260,212
Impacto
fadoptingSL
FRS09on1April2018
-(19,820,705)
--
19,820,705
-
Adjusted
Balan
ceasat0
1April2018
105,578,000
-7,010,944
12,841,0001,141,830,2681,267,260,212
Totalcomprehensivein
come
Pro�itfortheyear
--
--
172,796,253
172,796,253
Otherco
mprehensivein
come
Re-measuremen
tofde�ined
ben
e�itsobligation
--
--
3,504,5013,504,501
Related
taxes
--
--
(981,260)
(981,260)
Totalo
therco
mprehensivein
comefo
rtheyear
--
--
2,523,241
2,523,241
Totalcomprehensivein
comefo
rtheyear
-
--
-
175,319,494
175,319,494
TransactionswithownersoftheGro
up,reco
gnizeddirectlyin
equity
Interimdividen
d
--
--
(38,392,000)
(38,392,000)
Finaldividen
d
--
--
(47,990,550)
(47,990,550)
TotaltransactionswithownersoftheGro
up
--
--
(86,382,550)
(86,382,550)
Balanceasat3
1March2019
105,578,000
-7,010,944
12,841,0001,230,767,2121,356,197,156
Balanceasat0
1April2
019
105,578,000
-7,010,944
12,841,0001,230,767,2121,356,197,156
Totalcomprehensivein
come
Pro�itfortheyear
--
--148,292,912148,292,912
Otherco
mprehensivein
come
Re-measuremen
tofemployeeben
e�itsobligation
--
--(2,749,174)(2,749,174)
Related
taxes
----769,769769,769
Totalo
therco
mprehensivein
comefo
rtheyear
--
--(1,979,405)(1,979,405)
Totalcomprehensivein
comefo
rtheyear
--
--146,313,507146,313,507
TransactionswithownersoftheGro
up,reco
gnizeddirectlyin
equity
Interimdividen
d
--
--(38,392,000)(38,392,000)
Finaldividen
d
--
--
(57,588,026)
(57,588,026)
Forfeitureofunclaimed
divided
-Note(a)
--
--297,200297,200
TotaltransactionswithownersoftheGro
up
--
--
(95,682,826)(95,682,826)
Balan
ceasat31March2020
105,578,000
-7,010,944
12,841,0001,281,397,8931,406,827,837
Note(a)-TheGrouppolicyistoforfeitthedividen
dswhichareoutstandingformorethan
sixyearsin
whichthedividen
dshavebeenin
itiallydeclared.
Figurein
bracketin
dicateded
uctions.
Thenotestoth
e�inan
cialstatemen
tsfrompage39to74form
anintegralparto
ftheseconsolidated
�inan
cialstatemen
ts.
-36-
STATEMENTOFCHANGESINEQUITY
COMPANY
StatedAvailablefo
rsale/
OtherCapital
General
Retained
Total
Capital
FVOCIR
eserve
Reserve
Reserve
Earn
ings
Equity
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Balanceasat0
1April2
018
105,578,00019,820,705
11,014
12,841,0001,044,222,5921,182,473,311
Impacto
fadoptingSL
FRS09on1April2018
-(19,820,705)
-
-19,820,705
-
Adjusted
Balan
ceasat0
1April2018
105,578,000
-11,01412,841,0001,064,043,2971,182,473,311
Totalcomprehensivein
come
Pro�itfortheyear
--
--249,930,377249,930,377
Otherco
mprehensivein
come
Re-measuremen
tofde�ined
ben
e�itsobligation
--
--3,504,5013,504,501
Related
taxes
--
--(981,260)(981,260)
Totalo
therco
mprehensivein
comefo
rtheyear
-
--2,523,2412,523,241
Totalcomprehensivein
comefo
rtheyear
-
--
-252,453,618252,453,618
TransactionswithownersoftheCompany,reco
gnizeddirectlyin
equity
Interimdividen
d
--
--
(38,392,000)
(38,392,000)
Finaldividen
d
--
--
(47,990,000)
(47,990,000)
TotaltransactionswithownersoftheCompany
--
--
(86,382,000)
(86,382,000)
Balanceasat3
1March2019
105,578,000
-11,014
12,841,0001,230,114,9151,348,544,929
Balanceasat0
1April2
019
105,578,000
-11,014
12,841,0001,230,114,9151,348,544,929
Totalcomprehensivein
come
Pro�itfortheyear
--
--
152,582,747152,582,747
Otherco
mprehensivein
come
Re-measuremen
tofemployeeben
e�itsobligation
--
--(2,749,174)(2,749,174)
Related
taxes
--
--769,769769,769
Totalo
therco
mprehensivein
comefo
rtheyear
--
--(1,979,405)(1,979,405)
Totalcomprehensivein
comefo
rtheyear
--
--150,603,342150,603,342
TransactionswithownersoftheCompany,reco
gnizeddirectlyin
equity
Interimdividen
d
--
--(38,392,000)(38,392,000)
Finaldividen
d
--
--
(57,588,000)
(57,588,000)
Forfeitureofunclaimed
divided
-Note(a)
--
--297,200297,200
TotaltransactionswithownersoftheCompany
--
--
(95,682,800)(95,682,800)
Balanceasat3
1March2020
105,578,000
-
11,014
12,841,0001,285,035,4571,403,465,471
Note(a)-TheGrouppolicyistoforfeitthedividen
dswhichareoutstandingformorethan
sixyearsin
whichthedividen
dshavebeenin
itiallydeclared.
Figurein
bracketin
dicateded
uctions.
Thenotestoth
e�inan
cialstatemen
tsfrompage39to74form
anintegralparto
ftheseconsolidated
�inan
cialstatemen
ts.
-37-
STATEMENTOFCASHFLOWS
GROUP COMPANY
FORTHEYEARENDED31MARCH, 2020 2019 2020 2019
Note Rs. Rs. Rs. Rs.
Cash�lowsfromoperatingactivities
Pro�itbeforeincometaxexpense 242,371,950 247,644,140246,147,285 309,768,440
Adjustmentfor
Provisionforemployeebene�it 23 18,990,514 16,897,069 18,990,514 16,897,069
Depreciation/amortization 11,12&13 106,728,320 88,989,772106,728,320 88,989,773
Interestexpenses 71,447,979 2,736,8891,447,979 7,234,115
Provisionofslowmovinginventories 16 - 4,250,058 - 4,250,058
Changeinfairvalueofunittruts 5(372,000) (346,500) (372,000) (346,500)
Lossondisposalofunittrusts 5 - 3,175,751 - 3,175,751
Pro�itondisposalofproperty,plant&equipment5(29,429,730) (23,626,059) (29,429,730) (23,626,059)
Dividendincome 5 - -(3,160,477) (66,219,527)
Interestincomefrominvestmentin�ixeddeposits (23,569,962) (26,346,982) (23,569,962) (26,346,983)
Operatingpro�itbeforeworkingcapitalchanges 316,167,071 313,374,138 316,781,929 313,776,137
Changeininventories (121,337,851) (2,643,826) (121,337,851) (2,643,826)
Changeintradeandotherreceivables 35,640,877 10,852,246 35,640,877 10,852,246
Changeinrelatedpartypayables - - - (15,037,761)
Changeintradeandotherpayables 47,958,885 (48,325,218) 48,004,424 (48,370,831)
Cashgeneratedfromoperations 278,428,982 273,257,340 279,089,379 258,575,965
Gratuitypaid 23(7,877,645) (6,007,833)(7,877,645) (6,007,833)
Interestpaid (913,692) (2,736,889) (913,692) (7,234,115)
Incometaxpaid 26(101,995,487) (96,559,683) (101,480,986) (82,492,767)
Netcash�lowsgeneratedfromoperatingactivities 167,642,158 167,952,935 168,817,056 162,841,250
Cash�lowsfrominvestingactivities
Interestreceived 5,147,651 20,188,960 5,147,651 20,188,960
Dividendreceived - - 3,160,477 -
Investmentin�ixeddeposits - (97,226,168) - (97,226,168)
Proceedsfromdisposalofinvestmentinunittrust - 31,668,049 - 31,668,049
Proceedsfromdisposalofproperty,
plantandequipment 30,592,818 23,731,839 30,592,818 23,731,838
Acquisitionofproperty,plantandequipmentand
intangibleassets (207,987,257) (111,280,024)(207,987,257) (111,280,024)
Cash�lowsusedininvestingactivities (172,246,788) (132,917,344) (169,086,311) (132,917,345)
Cash�lowsfrom�inancingactivities
Dividendspaid (95,357,056) (86,382,550) (95,357,056) (86,382,000)
Leaserentalpaid (6,063,600) - (6,063,600) -
Cash�lowsusedin�inancingactivities (101,420,656) (86,382,550)(101,420,656) (86,382,000)
Netchangeincashandcashequivalents (106,025,286)(51,346,959)(101,689,911) (56,458,095)
Cashandcashequivalentsatthebeginning 18 51,596,037 102,942,996 46,308,852 102,766,947
Cashandcashequivalentsattheend (54,429,249) 51,596,037 (55,381,059) 46,308,852
Figuresinbracketindicatedeductions.
Thenotestothe�inancialstatementsfrompage39to74formanintegralpartoftheseconsolidated�inancialstatements.
-38-
1.ReportingEntity
1.1DomicileandLegalForm
HarischandraMillsPLC(“theCompany”)isapubliclimited
liability company incorporated anddomiciled in Sri Lanka
since09January1953.
Theregisteredof�iceandtheprincipalplaceofbusinessofthe
CompanyaresituatedatNo.11,C.A.HarischandraMawatha,
Matara.
TheConsolidatedFinancialStatementsoftheGroupforthe
year ended31March2020 comprise theCompanyand its
subsidiary (together referred to as the “Group” and
individuallyas“Groupentities”).
1.2Subsidiary
The Company has a fully owned subsidiary, Harischandra
Mills (Distributors) Limited which is incorporated on 03
February1993.
FinancialstatementsoftheCompanyandthesubsidiaryare
prepared for a common �inancial year, which ends on 31
March.
1.3PrincipalActivitiesandNatureofOperations
TheprincipalactivitiesoftheGrouparemanufacturingand
distributingfood,soapitemsandsalesoffuelandlubricants.
Intheyear2014,directorsoftheCompanydecidedtotransfer
the distributorship of Harischandra Mills (Distributors)
LimitedtoHarischandraMillsPLC.Accordingly,theprincipal
commercial operation of HarischandraMills (Distributors)
LimitedisnowbeentransferredtotheparentCompany.
There were no signi�icant changes in the nature of the
principal activities of the Group during the �inancial year
underreview.
1.4ParentEnterpriseandUltimateParentEnterprise
IntheopinionoftheDirectors,theCompanydoesnothave
anyidenti�iableparententityofitsown.
1.5NumberofEmployees
ThenumbersofemployeesoftheGroupandCompanyasat31
March2020areasfollows:
Group 589(2019-589)
Company 589(2019-589)
NOTESTOTHEFINANCIALSTATEMENTS
1.6 Responsibilities for �inancial statements and
approvalof�inancialstatements
The board of directors is responsible for preparation and
presentation of the �inancial statements of the Group &
Company as per theprovisionof CompaniesActNo. 07of
2007 and Sri Lanka Accounting Standards. The directors'
responsibilityover�inancialstatementsissetoutindetailin
thestatementofdirectors'responsibility.
The�inancialstatementsoftheGroupfortheyearended31
March 2020were authorized for issue in accordancewith
resolutionoftheBoardofDirectorson25September2020.
2.BasisofPreparation
2.1StatementofCompliance
The onsolidated inancial tatements of the Group andC F S
CompanywhichcompriseoftheStatementofpro�itorloss
and other comprehensive income, Statement of Financial
Position, StatementofChanges inEquity andStatementof
CashFlowshavebeenpreparedinaccordancewithSriLanka
Accounting Standards (hereinafter referred to as SLFRS /
LKASs)asissuedbytheInstituteofCharteredAccountantsof
SriLanka, and in compliancewith the requirementsof the
Compan sActNo.07of2007.ie
These �inancial statements except for information on cash
�lows have been prepared following the accrual basis of
accounting. This is the �irst set of �inancial statements in
which SLFRS-16 Leases has been applied. The related
changes to signi�icant accounting policies are described in
Note3.
2.2BasisofMeasurement
TheConsolidatedFinancialStatementshavebeenprepared
on the historical cost basis except for the following items,
whicharemeasuredonalternativebasisoneachreporting
date.
· De�inedbene�it obligations are actuarially valued and
recognizedatthepresentvalue.
· Financial assets classi�ied as FVTPL / FVOCI are
measuredatfairvalue.
Noadjustmentshavebeenmadeforin�lationaryfactorsinthe
�inancialstatements.
2.3FunctionalandPresentationCurrency
TheConsolidatedFinancialStatementsarepresentedinSri
Lankan Rupees, which is the Group's functional and
presentation currencyof allGroupentities. Therewasno
changeintheGroup'spresentationandfunctionalcurrency
-39-
level in the fair value hierarchy in which such valuations
shouldbeclassi�ied.
Signi�icantvaluationissuesarereportedtotheGroup'sAudit
Committee.
Whenmeasuringthefairvalueofanassetoraliability,the
Groupusesobservablemarketdataas faraspossible.Fair
values are categorized into different levels in a fair value
hierarchy based on the inputs used in the valuation
techniquesasfollows.
Level 1: Quoted prices (unadjusted) in active markets for
identicalassetsorliabilities.
Level2:InputsotherthanquotedpricesincludedinLevel1
thatareobservablefortheassetorliability,eitherdirectly(i.e.
asprices)orindirectly(i.e.derivedfromprices).
Level3:Inputsfortheassetorliabilitythatarenotbasedon
observablemarketdata.(Unobservableinputs).
Iftheinputsusedtomeasurethefairvalueofanassetora
liability fall intodifferent levelsof the fair valuehierarchy,
thenthefairvaluemeasurementiscategorizedinitsentirety
inthesamelevelofthefairvaluehierarchyasthelowestlevel
inputthatissigni�icanttotheentiremeasurement.
The Group recognizes transfers between levels of the fair
value hierarchy at the end of the reporting period during
whichthechangehasoccurred.
Further information about the assumption made in
measuringfairvalueisincludedinNote36.2.
2.6MaterialityandAggregation
Eachmaterialclassofsimilaritemsispresentedseparately.
Items of dissimilar nature or function are presented
separatelyunlesstheyareimmaterial.
2.7GoingConcern
TheDirectorshavemadeanassessmentoftheGroup'sability
tocontinueasagoingconcernintheforeseeablefuture,and
theydonotintendeithertoliquidateorceasetrading.
Further information about the impact of COVID-19 is
includedinNote33.
2.8RelatedPartyTransactions
Disclosurehasbeenmade inrespectof the transactions in
which one party has the ability to control or exercise
during the year under review. All �inancial information
presentedinSriLankanRupees,unlessstatedotherwise.
2.4UseofEstimatesandJudgments
Thepreparationof �inancialstatements inconformitywith
Sri Lanka Accounting Standards requires management to
makejudgments,estimatesandassumptionsthataffectthe
applicationofaccountingpoliciesandthereportedamounts
ofassets,liabilities,incomeandexpenses.Actualresultsmay
differfromtheseestimates.
Estimatesandunderlyingassumptionsare reviewedonan
ongoing basis. Revisions to accounting estimates are
recognizedintheperiodinwhichtheestimatesarerevised
andinanyfutureperiodsaffected.
Informationaboutcriticaljudgmentsinapplyingaccounting
policiesthathavethemostsigni�icanteffectontheamounts
recognized in the consolidated �inancial statements are
includedinthefollowingnotes;
Note3.4-Impairmentofassets
Note3.11.1-Provisions
Note3.13-Employeebene�its
Note3.15-Capitalcommitmentsandcontingencies
Coronavirus(COVID-19)pandemic
The ongoing COVID-19 pandemic has increased the
estimationuncertaintyinthepreparationoftheseCondensed
Consolidated Financial Statements. The estimation
uncertaintyisassociatedwiththeextentanddurationofthe
expected economic downturn (and forecasts for key
economic factors including GDP, employment and house
prices). This includes the disruption to capital markets,
deteriorating credit , liquidity concerns, increasing
unemployment, declines in consumer discretionary
spending, reductions in production because of decreased
demand,andotherrestructuringactivities.
2.5.MeasurementofFairvalue
AnumberoftheGroup'sandCompany'saccountingpolicies
anddisclosuresrequirethemeasurementoffairvalues,for
both�inancialandnon-�inancialassetsandliabilities.
Groupregularlyreviewssigni�icantunobservableinputsand
valuationadjustments.Ifthirdpartyinformationisusedto
measure fairvalues,Groupassesses theevidenceobtained
from the third parties to support the conclusion that such
valuations meet the requirements of SLFRS, including the
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
-40-
continues to recognize the investment in the subsidiary at
cost.
3.1.3.Non-ControllingInterest
Non-controllinginterestsaremeasuredattheirappropriate
share of acquired identi�iable net assets at the date of
acquisition.
Changes in theGroup's interest inasubsidiary thatdonot
result in a loss of control are accounted for as equity
transactions.
However, the Company owned 100% of the equity of its
subsidiary and hence no non-controlling interest is
applicable.
3.1.4.LossofControl
WhentheGrouplossesitscontroloveritssubsidiaries,itde-
recognizestheassetsandliabilitiesofthesubsidiaries,any
related Non-Controlling Interest and other components of
equity.Anyresultinggainorlossisrecognizedinpro�itorloss.
Anyinterestretainedinformersubsidiariesismeasuredat
fairvaluewhencontrolislost.
3.1.5.Intra-GroupTransactions
Intra-groupbalances,intra-grouptransactionsandresulting
unrealizedpro�itsareeliminatedinfullintheConsolidated
FinancialStatements.Unrealizedlossesresultingfromintra-
grouptransactionsareeliminatedunlessthecostcannotbe
recovered.
3.2.ForeignCurrencyTransactions
Transactions in foreign currencies are translated to the
respectivefunctionalcurrenciesofGroupentitiesatexchange
ratesasatthedatesofthetransactions.
Monetary assets and liabilities denominated in foreign
currencies at the reporting date are translated to the
functionalcurrencyattheexchangerateasatthatdate.Non-
monetaryassetsandliabilitiesthataremeasuredatfairvalue
in a foreign currency are translated into the functional
currency at the exchange rate when the fair value was
determined.Non-monetaryitemsthataremeasuredbasedon
historical cost in a foreign currency are translated at the
exchangerateatthedateofthetransaction.
Foreign currency differences arising on translation are
generallyrecognizedinpro�itorloss.
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
signi�icant in�luence over the �inancial and operating
policies/decisionsoftheother,irrespectiveofwhetheraprice
ischarged.
2.9ComparativeInformation
Thecomparativeinformationhasbeenreclassi�ied/restated
where necessary to conform to the current year's
classi�icationinordertoprovideabetterpresentation.
3.SummarySigni�icantAccountingPolices
Theaccountingpoliciessetoutthebelowhavebeenapplied
consistently toallperiodspresented in theseConsolidated
FinancialStatementsandhavebeenappliedconsistentlyby
GroupentitiesexceptforSLFRS16relatedpolicies.
3.1BasisofConsolidation
3.1.1.Businesscombinations
The Group accounts for business combinations using the
acquisitionmethodwhencontrolistransferredtotheGroup.
theconsiderationtransferredintheacquisitionisgenerally
measured at fair value, as are the identi�iable net assets
acquired.
Anygoodwill thatarises is testedannually for impairment.
Anygainonabargainpurchaseisrecognizedinpro�itorloss
immediately. Transaction costs are expensed as incurred,
exceptifrelatedtotheissueofdebtorequitysecurities.
The consideration transferred does not include amounts
relatedtothesettlementofpre-existingrelationships.Such
amountsaregenerallyrecognizedinthepro�itorloss.
3.1.2.Subsidiaries
SubsidiariesareentitiescontrolledbytheGroup.TheGroup
controls an entity when it is exposed to, or has right to,
variablereturnsfromitsinvolvementwiththeentityandhas
theabilitytoaffectthosereturnsthroughitspoweroverthe
entity.The�inancialstatementsofsubsidiariesareincludedin
the Consolidated Financial Statements from the date on
which control commences until the date onwhich control
ceases.
Adjustmentsrequiredtotheaccountingpoliciesofsubsidiary
hasbeenchangedwherevernecessarytoalignthemwiththe
policiesadoptedbytheGroup.
Thecostofanacquisitionismeasuredatthefairvalueofthe
consideration, including contingent consideration. The
acquired identi�iable assets, liabilities and contingent
liabilities are measured at their fair value at the date of
acquisition. Subsequent to the acquisition, the Company
-41-
Group's�inancialassetsclassi�iedandmeasuredatamortized
costarelimitedtorelatedpartyreceivablesandcash&cash
equivalents.
AdebtinvestmentismeasuredatFVOCIifitmeetsbothofthe
followingconditionsandisnotdesignatedasatFVTPL:
- it is heldwithin a businessmodelwhose objective is
achievedbybothcollectingcontractualcash�lowsand
selling�inancialassets;and
- itscontractualtermsgiveriseonspeci�ieddatestocash
�lowsthataresolelypaymentsofprincipalandinterest
ontheprincipalamountoutstanding.
Oninitialrecognitionofanequityinvestmentthatisnotheld
for trading, the Group may elect to present subsequent
changesintheinvestment'sfairvalueinOCI.Thiselectionis
madeonaninvestment-by-investmentbasis.
All �inancialassetsnotclassi�iedasmeasuredatamortised
costorFVOCIasdescribedabovearemeasuredatFVTPL.This
includesallderivative�inancialassets.Oninitialrecognition,
theGroupmay irrevocably designate a �inancial asset that
otherwise meets the requirements to be measured at
amortisedcostoratFVOCIasatFVTPLifdoingsoeliminates
orsigni�icantlyreducesanaccountingmismatchthatwould
otherwisearise.
TheCompanyhasclassi�iedits investmentsinunittrustas
FVTPL.
Thecompanyhasclassi�ieditsinvestmentsinFixeddeposits
atamotisedcost.
a)Financialassets-Businessmodelassessment
The Group makes an assessment of the objective of the
businessmodelinwhicha�inancialassetisheldataportfolio
level because this best re�lects the way the business is
managedandinformation isprovidedtomanagement.The
informationconsideredincludes:
- Thestatedpoliciesandobjectivesfortheportfolioandthe
operation of those policies in practice. These include
whether management's strategy focuses on earning
contractual interest income, maintaining a particular
interestratepro�ile,matchingthedurationofthe�inancial
assetstothedurationofanyrelatedliabilitiesorexpected
cashout�lowsorrealisingcash�lowsthroughthesaleof
theassets;
- How the performance of the portfolio is evaluated and
reportedtotheGroup'smanagement;
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
3.3FinancialInstruments
(i)RecognitionandInitialMeasurement
A �inancial instrument is any contract that gives rise to a
�inancialassetofoneentityand�inancialliabilityorequity
instrumentofanotherentity.
Receivablesanddebtsecuritiesissuedareinitiallyrecognized
when they are originated. All other �inancial assets and
liabilitiesareinitiallyrecognizedwhentheGroupbecomesa
partytothecontractualprovisionsoftheinstrument.
A �inancial asset (unless it is a trade receivablewithout a
signi�icant �inancing component) or �inancial liability is
initiallymeasuredat fairvalueplus, foran itemnotat fair
valuethroughpro�itorloss(FVTPL),transactioncoststhat
aredirectlyattributabletoitsacquisitionorissue.
Atradereceivablewithoutasigni�icant�inancingcomponent
isinitiallymeasuredatthetransactionvalue.
FinancialAssets
(ii)Classi�icationandsubsequentmeasurement
On the initial recognition, a �inancial asset is classi�ied as
measured at: amortised cost; fair value through other
comprehensiveincome(FVOCI)–debtinvestment;fairvalue
through other comprehensive income (FVOCI) – equity
investment;orfairvaluethroughpro�itorloss(FVTPL).
Financialassetsarenotreclassi�iedsubsequenttotheirinitial
recognitionunlesstheGroupchangesitsbusinessmodelfor
managing�inancialassets,inwhichcaseallaffected�inancial
assetsarereclassi�iedonthe�irstdayofthe�irstreporting
periodfollowingthechangeinthebusinessmodel.
A�inancialassetismeasuredatamortisedcostifitmeetsboth
ofthefollowingconditionsandisnotdesignatedasatFVTPL:
- itisheldwithinabusinessmodelwhoseobjectiveistohold
assetstocollectcontractualcash�lows;and
- itscontractualtermsgiveriseonspeci�ieddatestocash
�lowsthataresolelypaymentsofprincipalandintereston
theprincipalamountoutstanding.
Financialassetsarenotreclassi�iedsubsequenttotheirinitial
recognitionunlesstheGroupchangesitsbusinessmodelfor
managing�inancialassets,inwhichcaseallaffected�inancial
assetsarereclassi�iedonthe�irstdayofthe�irstreporting
periodfollowingthechangeinthebusinessmodel.
-42-
prepaymentfeatureisinsigni�icantatinitialrecognition.
(iii) Financial assets - Subsequent measurement and
gainsandlosses
FinancialLiabilities
Classi�ication, subsequent measurement and gain and
losses
Financialliabilitiesareclassi�iedasmeasuredatamortized
costorFVTPL.A�inancialliabilityisclassi�iedasatFVTPLifit
is classi�ied as held-for-trading, it is a derivative or it is
designatedassuchoninitialrecognition.Financialliabilities
at FVTPL aremeasured at fair value and gains and losses,
including any interest expense, are recognised in pro�it or
loss.Other�inancialliabilitiesaresubsequentlymeasuredat
amortizedcostusingtheeffectiveinterestmethod.Interest
expenseandforeignexchangegainsandlossesarerecognised
inpro�itor loss.Anygainor lossonde-recognition is also
recognisedinpro�itorloss.
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
- The risks that affect the performance of the business
model(andthe�inancialassetsheldwithinthatbusiness
model)andhowthoserisksaremanaged;
- How managers of the business are compensated - e.g.
whethercompensation isbasedon the fairvalueof the
assetsmanagedor thecontractualcash �lowscollected;
and
- The frequency, volume and timing of sales of �inancial
assets in prior periods, the reasons for such sales and
expectationsaboutfuturesalesactivity.
Transfersof�inancialassetstothirdpartiesintransactions
thatdonotqualifyforderecognitionarenotconsideredsales
for this purpose, consistent with the Group's continuing
recognitionoftheassets.
Financialassetsthatareheldfortradingoraremanagedand
whose performance is evaluated on a fair value basis are
measuredatFVTPL.
b) Financial assets -Assessment whether contractual
cash �lows are solely payments of principal and
interest
Forthepurposesofthisassessment,'principal'isde�inedas
the fair value of the �inancial asset on initial recognition.
'Interest' is de�ined as consideration for the time value of
moneyandforthecreditriskassociatedwiththeprincipal
amountoutstandingduringaparticularperiodoftimeandfor
other basic lending risks and costs (e.g. liquidity risk and
administrativecosts),aswellasapro�itmargin.
In assessingwhether the contractual cash �lows are solely
paymentsofprincipalandinterest,theGroupconsidersthe
contractualtermsoftheinstrument.Thisincludesassessing
whetherthe�inancialassetcontainsacontractualtermthat
couldchangethetimingoramountofcontractualcash�lows
such that itwould notmeet this condition. Inmaking this
assessment,theGroupconsiders:
- Contingenteventsthatwouldchangetheamountortiming
ofcash�lows
- Terms that may adjust the contractual coupon rate,
includingvariable-ratefeatures
- Terms that limit the Group's claim to cash �lows from
Speci�iedassets(e.g.non-recoursefeatures).
Additionally, fora �inancial asset acquiredat adiscountor
premiumtoitscontractualparamount,afeaturethatpermits
or requires prepayment at an amount that substantially
represents the contractual par amount plus accrued (but
unpaid) contractual interest (which may also include
reasonableadditionalcompensationforearlytermination)is
treatedasconsistentwiththiscriterionifthefairvalueofthe
Financialassetsat
amortisedcost
Financialassetsat
FVTPL
These assets are subsequentlymeasuredat amortised costusingthe effective interestmethod. Theamortised cost is reduced byimpairment losses . Interestincome,foreignexchangegainsandl o s se s and impa i rmen t a rerecognised in pro�it or loss. Anygain or loss on derecognition isrecognisedinpro�itorloss.
These assets are subsequentlymeasured at fair value. Net gainsandlosses,includinganyinterestordividendincome,arerecognizedinpro�itorloss.
Debtinvestmentsat
FVOCI
Equityinvestmentat
FVOCI
These assets are subsequentlymeasured at fair value, Interestincome calculated using effectiveinterestmethod ,foreignexchangegains and losses and impairmentare recognized in pro�it or loss.Other net gains and losses arerecognizedinOCI.
On de-recognition ,gains andlosses accumulated in OCI are re-classi�iedtopro�itorloss.
These assets are subsequentlymeasured at fair value .Dividendsarerecognizedasincomeinpro�itorlossunlessthedividendclearlyrepresentsarecoveryofpartofthecost of the investment .Other netgainsandlossesarerecognizedinOCI and are never re-classi�ied topro�itorloss.
-43-
Group's historical experience and informed credit
assessmentandincludingforward-lookinginformation.
TheGroupconsidersa�inancialassettobeindefaultwhen:
- theborrowerisunlikelytopayitscreditobligationstothe
Group in full,without recourse by the Group to actions
suchasrealisingsecurity(ifanyisheld)
LifetimeECLsaretheECLsthatresultfromallpossibledefault
eventsovertheexpectedlifeofa�inancialinstrument.
12-month ECLs are the portion of ECLs that result from
defaulteventsthatarepossiblewithinthe12monthsafterthe
reportingdate(orashorterperiodiftheexpectedlifeofthe
instrumentislessthan12months).
ThemaximumperiodconsideredwhenestimatingECLsisthe
maximum contractual period over which the Group is
exposedtocreditrisk.
MeasurementofECL
ECL are a probability-weighted estimate of credit losses.
Credit lossesaremeasuredas thepresentvalueofallcash
shortfalls(i.ethedifferencebetweenthecash�lowsduetothe
entityinaccordancewiththecontractandthecash�lowsthat
the Group expects to receive). ECLs are discounted at the
effectiveinterestrateofthe�inancialasset.
Credit-impaired�inancialassets
Ateachreportingdate,theGroupassesseswhether�inancial
assets carriedat amortisedcost andequity investmentsat
FVOCI are credit-impaired. A �inancial asset is 'credit-
impaired'whenoneormoreeventsthathaveadetrimental
impact on the estimated future cash �lows of the �inancial
assethaveoccurred.
Evidencethata�inancialassetiscredit-impairedincludesthe
followingobservabledata:
- Signi�icant�inancialdif�icultyoftheborrowerorissuer;
- Abreachofcontractsuchasadefaultinpayments
- The restructuringofa loanoradvanceby theGroupon
termsthattheGroupwouldnotconsiderotherwise;
- Itisprobablethattheborrowerwillenterbankruptcyor
other�inancialreorganisation;or
- The disappearance of an active market for a security
becauseof�inancialdif�iculties.
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
De-recognition
The Group derecognises a �inancial asset when the
contractualrightstothecash�lowsfromthe�inancialasset
expire,orittransferstherightstoreceivethecontractualcash
�lowsinatransactioninwhichsubstantiallyalloftherisks
and rewards of ownership of the �inancial asset are
transferred or in which the Group neither transfers nor
retainssubstantiallyalloftherisksandrewardsofownership
anditdoesnotretaincontroloverthetransferredasset.Any
interestinsuchderecognized�inancialassetsthatiscreated
orretainedbytheGroupisrecognizedasaseparateassetor
liability.
The Group derecognises a �inancial liability when its
contractualobligationsaredischargedorcancelled,orexpire.
The Group also derecognises a �inancial liability when its
termsaremodi�iedandthecash�lowsofthemodi�iedliability
are substantially different, in which case a new �inancial
liability based on themodi�ied terms is recognised at fair
value.
On de-recognition of a �inancial liability, the difference
between the carrying amount extinguished and the
consideration paid (including any non-cash assets
transferredorliabilitiesassumed)isrecognisedinpro�itor
loss.
Offsetting
Financialassetsand�inancialliabilitiesareoffsetandthenet
amount presented in the statement of �inancial position
when, and only when, the Group currently has a legally
enforceablerighttosetofftheamountsanditintendseither
tosettlethemonanetbasisortorealizetheassetandsettle
theliabilitysimultaneously.
3.4Impairment
(a)FinancialAssets
TheGrouprecogniseslossallowancesforECLson�inancial
assetsmeasuredatamortisedcost.TheGroupmeasuresloss
allowancesatanamountequaltolifetimeECLs,otherdebt
securities and bank balances. Loss allowances for trade
receivableisalwaysmeasuredatanamountequaltolifetime
ECLs.
Whendeterminingwhetherthecreditriskofa�inancialasset
hasincreasedsigni�icantlysinceinitialrecognitionandwhen
estimating ECLs, the Group considers reasonable and
supportable information that is relevant and available
withoutunduecostoreffort.Thisincludesbothquantitative
and qualitative information and analysis, based on the
-44-
Animpairmentlossisrecognisedifthecarryingamountofan
assetexceedsitsrecoverableamount.
3.5Statedcapital
Ordinaryshares
Ordinary shares are classi�ied as equity. Incremental costs
attributabletotheissueofordinarysharesarerecognizedasa
deductionfromequity,netofanytaxeffect.
3.6Property,PlantandEquipment
3.6.1Recognition&Measurement
Itemsofproperty,plant&equipmentaremeasuredatcost
lessaccumulateddepreciationandaccumulatedimpairment
losses.
Costincludesexpenditurethatisdirectlyattributabletothe
acquisitionof theasset.Thecostofself-constructedassets
includes the cost ofmaterials and direct labour, any other
costsdirectlyattributabletobringingtheassetstoaworking
conditionfortheirintendeduse.
Purchasedsoftwarethatisintegraltothefunctionalityofthe
relatedequipmentiscapitalizedaspartofthatasset.
When parts of an item of property, plant and equipment
(major components) have different useful lives, they are
accounted for as separate items of property, plant and
equipment.
3.6.2SubsequentCosts
Subsequentexpenditureiscapitalizedonlyifisprobablethat
thefutureeconomicbene�itsassociatedwiththeexpenditure
will �lowtotheGroup.Thecostsofday-to-dayservicingof
property,plantandequipmentisrecognizedinpro�itorloss
asincurred.
3.6.3.Depreciation
Depreciation is calculated towrite off the cost of items of
property,plantandequipmentlesstheirestimatedresidual
values using the straight-line basis over their estimated
useful lives, and is generally recognized in pro�it or loss,
unless the amount is included in the carrying amount of
anotherasset.Leasedassetsaredepreciatedovertheshorter
oftheleasetermandtheirusefullivesunlessitisreasonably
certainthattheGroupwillobtainownershipbytheendofthe
leaseterm.Landisnotdepreciated.
Theestimateduseful lives for thecurrentandcomparative
yearsofsigni�icant itemsofproperty,plantandequipment
areasfollows;
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
Presentation of allowance for ECL in the statement of
�inancialposition
Lossallowancesfor�inancialassetsmeasuredatamortised
cost are deducted from the gross carrying amount of the
assets.
Write-off
Thegrosscarryingamountofa�inancialassetiswrittenoff
whentheGrouphasnoreasonableexpectationsofrecovering
a �inancial asset in its entirety or a portion thereof. For
individualcustomers,theGrouphasapolicyofwritingoffthe
gross carrying amount based on historical experience of
recoveries of similar assets. For corporate customers, the
Groupindividuallymakesanassessmentwithrespecttothe
timingandamountofwrite-offbasedonwhetherthereisa
reasonable expectation of recovery. The Group expects no
signi�icantrecovery fromtheamountwrittenoff.However,
�inancialassetsthatarewrittenoffcouldstillbesubjectto
enforcementactivities inordertocomplywiththeGroup's
procedurestorecoveryofamountsdue.
Financialassetsmeasuredatamortisedcost
The Group considered evidence of impairment for these
assetsatanindividualassetlevel.Allassetswereindividually
assessedforimpairment.Animpairmentlosswascalculated
asthedifferencebetweenanasset'scarryingamountandthe
presentvalueoftheestimatedfuturecash�lowsdiscountedat
the asset's original effective interest rate. Losses were
recognised in pro�it or loss and re�lected in an allowance
account. When the Group considered that there were no
realistic prospects of recovery of the asset, the relevant
amountswerewrittenoff.Iftheamountofimpairmentloss
subsequently decreased and the decrease was related
objectivelytoaneventoccurringafterthe impairmentwas
recognised,thenthepreviouslyrecognisedimpairmentloss
wasreversedthroughpro�itorloss.
(b)Non-�inancialAssets
At each reporting date, the Group reviews the carrying
amountsof itsnon-�inancialassets (other than inventories
anddeferredtaxassets)todeterminewhetherthereisany
indicationofimpairment.Ifanysuchexists,thentheassets
recoverableamountisestimated.
Therecoverableamountofanassetisthegreaterofitsvalue
inuseanditsfairvaluelesscosttosell.Valueinuseisbasedon
theestimatedfuturecash�lows,discountedtotheirpresent
value using a pre-tax discount rate that re�lects current
marketassessmentsofthetimevalueofmoneyandtherisks
speci�ictotheasset.
-45-
b.SubsequentExpenditure
Subsequentexpenditureiscapitalizedonlywhenitincrease
thefutureeconomicbene�itsembodiedinthespeci�icassetto
whichitrelate.Allotherexpenditure,includingexpenditure
oninternallygeneratedgoodwillandbrands,arerecognized
inpro�itorlossasincurred.
c.Amortization
Amortizationiscalculatedtowriteoffthecostofintangible
assetslesstheirestimatedresidualvaluesusingthestraight-
linemethodovertheirestimatedusefullives,andisgenerally
recognizedinpro�itorloss.Goodwillisnotamortized.
Theestimateduseful lives for thecurrentandcomparative
yearsareasfollows;
Computersoftware-5years
Amortizationmethods,useful livesand residualvaluesare
reviewedateachreportingdateandadjustedifappropriate.
d.De-recognition
Gainsor lossesarising fromderecognitionofan intangible
assets are measured as the difference between the net
disposalproceedsandthecarryingamountoftheassetsand
are recognized in pro�it or loss when the asset is
derecognized.
3.8LeasedAssets
TheGrouphasappliedSLFRS16usingmodi�iesretrospective
approachandthereforethecomparativeinformationhasnot
beenrestatedandcontinuetobereportedunder17andIFRIC
4.
Policyapplicablefrom1April2019
At inception of a contract ,the Group assesses whether a
contractis,orcontains,alease.Acontract is,orcontains,a
leaseofthecontractconveystherighttocontroltheuseofan
Identi�ied assets for a period of time in exchange for
consideration.Toassesswhetheracontractconveystheright
to control theuseof a identi�iedasset, theGroupuses the
de�initionofaleaseinSLFRS16.
Thispolicyappliedtocontractenteredinto,onorafter1April
2019.
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
Depreciationofanassetbeginswhenitisavailableforuseor,
inrespectofself-constructedassets,fromthedatethatthe
assetiscompletedandreadyforuse.
Depreciationofanassetceasesattheearlierofthedatethat
theasset isclassi�iedasheldforsaleandthedatethat the
assetisderecognized.
Depreciationmethods, useful lives and residual values are
reviewedateachreportingdateandadjustedifappropriate.
3.6.4.De-recognition
An item of property, plant and equipment is derecognized
upondisposal of orwhenno future economicbene�its are
expectedfromitsuseordisposal.Thegainsorlossesarising
on derecognition (disposal or retirement) of an item of
property,plantandequipmentaredeterminedbycomparing
theproceedsfromdisposalwiththecarryingamountofthe
property,plantandequipmentandarerecognizednetwithin
'otherincome'intheStatementofpro�itorloss.
3.6.5CapitalWork-in-Progress
Capitalwork-in-progressrepresentstheaccumulatedcostof
materialsandothercostsdirectlyrelatedtotheconstruction
of an asset. Capitalwork-in- progress is transferred to the
respective asset accounts at the time it is substantially
completedandreadyforitsintendeduse.
3.7IntangibleAssets
a.RecognitionandMeasurement
Allcomputersoftwarecostsincurred,licensedforusebythe
Group,whicharenotintegrallyrelatedtoassociatehardware,
and can be clearly identi�ied, reliably measured and it is
probablethattheywillleadtofutureeconomicbene�itsare
included in the statement of �inancial position under the
category intangible assets and carried at cost less
accumulated amortization and accumulated impairment
lossesifany.
CategoryofAsset UsefulEconomiclifetime(Years)
Buildings
Plantandmachinery
Of�ice,factory&laboratoryequipment
Furnitureand�ittings
Motorvehicles
50
13.33
10
20
4
-46-
² Amounts expected to be payable under residual value
guaranteedand
²TheexercisepriceunderapurchaseoptionthattheGroupis
reasonably certain to exercise, lease payments in an
optionalrenewalperiodiftheGroupisreasonablycertain
toexerciseandextensionoption, andpenalties forearly
termination of a lease unless the Group is reasonably
certainnottoterminateearly.
The lease liability is measured at amortized cost using
effective interestmethod.it is remeasuredwhen there is a
changeinfutureleasepaymentsarisingfromachangeinan
indexorrate,ifthereisachangeintheGroup'sestimateofthe
amount expected to be payable under a residual value
guarantee,iftheGroupchangesitsassessmentofwhetherit
willexerciseapurchase,extensionorterminationoptionorif
thereisarevisedinsubstance�ixedleasepayment.
When the lease liability is remeasured in this way, a
correspondingadjustmentismadetothecarryingamountof
theright-of-useassetsorisrecordedispro�itorlossifthe
carringamountoftherightofuseassethasbeenreducedto
zero
TheGrouppresentsright-of-use-assetsthatdonotmeetthe
de�initionofinvestmentpropertyinright-of-use-assetsand
leasecreditorinthestatementof�inancialposition.
Shorttermleasesandleasesoflowvalueassets
TheGrouphaselectednottorecognizerightofuseassetsand
leaseliabilitiesofleasesoflow-valueassetsandshortterm
leases.TheGrouprecognize the leasepaymentsassociated
withtheseleasesasanexpenseonastraight-linebasisover
theleaseterm.
Policyapplicablebefore1April2019
ForcontractsenteredintotheGroupdeterminedwhetherthe
arrangement was or contained a lease based on the
assessmentofwhether
² Ful�ilmentofthearrangementwasdependentontheuseof
speci�icassetorassetsand
² Thearrangementhadconveyedarighttousetheasset.An
arrangementconveyedtherighttousetheassetifoneof
thefollowingwasmet
-Thepurchaserhastheabilityorrighttooperatetheasset
whileobtainingorcontrollingmorethananinsigni�icant
amountoftheoutput
a.AsaLessee
At commencement or on modi�ication of a contract that
contains a lease component ,the Group allocate the
considerationinthecontracttoeachleasecomponentonthe
basisofItsrelativestand-aloneprices.However,foethelease
ofpropertytheGrouphaselectednottoseparatenon-lease
components and account for the lease and non-lease
componentsasasingleleasecomponent.
TheGrouprecognizedarightofuseassetandaleaseliability
attheleasecommencementdate .Therightofuseassetsis
initiallymeasuredatcostwhichcomprisestheamountofthe
lease liability adjusted for any lease paymentsmade at or
beforethecommencementdate ,plusany initialdirectcost
incurred and remove the underline asset or to restore the
underlineassetorthesiteonwhichitislocated,lessanylease
incentivereceived.
Therightofuseassetissubsequently depreciatedstraight-
linemethodfromthecommencementdatetotheendofthe
lease term ,unless the lease transfers ownership of the
underlyingassettotheGroupbytheendofleasetermorthe
costoftherightofuseassetre�lectthatGroupwillexerciseA
purchaseoption .In that case the rightofuseassetwillbe
depreciatedovertheusefullifeoftheunderlyingasset,which
is determined on the same basis as those of property and
equipment.Inaddition,therightifuseassetisperiodically
reduced by impairment losses ,if any and adjusted lease
liability.
Theleaseliabilityisinitiallymeasuredatthepresentvaluesof
theleasepaymentsthatarenotpaidatthecommencement
date,discountedusingtheinterestrateimplicitintheleaseor
,if rate cannot be readily determined, the Group's
incremental borrowing rate .Generally ,the Group uses Its
incrementalborrowingrateasthediscountrate.
The Group determines its incremental borrowing rate by
obtaining interest rates from various external �inancing
sourcesandmakescertainadjustmentstore�lectthetermsof
theleaseandtypeoftheassetsleased.
Lease payments included in themeasurement of the lease
liabilitycomprisethefollowing:
²Fixedpayments,includingin-substance�ixedpayments:
² Variableleasepaymentsthatdependonanindexorrate
initially measured using the index or rate as at
commencementdate;
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
-47-
Net realizable value is the estimated selling price in the
ordinary course of business, less the estimated costs
necessarytomakethesale.
3.11LiabilitiesandProvisions
Liabilitiesclassi�iedascurrentliabilitiesintheStatementof
FinancialPositionarethose,whichfalldueforpaymenton
demandorwithinoneyearfromthedateoftheStatementof
FinancialPosition.
Non-current liabilities are those balances that fall due for
paymentafteroneyearfromtheendofthereportingdate.All
known liabilitieshavebeenaccounted for inpreparing the
�inancialstatement.
3.11.1Provisions
Aprovision isrecognized if,asaresultofapastevent, the
Grouphasapresentlegalorconstructiveobligationthatcan
beestimated reliably, and it isprobable that anout�lowof
economicbene�itswillberequiredtosettletheobligation.
3.12CashandCashEquivalents
Cash and cash equivalents are de�ined as cash-in-hand,
deposits held at callwithbanksnet of bankoverdraft and
shortterm�ixeddeposits.
3.13EmployeeBene�its
a. De�inedContributionPlans - (EmployeesProvident
FundandEmployeesTrustFund)
Ade�inedcontributionplanisapost-employmentplanunder
whichanentitypays�ixedcontributionintoaseparateentity
and will have no legal or constructive obligation to pay a
further amount. Obligations for contributions to de�ined
contributionplansarerecognizedasexpenseinthepro�itand
lossintheperiodduringwhichrelatedservicesarerendered
byemployees.
Employees'ProvidentFund-ManagedbyHarischandra
MillsPLCProvidentFundAssociation
BoththeGroupandemployeeswhoarepaidonmonthlypay
basis (Payroll Expenses), contribute 15% on the salary of
eachemployeetotheapprovedprivateprovidentFund.
-Thepurchaserhadtheabilityofrighttocontrolphysical
accesstotheassetwhileobtainingorcontrollingmore
thanasinsigni�icantamountoftheoutput
-Factsandcircumstanceindicatedthatitwasremotethat
other parties would take more than an insigni�icant
amountoftheoutput,andthepriceperunitwasneither
�ixedperunitofoutputnorequaltothecurrentmarket
priceperunitofoutput.
Asalessee
In the comparativeperiod, as a lessee theGroupclassi�ied
leases that transferred substantially all of the risk and
rewardsofthe ownershipas�inanceleases.Whenthiswas
the case, the leased assets were measured initially at an
amountequaltotheloweroftheirfairvalueandthepresent
value of the minimum lease payments. Minimum lease
payments were the payment over the lease term that the
lesseewasrequiredtomake,excludinganycontingentrest.
Subsequenttoinitialrecognition,theassetswereaccounted
forinaccordancewiththeaccountingpolicyapplicabletothe
asset.
Assetsheldunderotherleaseswereclassi�iedasoperating
leasesandwerenotrecognisedintheGroup'sstatementof
�inancial position. Payment made under operating leases
wererecognisedinpro�itorlossinstraight–linebasisover
thetermoflease.Leaseincentivesreceivedwererecognised
asanintegralpartofthetotalleaseexpensesoverthetermof
lease.
3.9InvestmentsinSubsidiary
InvestmentsinsubsidiaryoftheGroupareclassi�iedasnon-
current investments, which are stated in the statement of
�inancialpositionatcostlessaccumulatedimpairmentlosses,
ifany.
3.10Inventories
Inventories are measured at the lower of cost and net
realizable value. The cost of raw material and packing
material inventories are accounted at purchased cost on a
�irstin�irstoutbasis.Thecostof�inishedgoodsinventoriesis
based on the weighted average principle, and includes
expenditure incurred in acquiring the inventories,
production or conversion cost and other cost incurred in
bringing them to their existing location and condition. In
relation towork in progress, cost includes an appropriate
share of production overheadsbased onnormal operating
capacity.
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
-48-
3.15CapitalCommitmentsandContingencies
Contingentliabilitiesaredisclosedifthereisapossiblefuture
obligationasaresultofpasteventbuteitherapaymentisnot
probableortheamountcannotbereliablyestimated.
Contingencies are possible assets or obligations that arise
frompasteventsandwhoseexistencewillbecon�irmedonly
byoccurrenceornon-occurrenceofuncertainfutureevents
notwhollywithinthecontroloftheGroup
CapitalcommitmentsandcontingentliabilitiesoftheGroup
aredisclosed inNote28&29 respectively to the �inancial
statements.
3.16EventsaftertheendoftheReportingPeriod
All material and important events which occur after the
reportingdatehavebeenconsideredanddisclosedinnotesto
the�inancialstatements.
Statement of Pro�it or Loss and Other Comprehensive
Income
3.17RevenueRecognition
RevenuefromContractswithCustomers
SLFRS15“RevenuefromContractswithCustomers”outlines
a single comprehensive model of accounting for revenue
arising from contracts with customers and supersedes
current revenue recognitionguidance foundacross several
standardsandinterpretationswithinSLFRS.Itestablishesa
new�ive-stepmodelthatwillapplytorevenuearisingfrom
contractswithcustomers.
Step1:Identifythecontract(s)withacustomer:Acontractis
de�inedasanagreementbetweentwoormorepartiesthat
create enforceable rights and obligations and sets out the
criteriaforeachofthoserightsandobligations.
Step2:Identifytheperformanceobligationsinthecontract:A
performanceobligationinacontractisapromisetotransfera
goodorservicetothecustomerthatisdistinct.
Step3:Determinethetransactionprice:Transactionpriceis
theamountofconsiderationtowhichtheentityexpectstobe
entitledtoinexchangefortransferringthepromisedgoods
andservicestoacustomer,excludingamountscollectedfrom
thirdparties.
EmployeeTrustFund
TheGroupcontributes3%ofthesalaryofeachemployeeto
the Employees' Trust Fund. Contributions to de�ined
contribution plans are recognized as an expense in the
StatementofComprehensiveIncomeasincurred.
b.De�inedBene�itPlan
De�inedbene�itplanisapost-employmentbene�itplanother
thanDe�inedcontributionplan.Theliabilityrecognizedinthe
statementof�inancialpositioninrespectofde�inedbene�it
planisthepresentvalueofthede�inedbene�itobligationat
theStatementofFinancialPositiondate.Thede�inedbene�it
obligation is calculatedannuallyby independent actuaries,
usingprojectedunitcreditmethod,asrecommendedbyLKAS
19,“EmployeeBene�its”.
The present value of the de�ined bene�it obligation is
determined by discounting the estimated future cash
out�lows using interest rates that apply to the currency in
which the bene�its will be paid, and that have terms to
maturityapproximatingtothetermsoftherelatedliability.
Theassumptionsbasedonwhichtheresultsoftheactuarial
valuationweredeterminedareincludedintheNote23.3to
the�inancialstatements.Thisliabilityisnotexternallyfunded
andtheitemisgroupedundernon-currentliabilitiesinthe
StatementofFinancialPosition.
However,underthePaymentofGratuityActNo.12of1983
theliabilitytoanemployeearisesonlyoncompletionof�ive
yearsofcontinuedservice.
TheGrouprecognizesallactuarialgainsand lossesarising
fromde�inedbene�itplansinOtherComprehensiveIncome
and expenses related to de�ined bene�it plans in staff
expenses in Statement of Pro�it or Loss and Other
ComprehensiveIncome.
Currentservicecostandtheinterestcostrelatedtode�ined
bene�itplaninemployeebene�itsareexpensedintheincome
statement.
3.14TradeandOtherPayables
Tradeandotherpayablesarestatedatcost.
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
-49-
Step 4: Allocate the transaction price to the performance
obligationsinthecontract:Foracontractthathasmorethan
one performance obligation, the entity will allocate the
transaction price to each performance obligation in an
amount that depicts the consideration towhich the entity
expects to be entitled in exchange for satisfying each
performanceobligation.
Step5:Recognizerevenuewhen(oras)theentitysatis�iesa
performanceobligation.
Revenueismeasuredbasedontheconsolidationspeci�iedin
a contact with a customer. The Group recognises revenue
whenittransferscontroloveragoodorservicetoacustomer.
Determiningthetimingofthetransferofcontrolatapointin
timeorovertimerequirejudgment.
The following speci�ic criteria are used for the purpose of
recognitionofrevenue.
a.Saleofgoods
Revenueisrecognisedwhenthecontrolhasbeentransferred
tothecustomer,recoveryoftheconsiderationisprobablethe
associated costs and possible return of goods can be
estimated reliably there is no continuing management
involvementofrevenuecanbemeasuredrettaoly.
Revenue is measured net of returns trade Discounts and
volumerebatestheGroupexpectstherevenuerecognitionto
occuratappointintimewhencontroloftheistransferredto
thecustomergenerallyondeliveryofthegoods.
b.Dividendincome
Dividendincomeisrecognizedwhentheshareholders'right
toreceivethepaymentisestablished.
c.Otherincome
Pro�itorlossofarevenuenatureonthedisposalofproperty,
plantandequipmentandothernon-currentassetshavebeen
accountedintheStatementofPro�itorLosshavingdeducted
fromtheproceedsondisposal, thecarryingamountof the
assetandtherelatedsellingexpenses.
Rentalincomeisrecognizedonanaccrualbasis.
3.18Expenditure
i.OperatingExpenditure
Allexpenditure incurred in runningof thebusinessand in
maintaining the property, plant & equipment in a state of
ef�iciencyhasbeenchargedtoincomestatementinarrivingat
the pro�it for the year. For the purpose of presentation of
Statements of Pro�it or Loss and Other Comprehensive
Income, the Directors are of the opinion that function of
expense method present fairly the elements of the
enterprise'sperformance,hencesuchpresentationmethodis
adopted.
Expenditureincurredforthepurposeofacquiring,expanding
orimprovingassetsofapermanentnaturebymeansofwhich
tocarryonthebusinessorforthepurposeofincreasingthe
earningcapacityofthebusinesshasbeentreatedascapital
expenditure.
RepairsandrenewalsarechargedtotheStatementofPro�itor
Lossintheyearinwhichtheexpenditureisincurred.
ii.FinanceIncomeandFinanceExpenses
Financeincomecomprisesinterestincomeonfundsinvested
andforeignexchangegains.Interestincomeisrecognizedasit
accrues in Statement of Pro�it or Loss, using the effective
interestmethod.
Financecostscompriseinterestexpenseonborrowingand
leasesrecognizedinpro�itorlossusingtheeffectiveinterest
method.
Foreign currency gains and losses on �inancial assets and
�inancial liabilities are reported on a net basis as either
�inanceincomeor�inancecostdependingonwhetherforeign
currencymovements.
3.19IncomeTaxExpenses
Incometaxexpensecomprisescurrentanddeferredtax.Itis
recognizedinStatementofPro�itorLossexcepttotheextent
thatitrelatestoitemsrecognizeddirectlyinequityorinOther
ComprehensiveIncome.
a.CurrentTaxation
Currenttaxcomprisestheexpectedtaxpayableorreceivable
onthetaxableincomeorlossfortheyearandanyadjustment
tothetaxpayableorreceivableinrespectofpreviousyears.
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
-50-
The measurement of deferred tax re�lects the tax
consequencesthatwouldfollowfromthemannerinwhich
theGroupexpects,atthereportingdate,torecoverorsettle
thecarryingamountofitsassetsandliabilities.
Deferredtaxassetsandliabilitiesareoffsetifthereisalegally
enforceablerighttooffsetcurrenttax liabilitiesandassets,
and they relate to income taxes levied by the same tax
authority on the same taxable entity, or on different tax
entities,but they intendtosettlecurrent tax liabilitiesand
assetsonanetbasisortheirtaxassetsandliabilitieswillbe
realisedsimultaneously.
3.20BasicEarningsperShare
TheGrouppresentsbasicearningspershare(EPS)dataforits
ordinaryshares.BasicEPSiscalculatedbydividingthepro�it
orlossattributabletoordinaryshareholdersoftheGroupby
theweightedaveragenumberofordinarysharesoutstanding
duringtheperiodoftheGroup.
3.21DividendDistribution
Dividendsonordinarysharesarerecognizedasaliabilityand
deductedfromequitywhentheyareapprovedbytheGroup's
shareholders. Interim dividends are deducted from equity
whentheyaredeclaredandarenolongeratthediscretionof
theGroup.
3.22StatementofCashFlow
ForthepurposeoftheStatementofCashFlow,cashandcash
equivalentsconsistofcashinhandanddepositsinbanksnet
of outstanding bank overdrafts. Investments with short
maturities i.e. three months or less from the date of
acquisitionarealsotreatedascashequivalents.
The Statement of Cash Flow has been prepared using the
“indirectmethod”.Interestpaidisclassi�iedasoperatingcash
�lows, interest and dividend received are classi�ied as
investing cash �lowswhile dividends paid are classi�ied as
�inancing cash �lows for the purpose of presenting of the
StatementofCashFlow.
3.23SegmentReporting
An operating segment is a component of the Group that
engages in business activities from which it may earn
revenues and incur expenses, including revenues and
expensesthatrelatetotransactionswithanyoftheGroup's
Theamountofcurrenttaxpayableorreceivableisthebest
estimateofthetaxamountexpectedtobepaidorreceived
thatre�lectsuncertaintyrelatedtoincometaxes,ifany.Itis
measuredusingtaxratesenactedorsubstantivelyenactedat
thereportingdate.Currenttaxpayablealsoincludesanytax
liabilityarisingfromthedeclarationofdividends.
b.Deferredtaxation
Deferredtaxisrecognizedinrespectoftemporarydifferences
between the carrying amount of assets and liabilities for
�inancial reporting purposes and the amounts used for
taxationpurposes.Differedtaxisnotrecognizedfor:
- temporarydifferencesontheinitialrecognitionofassets
or liabilities in a transaction that is not a business
combination and that affects neither accounting nor
taxablepro�itorloss;
- temporary differences related to investments in
subsidiarytotheextentthattheGroupisabletocontrol
thetimingofthereversalofthetemporarydifferencesand
itisprobablethattheywillnotreverseintheforeseeable
future;
- taxable temporary differences arising on the initial
recognitionofgoodwill.
Deferred tax assets are recognized for unused tax losses,
unusedtaxcreditsanddeductibletemporarydifferencesto
theextentthatitisprobablethatfuturetaxablepro�itswillbe
available against which they can be used. Future taxable
pro�its are determined based on the reversal of relevant
taxable temporary differences. If the amount of taxable
temporarydifferencesisinsuf�icienttorecognizeadeferred
tax asset in full, then future taxable pro�its, adjusted for
reversalsofexistingtemporarydifferences,areconsidered,
basedonthebusinessplansforindividualsubsidiariesinthe
Group. Deferred tax assets are reviewed at each reporting
dateandarereducedtotheextentthatitisnolongerprobable
thattherelatedtaxbene�itwillberealized;suchreductions
are reversedwhen theprobabilityof future taxablepro�its
improves.
Unrecognized deferred tax assets are reassessed at each
reportingdateandrecognizedtotheextentthatithasbecome
probablethatfuturetaxablepro�itswillbeavailableagainst
whichtheycanbeused.
Deferredtaxismeasuredatthetaxratesthatareexpectedto
beappliedtotemporarydifferenceswhentheyreverse,using
taxratesenactedorsubstantivelyenactedat thereporting
date.
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
-51-
transactionsareleases.TheGroupappliedSLFRS16onlyto
contractsthatwerepreviouslyidenti�iedasleases.Contracts
thatwerenotidenti�iedasleasesunderLKAS17andIFRIC4
werenotreassessedforwhetherthereisaleaseunderSLFRS
16.Therefore,thede�initionofaleaseunderSLFRS16was
appliedonly to contractsenteredor changedonorafter1
April2019.
3.24.1.2AsaLessee
Asa lessee, theGroup leases right-of-useofbuildings.The
Grouppreviouslyclassi�iedleasesasoperatinglease.Under
SLFRS16,theGrouprecognisesright-of-useassetsandlease
liabilities for the leases (– i.e. these leases are on-balance
sheet.)
Leaseclassi�iedasoperatingleaseunderLKAS17
Attransition,leaseliabilitiesweremeasuredatthepresent
value of the remaining lease payments, discounted at the
Group'sincrementalborrowingrateasat1April2019.
Right-of-useassetsaremeasuredat:
- an amount equal to the lease liability, adjustedby the
amount of any prepayments. The Group applied this
approachtoalltheleases.
TheGroupusedthefollowingpracticalexpedientswhen
applying SLFRS 16 to leases previously classi�ied as
operatingleasesunderLKAS17:
- Appliedasinglediscountratetoaportfolioofleaseswith
similarcharacteristics.
- Adjustedtheright-of-useassetsbytheamountofLKAS
37onerous contractprovision immediatelybefore the
date of initial application, as an alternative to an
impairmentreview.
- Excludedinitialdirectcostsfrommeasuringtheright-of-
useassetatthedateofinitialapplication.
- Usedhindsightwhendeterminingtheleasetermifthe
contract contains options to extend or terminate the
lease.
3.24.1.3Impactontransition
OntransitiontoIFRS16,theGroupandCompanyrecognized
anadditionalofrightofuseofassetsandleaseliabilities,asat
1 April 2019 as follows and theweighted average lessee's
incrementalborrowingrateappliedtotheleaseliabilitieson
1April2019was10%.
othercomponents.Segmenthasbeendeterminedbasedon
theGroup'smanagementandinternalreportingstructure.
All operating segments' operating results are reviewed
regularly by the Group's management to make decisions
aboutresourcestobeallocatedtothesegmentandassessits
performance,andforwhichdiscrete�inancialinformationis
available.
Segment information is based on the primary format
representingtheindustrysegmentoftheGroupisinNote34
&35tothe�inancialstatements.
BasedonthenatureoftheGroup,segmentinformationhas
notbeenprovidedonasecondary formatrepresentingthe
geographicalarea.Intersegmentpricingisdeterminedonan
arm'slengthbasis.
Segmentresults,assetsandliabilitiesincludeitemsdirectly
attributabletoasegmentaswellasthosethatcanbeallocated
onareasonablebasis.
3.24ChangesinAccountingPolicies
3.24.1Newandamendedstandardsandinterpretations
The Group initially applied SLFRS 16 Leases from 1 April
2019. A number of other new standards are also effective
from1April2019,buttheydonothaveamaterialeffectonthe
Group's�inancialstatements.
TheGroupappliedSLFRS16usingthemodi�iedretrospective
approach, (option B), underwhich no cumulative effect of
initialrecognitionisrecognisedinretainedearningsat1April
2019. Accordingly, the comparative information presented
for 2018/19 is not restated, as previously reported, under
LKAS 17 and related interpretations. The details of the
changes in accounting policies are disclosed below.
Additionally,thedisclosurerequirementsinSLFRS16have
notgenerallybeenappliedtocomparativeinformation.
3.24.1.1De�initionofalease
Previously, the Group determined at contract inception
whether an arrangement was or contained a lease under
IFRIC 4 “Determiningwhether anArrangement contains a
Lease”. The Group now assesses whether a contract is or
contains a lease based on the de�inition of a lease, as
explained.
On transition to SLFRS 16, the Group elected to apply the
practicalexpedienttograndfathertheassessmentofwhich
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
-52-
Group/Company
Rs.
Rightofuseofassets 17,508,819
Prepaymentintheleaserentals 11,384,000
Leaseliabilities 6,124,819
Currentleaseliabilities 5,529,313
Noncurrentleaseliabilities 595,506
Thechangeinaccountingpolicyaffectedthefollowingitems
inStatementofFinancialPositionasat1April2019:
ImpactGroup/Company
Rs.
Rightofuseofassets Increase 17,508,819
Tradeandotherreceivables Decrease (11,384,000)
Leaseliabilities Increase 6,124,819
Currentleaseliabilities 5,529,313
Noncurrentleaseliabilities 595,506
3.25NewStandardandinterpretationnotyetAdoptedas
atReportingDate
Anumberofnewstandardsareeffectiveforannualperiod
beginning after 1 April 2019 and earlier application is
permittedhowevertheGrouphasnotearlyadoptednewor
amendedstandardsinpreparingthese�inancialstatements.
Thefollowingamendedstandardsandinterpretationsarenot
expectedtohaveasigni�icantimpactontheGroup's�inancial
statement.
² AmendmentstoReferencestoConceptualFrameworkin
SLFRSStandard
²De�initionofaBusiness(AmendmentstoSLRS3)
²De�initionofMaterial(AmendmentstoLKAS01andLKAS
08)
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
-53-
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
4. REVENUE
RevenueStreams
a) TheGroupgeneratesrevenueprimaryfromfood,soap,fuelandlubricantsegments(Note34)
GROUP COMPANY
FORTHEYEARENDED31MARCH
2020 2019 2020 2019
Rs. Rs. Rs. Rs.
RevenueAnalysis
GrossRevenue 3,686,440,071 3,676,070,725 3,686,440,071 3,676,070,725
TaxestothegovernmentofSriLanka (34,171,660) (49,652,365) (34,171,660) (49,652,365)
Netrevenue 3,652,268,411 3,626,418,3603,652,268,4113,626,418,360
Revenuefromcontractwithcustomers.
Salesofgoods,netoftaxes 3,652,268,411 3,626,418,3603,652,268,411 3,626,418,360
TaxestothegovernmentofSriLankaincludeNationBuildingTax(NBT)
b) Disaggregationofrevenuefromcontractwithcustomers.
Inthefollowingtable,revenuefromcontractswithcustomersisdisaggregatedbymajorproducts.Thetimingofrevenuerecognitionisthepointintimeofproducttransferredtothecustomers.
GROUP COMPANY
FORTHEYEARENDED31MARCH
2020 2019 2020 2019
Rs. Rs. Rs. Rs.
MajorProducts
Foodproducts 2,348,627,427 2,193,624,009 2,348,627,427 2,193,624,009
Soapproducts 327,015,354 303,874,465 327,015,354 303,874,465
Fuelandlubricants 976,625,630 1,128,919,886 976,625,630 1,128,919,886
3,652,268,411 3,626,418,360 3,652,268,411 3,626,418,360
Operatingsegments
SegmentinformationispresentedinrespectoftheGroup'sbusinesssegments.BusinesssegmentsarebasedontheGroup'smanagementandinternalreportingstructure.
Segmentresults,assetsandliabilitiesincludeitemsdirectlyattributabletoasegmentaswellasthosethatcanbeallocatedonareasonablebasis.
TheGroupcomprisesthefollowingmainbusinesssegments:
-Foodproducts
Foodproductssegmentfocusonmanufacturingawiderangeofproductsincludingcoffee,noodles,papadamandrangeof�lourbasedproducts
-Soapproducts
Soapproductssegmentincludeslaundryandtoiletsoaps.
-FuelandLubricants
Thissegmentfocusesonbuyingandsellingofpetrol,diesel,kerosineoilandotherlubricantsthroughoperatingof�illingstation.
-54-
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
c) ContractBalances
Followingtableprovidesinformationaboutreceivables,contractliabilitiesfromcontractswithcustomers
GROUP COMPANY
FORTHEYEARENDED31MARCH
2020 2019 2020 2019
Rs. Rs. Rs. Rs.
Receivableswhichareincludedin
tradeandotherreceivables307,892,920 349,628,180 307,892,920 349,628,180
307,892,920 349,628,180307,892,920 349,628,180
GROUP COMPANY
FORTHEYEARENDED31MARCH
2020 2019 2020 2019
Rs. Rs. Rs. Rs.
5. OTHERINCOME
Dividendincome - - 3,160,477 66,219,527
Rentalincome 493,680 1,161,600493,680 1,161,600
Pro�itondisposalofproperty,
plant&equipment 29,429,730 23,626,05929,429,730 23,626,059
Lossondisposalofunittrusts - (3,175,751) - (3,175,751)
Changeinfairvalueofunittrusts 372,000 346,500372,000 346,500
Staffloaninterestincome 2,458,477 2,653,935 2,458,477 2,653,935
Sundryincome(Note5.1) 10,743,178 11,144,464 10,743,178 11,144,464
43,497,065 35,756,807 46,657,542 101,976,334
5.1 Sundryincome
Saleofdisposablematerial 9,268,300 9,085,765 9,268,300 9,085,765
Sundryreceipts 1,474,878 2,058,699 1,474,878 2,058,699
10,743,178 11,144,464 10,743,178 11,144,464
6. RESULTSFROMOPERATINGACTIVITIES
Resultsfromoperatingactivitiesarestatedafterchargingallexpensesincludingfollowing;
Directors'emoluments(Note27) 46,685,668 41,779,072 46,685,668 41,779,072
Auditors'remuneration
Audit 1,072,500 1,050,000 900,000 900,000
Auditrelated 400,030 315,000 355,750 315,000
Depreciationandamortization 106,728,320 88,989,787 106,728,320 88,989,787
Donations 6,010,267 4,646,607 6,010,267 4,646,607
Staffrelatedexpenses(Note6.1) 465,017,484 416,148,183 465,017,484 416,148,183
Provisionforimpairmentoftrade
receivable(Note17.1) 4,258,479 3,186,614 4,258,479 3,186,614
-55-
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
GROUP COMPANY
FORTHEYEARENDED31MARCH, 2020 2019 2020 2019
Rs. Rs. Rs. Rs.
6.1 Staffrelatedexpenses
Salariesandwages 312,633,322 278,627,046312,633,322 278,627,046
De�inedcontributionplan 44,704,883 39,774,12944,704,883 39,774,129
Bonus 57,079,523 49,212,202 57,079,523 49,212,202
Staffwelfare 31,609,242 31,637,737 31,609,242 31,637,737
De�inedbene�itplan-Retiringgratuity 18,990,514 16,897,069 18,990,514 16,897,069
465,017,484 416,148,183465,017,484 416,148,183
7. NETFINANCEINCOME
7.1 Financeincome
Interestincomeon�ixeddeposits 31,419,142 26,346,98331,419,142 26,346,983
Pro�itfromtranslationof
foreigncurrencies 1,571,297 4,555,2681,571,297 4,555,268
32,990,439 30,902,25132,990,439 30,902,251
7.2 Financeexpenses
Interestexpensesonoverdraftfacilities (913,692) (2,736,889) (913,692) (2,728,404)
Interestexpensesonleasepayable (534,287) -(534,287) -
Interestexpenseforrelatedpartypayable - - - (4,505,711)
(1,447,979) (2,736,889)(1,447,979) (7,234,115)
Net�inanceincome 31,542,460 28,165,36231,542,460 23,668,136
8. INCOMETAXEXPENSE
8.1 Amountsrecognizedinpro�itorloss
Currenttaxexpense
Oncurrentyearpro�its(Note8.3) 81,547,954 71,118,91381,547,954 69,972,247
Adjustmentsinrespectofprioryears 10,678,886 3,083,23410,678,886 -
Taxesonintercompanydividend 514,500 10,779,924 - -
Deferredtaxexpense
Originationoftemporarydifferences(Note22)1,337,698 (10,134,184)1,337,698 (10,134,184)
Taxexpenseoncontinuingoperations94,079,038 74,847,887 93,564,538 59,838,063
8.2 Amountsrecognisedinothercomprehensiveincome
Deferredtaxreversalonactuarial
(loss)/gain(Note22) (769,769) 981,260 (769,769) 981,260
(769,769) 981,260(769,769) 981,260
-56-
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
GROUP COMPANY
FORTHEYEARENDED31MARCH, 2020 2019 2020 2019
Rs. Rs. Rs. Rs.
8.3 Taxreconciliationstatement
Pro�itbeforeincometaxexpense 242,371,950 247,644,140246,147,285 309,768,440
Incomenotliabletotax (21,213,650)(17,081,948)(24,374,127) (83,301,475)
Aggregatenondeductibleexpensesfortax 212,294,990 198,753,683212,294,990 198,753,683
Aggregatedeductibleexpensesfortax(138,904,168) (173,086,057)(139,519,026) (173,086,057)
Adjustedpro�it 294,549,122 256,229,818294,549,122 252,134,591
Qualifyingpayments (3,306,603) (2,233,706)(3,306,603) (2,233,706)
Taxablepro�it 291,242,519 253,996,112 291,242,519 249,900,885
Incometaxat28% 81,547,954 71,118,91381,547,954 69,972,247
Oncurrentyearpro�its 81,547,954 71,118,91381,547,954 69,972,247
Effectivetaxrate 33.65% 28.72% 33.13% 22.59%
Applicabletaxrates
AspertheInlandRevenueActNo.24of2017theCompanyandsubsidiaryareliabletopayincometaxat28%
9. EARNINGSPERSHARE
9.1Basicearningspershare
Basicearningspershareiscalculatedbydividingthepro�itfortheyearattributabletotheordinaryshareholdersbytheweightedaveragenumberofordinarysharesoutstandingduringtheyearaspertherequirementoftheSriLankaAccountingStandards(LKAS33)-"EarningsperShare"
Pro�itattributableto
ordinaryshareholders 148,292,912 172,796,253152,582,747 249,930,377
Weightedaveragenumberofordinaryshares 1,919,600 1,919,6001,919,600 1,919,600
Basicearningspershare(Rs.) 77.25 90.02 79.49 130.19
9.2Dilutedearningspershare
Dilutedearningspershareiscalculatedbydividingpro�itfortheyearattributabletotheordinaryshareholdersbytheweightedaveragenumberofordinarysharesafteradjustmentfortheeffectsofalldilutivepotentialordinaryshares.
Atpresent,theGrouphasnodilutivepotentialordinarysharesassuchcalculationofdilutedearningspersharewillnotapply.
10. DIVIDENDPERSHARE
Equitydividendonordinarysharesdeclaredandpaidduringtheyear.
Interimdividend 38,392,000 38,392,00038,392,000 38,392,000
Finaldividend 57,588,026 47,990,55057,588,000 47,990,000
95,980,026 86,382,55095,980,000 86,382,000
Weightedaveragenumberofordinaryshares 1,919,600 1,919,6001,919,600 1,919,600
Dividendpershare(Rs.) 50.00 45.00 50.00 45.00
-57-
NOTESTOTHEFIN
ANCIA
LSTATEMENTS(CONTD.)
11.
PROPERTY,PLANTANDEQUIPMENT
GROUP/COMPANY
Freehold
Buildings
Plant&
Of�ice
Motor
Furn
iture
Total
Total
land
mach
inery
factory&
vehicle
&�ittings
2020
2019
laboratory
equipment
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Cost
Asat01April
299,062,500110,332,420346,263,05560,889,122462,636,565
31,727,2571,310,910,9191,221,257,338
Additions
--
23,341
1,343,253
-
513,9051,880,4993,816,093
TransfersfromCWIP(Note11.1)
-9,918,72117,024,27015,393,09470,290,510
2,589,077115,215,672110,319,706
Disposals
--(1,856,036)
(105,166)(43,223,137)
(57,441)(45,241,780)(24,482,218)
Asat3
1March
299,062,500120,251,141361,454,630
77,520,303489,703,938
34,772,7981,382,765,3101,310,910,919
Accumulateddepreciation
Asat01April
-27,433,941100,534,33430,449,305356,460,830
7,318,193522,196,603458,792,194
Chargefortheyear
-4,476,85825,212,317
6,379,68855,290,084
3,448,19994,807,14687,780,848
Ondisposals
--
(773,828)(63,899)(43,223,137)
(17,981)(44,078,845)(24,376,439)
Asat3
1March
-31,910,799124,972,823
36,765,094368,527,777
10,748,411572,924,904522,196,603
Carryingamountsasat3
1March2020
299,062,500
88,340,342236,481,807
40,755,209121,176,161
24,024,387809,840,406
Carryingamountsasat3
1March2019
299,062,50082,898,479245,728,72130,439,817106,175,735
24,409,064
-788,714,316
Cap
italworkinprogress(N
ote11.1)
111,662,34921,505,663
Netcarryingamounta
sat3
1March
921,502,755810,219,979
11.1Capitalw
ork
inpro
gress(CWIP)
Asat01April
21,505,66324,840,158
Incurred
duringtheyear
206,059,858107,315,931
Cap
italized
duringtheyear
Tan
gibleassets
(115,215,672)(110,319,706)
Intangibleassets
(687,500)
(330,720)
Asat31March
111,662,34921,505,663
11.2Thecostoffullydep
reciated
property,plantandequipmen
tasatrep
ortingdateam
ountedtoRs.281,486,924/-(2019,Rs.260,527,496/-)
11.3N
oproperty,plant&
equipmen
tpledgedassecurityforliab
ilities.
11.4Cap
italisationofborrowingcosts
Duringtheyearunderreview,theGrouphasnotcap
italised
anyborrowingcosts.
11.5Signi�ican
tchan
gesinth
eCompan
y'soritssubsidiary's�ixedassetsan
dth
emarketvalueoflan
d
Therearenosigni�ican
tchan
gesinth
eCompan
y'soritssubsidiary's�ixedassetsan
dth
emarketvalueoflan
dwhen
compared
toth
ebookvalueasat3
1March2020.
11.6Cap
italwork-inprogress
Thecapitalwork-inprogressbalan
cerep
resentthecostincurred
byth
eCompan
yon�ixedassetswhichisstillunderconstructionatthebalan
cesheetd
ate.
-58-
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)11.7 Companyproperties
Assettype Location Extent Value
A R P
Land 11,C.A.Harischandra 04 02 20 138,750,000
Mawatha,Matara.
455,Bauddhaloka
Mawatha,Colombo08 00 01 2.75 160,312,500
299,062,500
Noofbuildings Value
Buildings 11,C.A.Harischandra 23 107,728,174
Mawatha,Matara.
455,Bauddhaloka
Mawatha,Colombo08 02 12,522,967
25 120,251,141
GROUP COMPANY
ASAT31MARCH, 2020 2019 2020 2019
Rs. Rs. Rs. Rs.
12. INTANGIBLEASSETS
ComputerSoftware
Cost
Asat01April 8,550,750 8,072,030 8,550,750 8,072,030
Additions 46,900 148,000 46,900 148,000
TransferredfromCWIP 687,500 330,720 687,500 330,720
Disposals - - - -
Asat31March 9,285,150 8,550,750 9,285,150 8,550,750
Amortization
Asat01April 7,018,692 5,809,753 7,018,692 5,809,753
Amortizationduringtheyear 879,082 1,208,939 879,082 1,208,939
Disposals - - - -
Asat31March 7,897,774 7,018,692 7,897,774 7,018,692
Carryingvaluesasat31March 1,387,376 1,532,058 1,387,376 1,532,058
13. RIGHTOFUSEASSET
Cost
Balanceasat01April - - - -
Recognitionofright-of-use-assetsoninitial
applicationofSLFRS16 17,508,819 - 17,508,819 -
Adjustedbalanceasat01April 17,508,819 - 17,508,819 -
Additions - - - -
Balanceasat31March 17,508,819 - 17,508,819 -
Less:Accumulatedamortization
Balanceasat01April - - - -
Chargedfortheyear 11,042,092 - 11,042,092 -
Balanceasat31March - - - -
11,042,092 - 11,042,092 -
Netbookvalueasat31March 6,466,727 - 6,466,727 -
COMPANY
2020 2019
14. INVESTMENTINSUBSIDIARY
Ordinaryshares 70 70
(Fullyownedsubsidiary) 70 70
Totalnumberofshares700,000
-59-
GROUP COMPANY
ASAT31MARCH, 2020 2019 2020 2019 Rs. Rs. Rs. Rs.16. INVENTORIES Rawmaterialsandconsumables 206,514,898 96,549,721 206,514,898 96,549,721 Workinprogress 26,946,405 26,285,143 26,946,405 26,285,143 Finishedgoods 61,107,735 47,810,398 61,107,735 47,810,398 Machineryspares 22,503,507 25,089,432 22,503,507 25,089,432 317,072,545 195,734,694 317,072,545 195,734,694 Less: Provisionforslowmovingmachineryspares (6,887,199) (6,887,199) (6,887,199) (6,887,199) (Note16.1) 310,185,346 188,847,495 310,185,346 188,847,495
16.1Provisionforslowmovingmachineryspares Asat01April 6,887,199 2,637,141 6,887,199 2,637,141 Provisionmadeduringtheyear - 4,250,058 - 4,250,058 Asat31March 6,887,199 6,887,199 6,887,199 6,887,199
NoneoftheinventoriesarepledgedassecurityforfacilitiesobtainedbytheGrouportheCompanyfrombanksasat31March2020Inventoriesarestatedatthelowerofcostandnetrealizablevalue.
17. TRADEANDOTHERRECEIVABLES Tradereceivables 307,892,920 349,628,180 307,892,920 349,628,180 Provisionofimpairment(Note17.1) (4,258,479) (3,186,614) (4,258,479) (3,186,614) 303,634,441 346,441,566 303,634,441 346,441,566 Otherreceivables(Note17.2) ` 67,803,963 72,021,71567,803,963 72,021,715 371,438,404 418,463,281371,438,404 418,463,281 17.1Provisionofimpairment Asat01April 3,186,614 - 3,186,614 - Provisionmadeduringtheyear 1,071,865 3,186,614 1,071,865 3,186,614 Asat31March 4,258,479 3,186,614 4,258,479 3,186,614
17.2Otherreceivables Loanstoemployees 58,507,391 52,972,290 58,507,391 52,972,290 Advances&prepayments 2,494,923 15,156,814 2,494,923 15,156,814 Tradedeposits 2,584,122 2,535,566 2,584,122 2,535,566 Sundrydebtors 4,217,527 1,357,045 4,217,527 1,357,045 67,803,963 72,021,71567,803,963 72,021,715 18. CASH&CASHEQUIVALENTS Cashinhand 2,330,877 1,865,340 2,330,877 1,865,340 Cashatbank 23,150,701 17,154,565 22,198,891 11,867,380 Shorttermdeposits(Note18.2) 48,629,457 61,108,910 48,629,457 61,108,910 Cashandcashequivalentsinthe statementof�inancialposition 74,111,035 80,128,815 73,159,225 74,841,630 Bankoverdrafts(secured)(Note18.1) (128,540,284) (28,532,778) (128,540,284) (28,532,778) Cashandcashequivalentsforthepurpose ofstatementofcash�lows (54,429,249) 51,596,037(55,381,059) 46,308,852
18.1 Bankoverdraftisfullysecuredonshorttermdepositsheldwithbanks. 18.2 Shorttermdepositsaremeasuredatamortizedcostsandareexpectedtorecoveredthroughcontractualcash�lows.
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
GROUP/COMPANY
ASAT31MARCH, 2020 2019
No.ofunit FairValue No.ofunit FairValue
Rs. Rs.
15. INVESTMENTINUNITTRUST
NDBGrowth&IncomeFund 150,000 5,751,000 150,000 5,379,000
150,000 5,751,000 150,000 5,379,000
-60-
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
GROUP COMPANY
ASAT31MARCH, 2020 2019 2020 2019
Rs. Rs. Rs. Rs.
19. STATEDCAPITAL
1,919,600Ordinaryshares 105,578,000 105,578,000 105,578,000 105,578,000
19.1 Theholdersofordinarysharesareentitledtoreceivedividendsasdeclaredfromtimetotimeandareentitledto
onevotepershareattheshareholdersmeetingsoftheCompany.
20. OTHERCAPITALRESERVES
20.1 Othercapitalreserves
Reserveonscriptissue(Note20.1.1) 6,999,930 6,999,930 - -
Reserveonshareissue(Note20.1.2) 11,014 11,014 11,014 11,014
7,010,944 7,010,944 11,014 11,014
20.1.1 ReserveonscriptissueinConsolidatedFinancialStatementshasarisenonscriptissueof699,993sharesofRs.10/-
eachbythefullyownedsubsidiary,HarischandraMills(Distributors)Limitedintheyear1995/96.
20.1.2 Reserveonshareissuecompriseunclaimedfundsofshareapplicationandallotmentaccounttransferredtocapital
reserves.Thisreservecannotbedirectlydistributedtoshareholders.
21. GENERALRESERVES
Generalreserve 12,841,000 12,841,000 12,841,000 12,841,000
12,841,000 12,841,000 12,841,000 12,841,000
General reservecanbeutilized tosettleanyunknownfuturecontingenciesandstrengthen the �inancialpositionand
workingcapitalneedsofthecompanyifrequired
22. DEFERREDTAXATION
Balanceatthebeginningoftheyear 41,250,53350,403,45741,250,533 50,403,457
Origination/(Reversal)oftemporary
differencesrecognisedinpro�itfortheyear 1,337,697(10,134,184) 1,337,697 (10,134,184)
(Reversal)/Originationoftemporary
differencesrecognisedinthestatementofOther
ComprehensiveIncome (769,769)981,260(769,769)981,260
Balanceattheendoftheyear 41,818,461 41,250,53341,818,46141,250,533
22.1 Deferredtaxasset (50,116,553)(41,267,648)(50,116,553)(41,267,648)
Deferredtaxliability 91,935,01482,518,18191,935,014 82,518,181
41,818,461 41,250,53341,818,461 41,250,533
22.2 The effective taxes of 28% (2019-28%), was applied for calculation of deferred tax asset/liability as at the
reportingdate.
22.3 Thedeferredtaxasset/liabilityrecognisedontemporarydifferencesareasfollows:
2020 2019
Group/Company Temporary Temporary
differences TaxEffect differences TaxEffect
Onproperty,plantandequipment 328,339,33791,935,014294,707,789 82,518,181
Onretirementgratuity (109,246,500)(30,589,020)(95,384,457)(26,707,648)
Onleasecreditor (595,506)(166,743) - -
onotherprovisions (69,145,678)(19,360,790)(52,000,000) (14,560,000)
149,351,65341,818,461 147,323,332 41,250,533
-61-
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
GROUP COMPANY
ASAT31MARCH, 2020 2019 2020 2019
Rs. Rs. Rs. Rs.
23. EMPLOYEEBENEFITOBLIGATION
Retiringgratuity
Asat01April 95,384,457 87,999,722 95,384,457 87,999,722
Chargefortheyear(Note23.1) 21,739,688 13,392,568 21,739,688 13,392,568
117,124,145 101,392,290 117,124,145 101,392,290
Gratuitypaid (7,877,645) (6,007,833) (7,877,645) (6,007,833)
Balanceasat31March 109,246,500 95,384,457 109,246,500 95,384,457
23.1Chargefortheyear
Interestcost 10,969,213 9,679,969 10,969,213 9,679,969
Currentservicecost 8,021,301 7,217,100 8,021,301 7,217,100
Acturialloss/(gain) 2,749,174 (3,504,501) 2,749,174 (3,504,501)
21,739,688 13,392,568 21,739,688 13,392,568
AmountchargedtoIncomeStatement 18,990,514 16,897,069 18,990,514 16,897,069
AmountchargedtoOtherComprehensive
Income 2,749,174 (3,504,501) 2,749,174 (3,504,501)
21,739,688 13,392,568 21,739,688 13,392,568
23.2 Anactuarialvaluationontheretiringgratuitieswascarriedoutasat31March2020byMr.M.Poopalanathan,AIA,
M/sActuarialandManagementConsultants(Pvt)Limited,a�irmofprofessionalactuaries.Thevaluationmethod
usedbytheactuariestovaluetheliabilityisthe"ProjectedUnitCreditMethod",themethodrecommendedbythe
SriLankaAccountingStandard(LKAS19)"EmployeeBene�its."
23.3Actuarialassumptions
2020 2019
a. Financialassumptions
Discountrateasat31March 10% 11.5%
Futuresalaryincreases 8% 10%
b. Demographicassumptions
Thedemographic assumptionsunderlying the valuation are retirement age at 55 years, earlywithdrawal from
servicesanddeathbeforeandafterretirement.Assumptionregardingthefuturemortalityarebasedonthe1967-70
mortalitytableissuedbytheInstituteofActuaries,London.
23.4Sensitivityofassumptionsused
Possiblechangesatthereportingdatetooneoftheactuarialassumptions,holdingotherassumptionsconstantwouldhave
affectedthede�inedbene�itobligationsasfollows;
Discountrate1%
Discountrate1%
Salaryincrement1%
Salaryincrement1%
EffectonchargedtoStatementofPro�itorLossandOthercomprehensiveIncome
31March2020
31March2019 EffectonchargedtoStatementofPro�itorLossandOthercomprehensiveIncome
1% Increase
1% Increase
5,296,554
4,656,222 4,656,222
(5,860,551)
(5,188,717) (5,188,717)
(5,296,554) 5,860,551
(5,801,874)6,324,0015,801,874
5,073,222 5,073,222
(6,324,001)
(5,565,704) (5,565,704)
1% Decrease
1% Decrease
1% Increase
1% Increase
EffectonEmployeeBene�itObligationsIntheStatementofFinancialPosition
EffectonEmployeeBene�itObligationsIntheStatementofFinancialPosition
1%Decrease
1%Decrease
-62-
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
GROUP COMPANY
ASAT31MARCH, 2020 2019 2020 2019
Rs. Rs. Rs. Rs.
24. TRADE&OTHERPAYABLES
Tradepayables 120,018,237 55,191,085 120,018,237 55,191,085
Otherpayables(Note24.1) 119,072,974 135,615,471 118,900,178 135,397,162
239,091,211 190,806,556 238,918,415 190,588,247
24.1 Otherpayables
Accruedexpenses 26,217,668 32,395,362 26,044,872 32,177,058
VATpayable 17,993,424 32,175,363 17,993,424 32,175,363
NBTpayable - 4,959,828 -4,959,828
Trade&customerdeposits 5,393,846 6,562,291 5,393,846 6,562,291
Provisionforbonus 58,000,000 52,000,000 58,000,000 52,000,000
Provisionformarketreturns 3,650,524 - 3,650,524 -
Unclaimeddividendpayable 3,271,037 2,945,293 3,271,037 2,945,293
Others 4,546,475 4,577,334 4,546,475 4,577,329
119,072,974 135,615,471 118,900,178 135,397,162
25. LEASECREDITOR
Balanceasat1April - - - -
Additionsduringtheyear 6,124,819 - 6,124,819 -
Interestamortisedfortheyear 534,287 - 534,287 -
Re-payment (6,063,600) - (6,063,600) -
Balanceasat31March 595,506 - 595,506 -
Non-Current
Leasecreditor-dueafteroneyear 440,479 - 440,479 -
Current
Leasecreditor-duewithinoneyear 155,027 - 155,027 -
595,506 - 595,506 -
25.1 Amountrecognizedinstatementofcomprehensiveincome
2019/2020-LeaseunderSLFRS16
Interestonleaseliabilities 534,287 - 534,287 -
ROUamortisation 11,042,092 - 11,042,092 -
2018/2019-OperatingleaseunderLKAS17
Leaseexpense(Rentexpense) - 10,032,000 - 10,032,000
Amountrecognizedinstatementofcash�lows
2019/2020-Totalcashout�lowsforleases 6,063,600 - 6,063,600 -
-63-
27.2 Keymanagementpersonnelcompensation
AccordingtoSriLankaAccountingStandardLKAS24"RelatedPartyDisclosures",keymanagementpersonnelarethose
havingauthorityandresponsibility forplanning.directingandcontrollingtheactivitiesof theentity.Accordingly, the
directorsoftheCompanyhavebeenclassi�iedasKMPoftheCompanyandtheGroup.
AstheCompanyistheultimateparentofitssubsidiary,HarischandraMills(Distributors)LimitedandtheBoardofthe
Companyhastheauthorityandresponsibilityforplanning,directingandcontrollingoftheGroup,theDirectorsofthe
Companyhavebeenidenti�iedastheKMPoftheGroup.
i) LoanstoDirectors
NoloanshavebeengiventothedirectorsoftheCompany.
ii) Keymanagementpersonnelcompensationcomprised:
GROUP COMPANY
FORTHEYEARENDED31MARCH 2020 2019 2020 2019
Rs. Rs. Rs. Rs.
Shorttermbene�its 39,756,702 35,991,793 39,756,702 35,991,793
Longtermbene�its 6,928,966 5,787,279 6,928,966 5,787,279
Total(Note06) 46,685,668 41,779,072 46,685,668 41,779,072
27.3 Transactionswithsubsidiary
Recurrenttransactions
2020 2019
Nameofthe Natureof Volumeof Balance Volumeof Balance
relatedparty transaction transaction asat31.03.20 transaction asat31.03.19
Harischandra Interestexpenses - - 4,505,711 -
Mills FundTransfers - - (19,543,474) -
(Distributors) Dividendpayment (3,160,477) - (66,219,527) -
Limited OutstandingBalances
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
GROUP COMPANY
ASAT31MARCH, 2020 2019 2020 2019
Rs. Rs. Rs. Rs.
26. CURRENTTAXLIABILITIES
Asat01April 13,542,676 25,120,288 16,126,097 28,646,616
Provisionfortheyear(Note08) 81,547,954 71,118,913 81,547,954 69,972,247
Prioryearunderprovision(Note08)10,678,8863,083,23410,678,886 -
Taxonintercompanydividend 514,500 10,779,924 - -
106,284,016110,102,359108,352,937 98,618,863
Paymentsduringtheyear (101,995,487) (96,559,683) (101,480,986) (82,492,766)
Asat31March 4,288,529 13,542,676 6,871,951 16,126,097
27. TRANSACTIONSWITHRELATEDPARTIES
TheGroupcarriesouttransactionsintheordinarycourseofitsbusinesswithpartieswhoarede�inedasrelatedpartiesin
SriLankaAccountingStandardLKAS24"RelatedPartyDisclosures.",thedetailsofwhicharereportedbelow.
TheCompany'srelatedpartiesincludekeymanagementpersonnel,closefamilymembersofkeymanagementpersonnel
andentitieswhicharecontrolled,jointlycontrolledorsigni�icantlyin�luencedforwhichsigni�icantvotingpowerisheldby
keymanagementpersonnelortheirclosefamilymembers.
27.1 Parentandultimatecontrollingparty
IntheopinionofDirectorstheCompanydosenothaveanidenti�iableparentofitsown.
-64-
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
27. TRANSACTIONSWITHRELATEDPARTIES(CONTD.)
27.4 Transactionswithotherentities
Other related entities are those which are controlled or signi�icantly in�luenced, directly by KeyManagementPersonnel(KMP)oftheCompany.Therewerenosigni�icanttransactionswithotherrelatedentitiesduringtheyear.
28. CAPITALEXPENDITURECOMMITMENTS
Therewerenomaterialcommitmentswhichrequiredisclosureasatthereportingdate.
29. CONTINGENTLIABILITIES
TheGroupdidnothaveanycontingentliabilitiesoutstandingasatthereportingdate.
30. EVENTSOCCURRINGAFTERTHEREPORTINGDATE
Therewerenomaterialeventsoccurringafterthereportingdatethatrequireadjustmentordisclosureinthe�inancialstatements,otherthananinterimdividendofRs.20.00pershareamountingtoRs.38,392,000/-wasapprovedon24July2020bytheBoardofDirectorsandpaidon23August2020.
31. COMPARATIVEINFORMATION
Comparativeinformationhasbeenrearrangedandreclassi�iedtoconformwiththecurrentyearpresentation.
32. DIRECTORS'RESPONSIBILITY
DirectorsoftheCompanyareresponsibleforthepreparationandpresentationofthese�inancialstatements.
33. OTHERMATTERS:IMPACTOFCOVID19
COVID-19pandemicwillhaveanadverseimpactontheoverallbusinessactivitiesandoperationsofHarischandraMillsPLCGroupintheforeseeableshorttomediumterm.TheGroupexperiencedtemporarydisruptioninretailsalesandcollectionsfromtradedebtors.Asthegovernmentdeclaredastateof“WorkfromHome”,mostofouroperationswererestrictedespeciallysalesandproductionduringthepeakbusinessperiodof2020.DespitethesechallengesCompanyhasobtainedpermissiontorestart theoperationsatreducedscaleduring themonthofApril2020subject to therestrictionsandguidelineofthehealthsector.
Managementhadcarriedoutadetailassessmentandplannedas tohowtheGroupwillcontinue itsoperations in itsoptimumcapacitytogenerateprojectedpro�itsandliquidity,basedondifferentmodels.Giventhevolatileandevolvinglandscape,theGroupmanagementconsistentlymonitortheimpactofCOVID-19ontheGroup'soperationsandpro-activelytakemeasurestoensurethebusinesscontinueswithadequateworkingcapitalmanagement,costreductionmethods,innovationsindoingthebusiness.Directorsaresatis�iedthattheGrouphasadequateresourcesandcapabilitiestocontinueoperationsintheforeseeablefuture.
-65-
NOTESTOTHEFIN
ANCIA
LSTATEMENTS(CONTD.)
34.
SEGMENTALIN
FORMATIO
N
GROUP
Inform
ationbasedonth
eprimarysegments
FoodPro
ducts
FuelandLubrica
ntSoap
Total
Fortheyearended31March
2020
2019
2020
2019
2020
2019
2020
2019
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Revenue:
Totalsales
2,348,627,427
2,193,624,009976,625,6301,128,919,886327,015,354
303,874,4653,652,268,4113,626,418,360
Operatingpro
�it:
Segm
ento
peratingpro�itb
eforedep
reciation257,080,314252,217,98411,752,665
19,207,8985,227,766
1,285,876
274,060,745272,711,758
Dep
reciationandamotization
(93,290,195)
(77,700,910)(448,697)
(525,263)(12,989,428)
(10,763,614)(106,728,320)
(88,989,787)
Segm
ento
peratingpro�it
163,790,119174,517,07411,303,968
18,682,635(7,761,662)
(9,477,738)
167,332,425183,721,971
Otheroperatingincome
43,497,065
35,756,807
Net�inan
ceincome
31,542,460
28,165,362
Pro�itb
eforeincometaxexpen
se
242,371,950247,644,140
Incometaxexpen
se
(94,079,038)
(74,847,887)
Pro�itafterincometax
148,292,912172,796,253
Assets:
Operatingassets
1,193,710,385995,416,181496,378,500512,277,909166,208,408137,891,2511,856,297,2931,645,585,341
Cash&cashequivalen
ts
74,111,035
80,128,815
Totalassets
1,930,408,3281,725,714,156
Liabilities:
Operatingliab
ilities
307,044,072
190,376,729127,677,598
97,974,89242,751,831
26,372,170477,473,501
314,723,791
Deferredtaxliab
ilities
41,818,461
41,250,533
Incometaxpayab
le
4,288,529
13,542,676
Totalliabilities
523,580,491
369,517,000
-66-
NOTESTOTHEFIN
ANCIA
LSTATEMENTS(CONTD.)
35.
SEGMENTALIN
FORMATIO
N
COMPANY
Inform
ationbasedonth
eprimarysegments
FoodPro
ducts
FuelandLubrica
ntSoap
Total
Fortheyearended31March
2020
2019
2020
2019
2020
2019
2020
2019
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Revenue:
Totalsales
2,348,627,427
2,193,624,009976,625,6301,128,919,886327,015,354
303,874,4653,652,268,4113,626,418,360
Operatingpro
�it:
Segm
ento
peratingpro�itb
eforedep
reciation257,620,024
252,571,07211,752,665
19,207,8985,302,914
1,334,787274,675,603273,113,757
Dep
reciationandamortization
(93,290,195)
(77,700,910)
(448,697)
(525,263)(12,989,428)
(10,763,614)(106,728,320)
(88,989,787)
Segm
ento
peratingpro�it
164,329,829
174,870,16211,303,968
18,682,635(7,686,514)
(9,428,827)167,947,283184,123,970
Otheroperatingincome
46,657,542101,976,334
Net�inan
ceincome
31,542,460
23,668,136
Pro�itb
eforeincometaxexpen
se
246,147,285
309,768,440
Incometaxexpen
se
(93,564,538)
(59,838,063)
Pro�itafterincometax
152,582,747
249,930,377
Assets:
Operatingassets
1,193,710,431995,416,223496,378,518512,277,931166,208,414137,891,2571,856,297,3631,645,585,411
Cash&cashequivalen
ts
73,159,225
74,841,630
Totalassets
1,929,456,5881,720,427,041
Liabilities:
Operatingliab
ilities
306,932,953
190,244,674127,631,39297,906,93142,736,360
26,353,877
477,300,705314,505,482
Deferredtaxliab
ilities
41,818,461
41,250,533
Incometaxpayab
le
6,871,951
16,126,097
Totalliabilities
525,991,117
371,882,112
-67-
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
36. FINANCIALINSTRUMENTS-FAIRVALUEANDRISKMANAGEMENT
36.1 FinancialRiskManagement
TheGroupisexposedtofollowingrisksarisingfrom�inancialinstruments.Inparticular,thekey�inancialrisk
categoriesare:
A.Creditrisk
B.Liquidityriskand
C.Marketrisk
d.Operationalrisk
36.1.1 RiskManagementFramework
TheBoardofdirectorshasoverallresponsibilityfortheestablishmentandoverseetheGroup'sriskmanagement
framework.TheGroup'sriskmanagementpoliciesareestablished, identifyandanalyze therisk facedby the
Group,tosetappropriaterisklimitsandcontrols,andtomonitorrisksandadherencetolimits.Riskmanagement
policiesandsystemareregularlytore�lectchangesinmarketconditionsandtheGroup'sactivities.
TheGroupAuditCommitteeoverseeshowmanagementmonitorscompliancewiththeGroup'sriskmanagement
policiesandprocedures,andreviewstheadequacyoftheriskmanagementframeworkinrelationtotherisksfaced
bytheGroup.TheGroupAuditCommitteeisassistedinitsrolebyinternalaudit.Internalauditundertakesboth
regularandadhocreviewmanagementcontrolsandprocedures,theresultsofwhicharereportedtotheAudit
Committee.
ThisNotepresentsinformationabouttheGroup'sexposuretoeachoftheaboverisks,theGroup'sobjectives,
policiesandprocessesformeasuringandmanagingrisks,andtheCompany'smanagementofcapital.
36.1.2 CreditRisk
Creditriskisthe�inanciallosstotheGroupifacustomerorcounterpartytoa�inancialinstrumentfailstomeetits
contractualobligation,andarisesprincipallyfromtheGroup'sreceivablefromcustomers.
36.1.2.1ExposuretoCreditRisk
Thecarryingamountof�inancialassetsrepresentingthemaximumcreditexposure.Themaximumexposureto
creditriskatthereportingdatewas,
GROUP COMPANY
ASAT31MARCH, 2020 2019 2020 2019
Rs. Rs. Rs. Rs.
Tradeandotherreceivables 368,943,481 404,074,959 368,943,481 404,074,959
Shorttermdeposits 48,629,457 61,108,910 48,629,457 61,108,910
Investmentinunittrust 5,751,000 5,379,000 5,751,000 5,379,000
Investmentsin�ixeddeposit 239,565,685 221,143,528 239,565,685 221,143,528
662,889,623 691,706,397 662,889,623 691,706,397
(a) TradeandOtherReceivables
TheGroup'sexposuretocreditriskisin�luencedmainlybytheindividualcharacteristicofeachcustomer.However,
managementalsoconsiderthedemographicsof theCompany'scustomerbase, includingthedefaultriskof the
industryandcountryinwhichcustomeroperate,asthesefactorsmayhaveanin�luenceoncreditrisk.
Theagingoftradeandotherreceivablesattheendofthereportingperiodthatwerenotimpairedwasasfollows,
1-60days 269,448,051 342,949,024 269,448,051 342,949,024
61-180days 60,516,422 25,766,388 60,516,422 25,766,388
Above181days 38,979,008 35,359,547 38,979,008 35,359,547
368,943,481 404,074,959 368,943,481 404,074,959
-68-
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
Tominimizethecreditriskfromcustomers,theCompanyobtainsbankguaranteesfromitstradingcustomerswheninitiating
thebusinessrelationships.TheCompanymonitors the levelof transactionwith theguaranteeand increases theguarantee
amountwherenecessary.Further,creditperiodsareestablishedandthereceivablebalancesaremonitoredcontinuously.The
amountspastduebymore than181daysare still consideredcollectible in full,basedonhistoricalpaymentbehaviorand
analysisofcustomercreditrisk.
Impairmentlosses
TheCompanyestablishesanallowanceforimpairmentthatrepresentsitsestimateofincurredlossesinrespectoftradeand
otherreceivables.Themaincomponentsofthisallowanceareaspecificlosscomponentthatrelatestoindividuallysignificant
exposures, and a collective loss component established for groups of similar assets in respect of losses that have been
incurredbutnotyetidentified.Thecollectivelossallowanceisdeterminedbasedonhistoricaldataofpaymentstatisticsfor
similarfinancialassets.
Theagingoftradereceivablesatthereportingdatewasasfollows:
(b)CashandCashEquivalents
TheGroupheldcashandcashequivalentsofRs.74millionasat31March2020(2019:Rs.80million),whichrepresent its
maximum credit exposure on these assets. Cash and cash equivalents are heldwith bank,which are rateAA (LKA) toA+
(LKA),basedonFitchratings.
(c)InvestmentinUnitTrust
InvestmentinunittrustismadeinunitsmanagedbyNDBwealthmanagementLtd.
(d)InvestmentinFixeddeposits
Investmentinfixeddepositsrepresentsfixeddepositsplacedatvariouslicencedcommercialbanks.
36.1.3Expectedcreditlosses
With the adoption of SLFRS 9 - Financial Instruments, the Companymanages credit quality using a three stage approach
whichinlinewiththenewstandardrequirementsaswell.
Stageone:12monthexpectedcreditlosses(ECL)
Stagetwo:Lifetimeexpectedcreditlosses(ECL)-notcreditimpaired
Stagethree:Lifetimeexpectedcreditlosses(ECL)-creditimpaired
GROUP/COMPANY
ASAT31MARCH, 2020 2019
Gross Impairment Gross Impairment
Balance Balance
Rs. Rs. Rs. Rs.
Pastdue0-30days 202,615,539 - 264,584,870 -
Pastdue31-90days 90,045,408 - 75,014,988 -
Pastdue91-180days 8,874,861 - 1,529,546 -
Pastdue181-270days 892,568 - 1,901,426 -
Pastdue271-365days 1,002,547 - 1,358,055 -
Morethanoneyear 4,461,997 4,258,479 5,239,295 3,186,614
Total 307,892,920 4,258,479 349,628,180 3,186,614
-69-
Tablebelowshowstheclassificationofasstsandliabilitiesbasedontheabovementionedthreestagemodel:
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
Group
Asat31March2020
LifeTime LifeTime
ECL– ECL–
12-month NotCredit Credit
ECL Impaired Impaired Unclassi�ied Total
Rs. Rs. Rs. Rs. Rs.
Cashandcashequivalents Note18 74,111,035 - - - 74,111,035
Tradeandotherreceivables Note17 371,438,404 - - - 371,438,404
Investmentin�ixeddeposits 239,565,685 - - - 239,565,685
Investmentofunittrust 5,751,000 - - - 5,751,000
Othernon�inancialassets - - -1,239,542,204 1,239,542,204
Totalassets 690,866,124 - -1,239,542,204 1,930,408,328
Company
Asat31March2019
LifeTime LifeTime
ECL– ECL–
12-month NotCredit Credit
ECL Impaired Impaired Unclassi�ied Total
Rs. Rs. Rs. Rs. Rs.
Cashandcashequivalents Note18 74,841,630 - - - 74,841,630
Tradeandotherreceivables Note17 418,463,281 - - - 418,463,281
Investmentin�ixeddeposits 221,143,528 - - - 221,143,528
Investmentofunittrust 5,379,000 - - - 5,379,000
Othernon�inancialassets - - -1,000,599,602 1,000,599,602
Totalassets 719,827,439 - -1,000,599,602 1,720,427,041
Group
Asat31March2019
LifeTime LifeTime
ECL– ECL–
12-month NotCredit Credit
ECL Impaired Impaired Unclassi�ied Total
Rs. Rs. Rs. Rs. Rs.
Cashandcashequivalents Note18 80,128,815 - - - 80,128,815
Tradeandotherreceivables Note17 418,463,281 - - - 418,463,281
Investmentin�ixeddeposits 221,143,528 - - - 221,143,528
Investmentofunittrust 5,379,000 - - - 5,379,000
Othernon�inancialassets - - -1,000,599,532 1,000,599,532
Totalassets 725,114,624 - -1,000,599,532 1,725,714,156
Company
Asat31March2020
LifeTime LifeTime
ECL– ECL–
12-month NotCredit Credit
ECL Impaired Impaired Unclassi�ied Total
Rs. Rs. Rs. Rs. Rs.
Cashandcashequivalents Note18 73,159,225 - - - 73,159,225
Tradeandotherreceivables Note17 371,438,404 - - - 371,438,404
Investmentin�ixeddeposits 239,565,685 - - - 239,565,685
Investmentofunittrust 5,751,000 - - - 5,751,000
Othernon�inancialassets - - -1,239,542,274 1,239,542,274
Totalassets 689,914,314 - -1,239,542,274 1,929,456,588
-70-
36.1.4 LiquidityRisk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial
liabilitiesthataresettledbydeliveringcashoranotherfinancialasset.
CashflowforecastingisdonebytheCompanyonaregularbasis.ThefinancedivisionmonitorsrollingforecastsoftheGroup's
liquidity requirements to ensure it has sufficient funds to meet operational needs. Further, the Group has not obtained
borrowingfromanythirdpartyexcepttemporarybankoverdraft.
Asat31March2020
TheMaturityAnalysisofLiabilities
Contractualcashflows
Group Carrying 6monthor 6-12month 2-5years morethan
amount less 5years
LIABILITIES
Bankoverdraft 128,540,284 128,540,284 - - -
Tradeandotherpayables 239,091,211 239,091,211 - - -
Leasecreditor 595,506 75,583 79,444 440,479 -
Interestinsuspense - 28,217 24,358 48,723 -
Totalliabilities 368,227,001 367,735,295 103,802 489,202 -
Asat31stMarch2019
TheMaturityAnalysisofLiabilities
Contractualcashflows
Group Carrying 6monthor 6-12month 2-5years morethan
amount less 5years
LIABILITIES
Bankoverdraft 28,532,778 28,532,778 - - -
Tradeandotherpayables 190,806,556 190,806,556 - - -
Totalliabilities 219,339,334 219,339,334 - - -
Asat31March2020
TheMaturityAnalysisofLiabilities
Contractualcashflows
Company Carrying 6monthor 6-12month 2-5years morethan
amount less 5years
LIABILITIES
Bankoverdraft 128,540,284 128,540,284 - - -
Tradeandotherpayables 238,918,415 238,918,415 - - -
Leasecreditor 595,506 75,583 79,444 440,479 -
Interestinsuspense - 28,217 24,358 48,723 -
Totalliabilities 368,054,205 367,562,499 103,802 489,202 -
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
-71-
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
Asat31March2019
TheMaturityAnalysisofLiabilities
Contractualcashflows
Company Carrying 6monthor 6-12month 2-5years morethan
amount less 5years
LIABILITIES
Bankoverdraft 28,532,778 28,532,778 - - -
Tradeandotherpayables 190,588,247 190,588,247 - - -
Totalliabilities 219,121,025 219,121,025 - - -
36.1.5 MarketRisk
Market risk is the risk that the fair valueof future cash flowsof a financial instrumentwill fluctuatebecauseofchangesinmarketprice.Marketriskcomprisesthreetypesofriskscurrencyrisk,interestrateriskandothermarketprice risk. The objective of market risk management is to manage and control market risk exposure withinacceptableparameters,whileoptimisingthereturn.
36.1.5.1CurrencyRisk
Company'sfunctionalcurrencyisSriLankanRupeesandreceivedforeigncurrenciesfromexportsales.Atpresent,99.5% of the total sales are made to local customer and hence currency risk is insignificant in relation to theCompanyassuchthesensitivityanalysisonforeigncurrencyfluctuationswillnotapply.
36.1.5.2InterestRateRisk
Interest rate risk is the risk to the Group's earnings and Economic Value of Equity (EVE) arising from adversemovementsininterestrates.
Atpresent,theGrouphasnotobtainedfundsfromanyinterestbearingfinancial liabilitiesexcepttemporarybankoverdraftsassuchsensitivityanalysisoninterestratefluctuationwillnotapply.
TheGroup'sshortterminvestmentsareatfixedinterestratesandmaturewithinoneyear.
36.1.6 OperationalRisk
OperationalriskistheriskofdirectorindirectlossarisingfromawidevarietyofcausesassociatedwiththeGroup'sprocesses, personnel, technology and infrastructure, and from external factors other than credit, market andliquidity risks such as those arising from legal and regulatory requirements and generally accepted standards ofcorporatebehaviour.OperationalrisksarisefromalloftheGroup'soperations.
TheGroup'sobjectiveistomanageoperationalrisksoastobalancetheavoidanceoffinanciallossesanddamagetothe Group's reputationwith overall cost effectiveness and to avoid control procedures that restrict initiative andcreativity.
36.2 AccountingClassificationsandFairValues
FinancialInstrumentsaremeasuredonanongoingbasiseitheratfairvalueoratamortisedcost.Thesummaryofsignificantaccountingpoliciesdescribeshowtheclassesoffinancialinstrumentsaremeasured,andhowincomeandexpenses,includingfairvaluegainsandlosses,arerecognised.
Thefollowingtablesanalyzefinancial instrumentsmeasuredat fairvalueatthereportingdate,bythe level inthefairvaluehierarchyintowhichthefairvaluemeasurementiscategorizedandacomparisonofthecarryingamountsandfairvaluesofthefinancialassetsandliabilitiesoftheCompanyandGroupwhicharenotmeasuredatfairvalueinthefinancialstatements.Theamountsarebasedonthevaluesrecognisedinthestatementoffinancialposition.
The carrying values of financial assets and liabilities which has a shortermaturity period and based on normalmarketconditions,havebeenconsideredasareasonableapproximationtothefairvalue.Accordingly,thefairvaluehierarchydoesnotapplytocashandcashequivalents,tradeandotherreceivables,tradeandotherpayableandbankoverdraft.
-72-
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)Group
Asat31March2020
FVTPL Amortized Other Total Fairvalue Fairvalue
investments cost �inancial carrying hierarchy
liabilities amount level
Rs. Rs. Rs. Rs. Rs. 123
Cashandcashequivalents -74,111,035 - 74,111,035 - ---
Tradeandotherreceivables -368,943,481 -368,943,481 - ---
Investmentsinunittrust 5,751,000 - - 5,751,0005,751,000-5,751,000-
Investmentsin�ixeddeposit - 239,565,685 - 239,565,685 - ---
Tradeandotherpayables - -(239,091,211)(239,091,211) - ---
Overdraft - - (128,540,284)(128,540,284) - ---
5,751,000682,620,201(367,631,495) 320,739,706 5,751,000 -5,751,000-
Group
Asat31March2019
FVTPL Amortized Other Total Fairvalue Fairvalue
investments cost �inancial carrying hierarchy
liabilities amount level
Rs. Rs. Rs. Rs. Rs. 123
Cashandcashequivalents - 80,128,815 - 80,128,815 - ---
Tradeandotherreceivables - 403,306,468 - 403,306,468 - ---
Investmentinunittrust 5,379,000 - - 5,379,0005,379,000 -5,379,000-
Investmentsin�ixeddeposit - 221,143,528 - 221,143,528 - ---
Tradeandotherpayables - -(190,806,556)(190,806,556) - ---
Overdraft - -(28,532,778)(28,532,778) - ---
5,379,000704,578,811(219,339,334) 490,618,4775,379,000 -5,379,000-
Company
Asat31March2019
FVTPL Amortized Other Total Fairvalue Fairvalue
investments cost �inancial carrying hierarchy
liabilities amount level
Rs. Rs. Rs. Rs. Rs. 123
Cashandcashequivalents - 74,841,630 - 74,841,630 - ---
Tradeandotherreceivables - 403,306,468 - 403,306,468 - ---
Investmentinunittrust 5,379,000 - - 5,379,000 5,379,000 -5,379,000-
Investmentsin�ixeddeposit - 221,143,528 - 221,143,528 - ---
Tradeandotherpayables - -(190,588,247)(190,588,247)- ---
Overdraft - (28,532,778)(28,532,778) - ---
5,379,000699,291,626(219,121,025)485,549,6015,379,000 -5,379,000-
Company
Asat31March2020
FVTPL Amortized Other Total Fairvalue Fairvalue
investments cost �inancial carrying hierarchy
liabilities amount level
Rs. Rs. Rs. Rs. Rs. 123
Cashandcashequivalents -73,159,225 - 73,159,225 - ---
Tradeandotherreceivables -368,943,481 - 368,943,481 - ---
Investmentsinunittrust 5,751,000 - - 5,751,000 5,751,000 -5,751,000-
Investmentsin�ixeddeposit - 239,565,685 - 239,565,685 - ---
Tradeandotherpayables - - (238,918,415) (238,918,415) - ---
Overdraft - - (128,540,284)(128,540,284) - ---
5,751,000681,668,391(367,458,699) 319,960,6925,751,000-5,751,000-
-73-
NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)
Thefollowingtableshowsthevaluationtechniqueusedinmeasuringlevel2fairvalues,aswellasthesigni�icantunobservable
inputsused.
36.3 CapitalManagement
TheBoard'spolicyistomaintainastrongcapitalbasetomaintaincon�idenceoftheinvestors,creditorsandthemarket
whilesustainingfuturedevelopmentofthebusinesscapitalconsiststototalequity.TheBoardofDirectorsmonitorsthe
returnoncapitalaswellasthelevelofdividendstoordinaryshareholders.
ThecapitalstructureoftheGroupconsistsofdebtandequityoftheGroup.ThecapitalstructureoftheGroupisreviewedby
theBoardofDirectors.
TheGroupmonitorscapitalusingtheratioofnetdebttoequity.Forthispurposeadjustednetdebtisde�inedastotal
liabilitiescomprisinginterestbearingloansandborrowings,lesscashandcashequivalents.
Type Valuationtechnique Signi�icantunobservableinputs
Inter-relationshipbetweenkeyunobservableinputsandfairvaluemeasurement
Investmentsinunittrusts
FairvalueisbasedontheunitpricesasatyearendRs.38.34(2020)Rs.35.86(2019)
Basedonunitprices
Theestimatedfairvaluewouldincrease(decrease)if:theunitpriceswerehigher(lower)
GROUP COMPANY
ASAT31MARCH, 2020 2019 2020 2019
Rs. Rs. Rs. Rs.
TotalLiabilities 465,580,491 317,517,000 467,991,117 319,882,112
Less:Cashandcashequivalents (74,111,035) (80,128,815) (73,159,225) (74,841,630)
Adjustednetdebt 391,469,456 237,388,185 394,831,892 245,040,482
Totalequity 1,406,827,837 1,356,197,156 1,403,465,471 1,348,544,929
Netdebttoequityratio 0.28 0.18 0.28 0.18
TherewerenochangesintheCompany'sapproachtocapitalmanagementduringtheyearandthecompanyisnotsubjecttoexternallyimposedcapitalrequirements.
-74-
STATEMENTOFVALUEADDED
FORTHEYEARENDED31MARCH, 2020 2019
Rs.000 Rs.000
Turnover 3,652,268 3,626,418
OtherIncome 76,488 66,659
3,728,756 3,693,077
CostofGoods&Servicesboughtin (2,828,787) (2,851,176)
ValueAdded 899,969 841,901
Distributionasfollows % Rs.000 % Rs.000
ToEmployees 51.68 465,017 49.43 416,148
ToGovernment 10.45 94,079 8.89 74,848
ToLenders 0.10 914 0.33 2,737
ToShareholders 10.66 95,980 10.26 86,382
RetainedinBusiness
Depreciation 10.63 95,686 10.57 88,990
Pro�itRetained 16.48148,293 20.52 172,796
100.00 899,969 100.00 841,901
ToEmployees
ToGovernment
ToLenders
ToShareholders
Depreciation
Pro�itRetained
20192020
49.43
10.26
8.89
20.52
10.57
0.33
10.45
10.66
0.10
51.68
16.48
10.63
-75-
TENYEARSSTATISTICALSUMMARY
Reportedasper
SLAS
SLFRS/LKAS
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Rs.000's
Rs.000's
Rs.000's
Rs.000's
Rs.000's
Rs.000's
Rs.000's
Rs.000's
Rs.000's
Rs.000's
Resu
lts
--
--
--
--
Groupturnover
1,475,664
2,245,1672,577,9272,599,0692,720,1602,826,223
3,003,824
3,131,6743,626,4183,652,268
Pro�itbeforetax
115,317
150,554
138,773
172,727
219,644
218,034
179,075
204,478
247,644
242,372
Taxation
(51,227)
(49,572)
(42,338)
(55,409)
(69,886)
(76,646)
(53,930)
(81,635)
(74,848)
(94,079)
Pro�itaftertax
64,090
100,982
96,435
117,318
149,758
141,388
125,145
122,843
172,796
148,293
FundsEmployed
Stated
Cap
ital
9,598
9,598
9,598
9,598
9,598
9,598
9,598
105,578
105,578
105,578
Cap
italreserves
89,871
30,849
32,643
19,852
19,852
19,852
19,852
19,852
7,011
7,011
Reven
uereserves
414,244
850,872
908,9151,000,0211,084,3251,147,187
1,199,258
1,141,8301,243,6081,294,239
Shareh
olders'funds
513,713
891,319
951,1561,029,4711,113,7751,176,637
1,228,708
1,267,2601,356,1971,406,828
AssetsEmployed
Noncurren
tassets
234,834
539,604
579,502
652,533
680,855
786,226
817,348
829,444
811,752
929,357
Curren
tassets
536,254
596,997
641,114
697,172
780,909
723,606
783,556
869,128
913,9621,001,051
Curren
tliab
ilities
(197,442)
(184,499)
(200,413)
(240,976)
(251,841)
(227,679)
(260,725)
(292,908)
(232,882)
(372,075)
Provisions
(59,933)
(60,783)
(69,047)
(79,258)
(96,148)
(105,516)
(111,471)
(138,404)
(136,635)
(151,505)
Cap
italemployed
513,713
891,319
951,1561,029,4711,113,7751,176,637
1,228,708
1,267,2601,356,1971,406,828
Cash
Flow
Netcashin
�low/(out�low)fromoperatingactivities
33,348
75,457
89,915
129,424
236,717
147,562
117,719
224,296
167,953
167,642
Netcashin
�low/(out�low)fromin
vestingactivities
(13,772)
(44,958)
(48,244)
(108,877)
(29,988)
(154,718)
(67,707)
(74,322)
(132,917)
(172,247)
Netcashin
�low/(out�low)from�inan
cingactivities
(37,791)
(28,794)
(38,392)
(43,191)
(62,387)
(76,784)
(81,584)
(80,133)
(86,383)
(101,420)
Increase/(decrease)incashandcashequivalen
ts
(18,215)
1,705
3,279
(22,644)
144,342
(83,940)
(31,572)
69,841(51,347)(106,025)
KeyIndicators
Earningspershare
66.77
106.25
100.47
122.23
156.03
147.31
130.38
63.99
90.02
77.25
Netassetspershare
535.23
928.65
990.99
1,072.59
1,160.42
1,225.92
1,280.17
660.17
706.50
732.88
Marketpricepershare
950.00
2,199.00
2,488.00
2,200.00
2,348.90
2,700.70
2,799.90
1,351.10
1,388.90
1687.20
Returnonequity
12.48
11.44
10.14
11.40
13.44
12.02
10.19
9.6912.74
10.54
Priceearningratio
14.23
20.69
24.76
18.00
15.05
18.33
21.47
21.1115.43
21.84
Dividen
dpershare
30.00
30.00
40.00
45.00
65.00
80.00
85.00
42.0045.00
50.00
th
**On05June2017,shareh
olderspassedanordinaryresolutiontocap
italizeRs.95,980,000/-fromandoutofretained
earningsbyallocating959,800ordinarysharesasfullypaidshares.
**
-76-
INVESTORINFORMATION
01. StockExchangeListing
TheissuedOrdinarySharesofHarischandraMillsPLCarelistedwiththeColomboStockExchangein1983.
02. OrdinaryShareholders
2.1Distributionofstatedcapital
Asat31March
2.2 Classi�icationofShareholders
Asat31March 2020 2019
No.of Total Percentage No.of Total Percentage
Shareholders Holdings % Shareholders Holding %
Directors 4 277,140 14.44 4353,790 18.44
Institutionalinvestors 11 485,544 25.29 8 2,008 0.10
Employees 15 77,940 4.06 13 1,170 0.06
Others 487 1,078,976 56.21 5021,562,632 81.40
517 1,919,600 100.00 5271,919,600 100.00
2.3 Twentylargestshareholdersofthecompany
Shareholder'sname No.ofShares % No.ofShares %
01. SeylanBankPLC/SenthilverlT. 480,858 25.05 480,101 25.01
02. DeSilvaU. 286,936 14.95 286,936 14.95
03. RodrigoC.P. 278,920 14.53 278,920 14.53
04. SamarasingheR.K 270,120 14.07 270,120 14.07
05. SampathBankPLC/SenthilverlT. 267,571 13.94 267,571 13.94
06. SamarasingheS.N. 76,670 3.99 76,670 3.99
07. RodrigoN. 30,736 1.60 30,736 1.60
08. RodrigoS.A. 30,736 1.60 30,736 1.60
09. EkanayakeD.H.C. 28,292 1.47 28,292 1.47
10. SelvarajA.G.I. 27,014 1.41 27,014 1.41
11. WijayanandanaH.D. 24,760 1.29 24,760 1.29
12. WoodwardH.W.M. 15,220 0.79 15,220 0.79
13. DeSilvaM.P. 5,000 0.26 5,000 0.26
14. SigamoneyC. 4,494 0.23 4,494 0.23
15. JayanthaD. 3,800 0.20 3,800 0.20
16. WijayawardhaneC.J. 3,788 0.20 3,570 0.19
17. ThirugnanasambandarSenthilverl 3,752 0.20 3,752 0.20
18. AbeysekaraS. 2,800 0.15 2,800 0.15
19. JayasinghaD.A. 2,720 0.14 2,720 0.14
20. EstateofMohommedRafeek 2,668 0.14 2,668 0.14
ResidentsNon-ResidentsTotal
Rangeof No.of No.of No.of No.of No.of No.of
Shreholdings Shareholders Shares % Shareholders Shares % Shareholders Shares %
1 1,000 476 43,969 2.29 3 220 0.01 479 44,189 2.30
1,001 5,000 25 53,084 2.77 1 4,494 0.23 26 57,578 3.00
5,001 10,000 - - 0.00 - - 0.00 - - 0.00
10,001 50,000 5 141,538 7.37 1 15,220 0.80 6 156,758 8.17
50,001 100,000 1 76,670 3.99 - - 0.00 1 76,670 3.99
100,001 500,000 5 1,584,405 82.54 - - 0.00 5 1,584,405 82.54
500,001 1,000,000 - - 0.00 - - 0.00 - - 0.00
Over1,000,000 - - 0.00 - - 0.00 - - 0.00
Total 512 1,899,666 98.96 5 19,934 1.04 517 1,919,600 100.00
2020
-77-
INVESTORINFORMATION(CONTD.)
FORTHEYEARENDED31MARCH 2020 2019
03. Detailsofsharetransactionsduringtheyear
No.oftransactions 294 230
No.ofsharetraded 485,364 4,544
Valueoftransactions(Rs.) 762,170,833 6,450,623
04. Thetransactedvalueofanordinaryshare
Rs. Rs.
HighestPrice 1800.00 1749.90
LowestPrice 1411.00 1057.10
LastTradedPrice 1687.20 1388.90
05. Dividend 38,392,000 38,392,000
Interim 57,588,026 47,990,550
Final 95,980,026 86,382,550
06. Earning
Earningspershare(Rs.)
Basic 77.25 90.02
Diluted 77.25 90.02
Priceearningratio 21.84 15.43
07. Dividedpershare(Rs.) 50.00 45.00
08. Dividedcover(Times) 1.55 2.00
09. DividendYield(%) 2.96 3.24
10. DividendPayout(%) 64.72 49.99
AsAt31March 2020 2019
11. PublicHolding
No.ofshares 817,381 818,138
Percentage 42.58% 42.62%
No.ofpublicshareholders 517 521
The Company had float adjusted market capitalization of
Rs.1,379,059,375andcompanyqualifiesunderoptiononeof
the minimum public holding requirement for the Diri Savi
BoadoftheCSE.
12. NetAssetpershare(Rs.) 732.88 706.50
13. Currentassetratio 2.69:1 3.92:1
14. Quickassetratio 1.86:1 3.11:1
15. Equitytototalassetratio(%) 72.88 78.59
-78-
FORMOFPROXY
I/We:.......................................................................................................................................................................................................................................................
of................................................................................................................................................................................................................................................................
beingaShareholder/ShareholdersofHARISCHANDRAMILLSPLCdoherebyappoint
1. Mr.M.A.Bastiansz orfailinghim,
2. Mr.S.N.Samarasinghe orfailinghim,
3. Mr.G.S.V.DeSilva orfailinghim,
4. Mrs.M.P.DeSilva orfailingher,
5. Mr.S.A.S.Jayasundara orfailinghim,
6. Mr.T.K.Bandaranayake orfailinghim,
7. Mrs.R.K.Samarasinghe orfailingher.
..................................................................... (holder of National Identity Card No. : ..................................................) of
.............................................................................................. asmy/ourProxy toattendandvoteat the68AnnualGeneralMeetingof the
CompanytobeheldattheregisteredofficeoftheCompanyatNo.11C.A.HarischandraMawatha,Mataraon14November
2020at11.00a.m.andatanyadjournmentthereof.
1. to receive and consider the Annual Report of the Board together with the
FinancialStatementsoftheCompany.
2. to declare a final dividend of LKR 30/- per share as recommended by the
Directors.
3. tore-electasaDirector,Mr.S.A.SJayasundaraasaDirector,whoretiresinterms
ofArticle98oftheArticlesofAssociation.
4. tore-appointM/sKPMG,CharteredAccountants,astheAuditorsoftheCompany
andauthorizetheDirectorstofixtheirremuneration.
5. to approve the donations and contributionsmade by the Directors during the
yearunderreview,andtoauthorisetheDirectorstodeterminecontributionsto
charitiesfortheensuingyear.
Signedthis............................................dayof.............................2020
........................................
Signature/s
For Against
Note:Instructionsasto
completionarenotedonthe
reversehereof
-79-
INSTRUCTIONSASTOCOMPLETION
1. KindlyperfecttheFormofProxyafterfillinginlegiblyyourfullnameandaddressandsigninthespaceprovided.Please
fillinthedateofsignature.
2. PleasereturnthecompletedFormofProxytotheCompanyaftercrossingoutoneortheotherofthealternativewords
indicated by the asterisks on the body of the Form and by indicating with an 'X' in the space provided against each
resolution,themannerinwhichyouwishyourvotetobecast.
3. AMemberentitledtoattendandvoteattheMeetingisentitledtoappointaProxywhoneednotbeamember,toattend
andvoteinsteadofhim.
4. In thecaseofaCorporateShareholder, theFormmustbecompletedunder itsCommonSealorotherwisesignedby its
AttorneyorbyanofficeronbehalfoftheCorporation.TheCorporateShareholdermay,butshallnotbeboundtorequire
evidenceoftheauthorityofanysuchAttorneyorofficer.
5. IftheFormofProxyissignedbyanAttorney,therelevantPowerofAttorneyshouldalsoaccompanythecompletedForm
ofProxy,inthemannerprescribedbyArticlesofAssociation.
6. The completed Form of Proxy should be deposited at the RegisteredOffice of the Company, No. 11, C.A. Harischandra
Mawatha,Mataranotlessthanfortyeight(48)hoursbeforetheappointedtimefortheMeeting.
7. Ifthereisanydoubtastothemannerinwhichtheproxyshouldvotebyreasonofthemannerinwhichinstructionsin2
abovehavebeencarriedout,theproxyholderwillvoteasshe/hethinksfit.
8. Ashareholderappointingaproxy(otherthanadirectoroftheCompany)toattendthemeetingshouldindicatetheproxy
holder'sNationalIdentityCard(NIC)numberontheFormofProxyandshouldinstructtheproxyholdertobringhis/her
NationalIdentityCardtotheMeeting.
-80-