Harischandra Annual Report Inner Pages new 2

Our Mission

Our Vision

To enhance our heritagebrand status and serve the nation.

To provide the public with a variety of high quality

foods and soaps.

NoticeofMeeting 4

CorporateInformation 5

Chairman'sReview 6

ManagingDirector'sReport 7

CorporateGovernance 10

RiskManagement 15

RemunerationCommitteeReport 16

AuditCommitteeReport 17

RelatedPartyTransactionsReviewCommitteeReport 19

BoardofDirectors 20

AnnualReportoftheBoardofDirectors

-ontheAffairsoftheCompany 21

StatementofDirectors'Responsibilityfor

-FinancialReporting 27

IndependentAuditors'Report 28

IncomeStatement 31

StatementofPro�itorLossandOther

-ComprehensiveIncome 32

StatementofFinancialPosition 33

StatementofChangesinEquity 34

StatementofCashFlows 36

NotestotheFinancialStatements 37

StatementofValueAdded 69

TenYearsStatisticalSummary 70

InvestorInformation 71

FormofProxy 73

3

NOTICEOFMEETING

thNoticeisherebygiventhatthe67 AnnualGeneralMeetingofHarischandraMillsPLC,willbeheldattheRegisteredof�iceofthestCompany,No.11,C.A.HarischandraMawatha,Mataraon21 September2019at11.00a.m.forthefollowingpurposes.

1. ToreceiveandconsidertheReportoftheDirectorsandAuditedStatementofAccountsfortheyearended31March,2019

alongwiththereportoftheAuditorsthereon.

2. Todeclarea�inaldividendofRupeesThirty(Rs.30/-)pershareforthe�inancialyearended31stMarch2019asrecommended

bytheDirectors.

3. Tore-electMrs.M.P.DeSilvaasaDirector,whoretiresintermsofArticle98oftheArticlesofAssociation.

4. ToproposethefollowingresolutionasanOrdinaryResolutionforthere-appointmentofMr.T.K.Bandaranayakewhohas

reachedtheageof76years.

ITISHEREBYRESOLVEDTHATtheagelimitreferredtoinsection210oftheCompaniesActNo7of2007shallnotapplyto

Mr.T.K.Bandaranayakewhohasreachedtheageof76yearspriortotheAnnualGeneralMeetingandthatheshallaccordingly

bere-appointed.

5. Toproposethefollowingresolutionasanordinaryresolutionforthere-appointmentofMrs.R.K.Samarasinghewhohas

reachedtheageof78years.


Mrs. R. K. Samarasinghewho has reached the age of 78 years prior to the Annual GeneralMeeting and that she shall

accordinglybere-appointed.

6. Toproposethefollowingresolutionasanordinaryresolutionforthere-appointmentofMr.M.A.Bastianszwhohasreached

theageof75years.


Mr.M.A.Bastianszwhohasreachedtheageof75yearspriortotheAnnualGeneralMeetingandthatheshallaccordinglybere-

appointed.

7. Toproposethefollowingresolutionasanordinaryresolutionforthere-appointmentofMr.G.S.V.DeSilvawhohasreached

theageof74years.


Mr.G.S.V.DeSilvawhohasreachedtheageof74yearspriortotheAnnualGeneralMeetingandthatheshallaccordinglybere-

appointed.

8. Tore-appointKPMG,CharteredAccountants,asAuditorsof theCompanyuntil thenextAnnualGeneralMeetingand to

authorisetheDirectorstodeterminetheirremuneration.

9. Toapprove thedonationsand contributionsmadeby theDirectorsduring theyearunder review, and toauthorise the

Directorstodeterminecontributionstocharitiesfortheensuingyear.

ByOrderoftheBoard

CORPORATESERVICES(PRIVATE)LIMITED.

Secretariesst Dated,onthis26 dayofJuly2019

Note

01. Amemberunabletoattendtheabovemeetingisentitledtoappointaproxywhoneednotbeamember.

02. AformofProxyisattachedtothereport.

03. ThecompletedformofProxyshouldbedepositedattheRegisteredOf�iceoftheCompanyatNo.11,

C.A.HarischandraMawatha,Matara,notlessthan48hoursbeforethetime�ixedforthemeeting.

67thAnnualGeneralMeeting

4

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

5

CHAIRMAN'SREVIEW

It gives me great pleasure to welcome you, on behalf of the Board of Directors, to the 67th Annual General Meeting of

HarischandraMillsPLC,andtopresenttoyoutheAnnualReportandAuditedStatementofAccountsoftheCompanyforthe

�inancialyearended31stMarch2019.

Thecompany'sbusinessactivity,likethatofthenationatlarge,wasadverselyaffectedbythesluggisheconomy,weakconsumer

sentimentandseriouspoliticalinstabilityinthecountry.Yet,despitethesechallenges,Iamhappytonotethatstrategicdecisions

takenduringtheyeartoupgradeinfrastructureandimproveproductionhavehelpedtoincreaseourpro�itabilityparticularlyin

thesoapandlubricantssectors.Thelosssufferedinthefoodsector,despiteincreasedsales,wasduetothedecisiontoabsorb

someofthehighcostofrawmaterials.Totalsalesfortheyearincreasedby16%,whilstoperatingpro�itandpro�itaftertaxhave

improvedcomparedtolastyear'spro�it.

ThecompanyhaspaidaninterimdividendofRs20/-pershare.TheBoardofDirectorshasrecommendedthepaymentofa�inal

dividendofRs30/-persharemakingthetotaldividendfortheyearRs50/-pershare.

Iamsurethatshareholderswillapplaudthecompany'scontinuedcontributionsintheareaofsocialresponsibilitythedetailsof

whicharefoundelsewhereinthisReport.

IwouldliketotakethisopportunitytothankmycolleaguesontheBoardfortheirguidance,andtheManagingDirectorandallour

employeesfortheircommitmenttowardsenhancingtheimageandsuccessofthecompany.

MaxwellA.BastianszChairmanJuly19,2019

6

MANAGINGDIRECTOR'SREPORT

IampleasedtodelivertheAnnualReportfortheyearended31March2019,whichcanbedescribedasapleasingyearforthe

Companydespitethesubduedeconomicenvironmentofthecountry.

Wehavedelivered improvedreturns forourshareholders,whilemakingdecent improvementonkeyproductionsegments

duringthepastyear.

TheSoapsegmentshowednoticeableperformanceduetotheimprovementinconsumerawarenessofourband'squality.Sales

increasedby23%duringtheyearwhilelossesdecreasedremarkablyby75%.

Foodssegmentrecorded4%increaseinsalescomparedtothepreviousyearevenwiththeweakconsumerspendingduringthe

yearunder review.However, operatingpro�itsof the segmentdecreasedby11%as theCompanyabsorbed increased raw

materialcostwithoutpassingtheburdentotheconsumers.

Investment in infrastructure improvementsat the �illing station, resulted140% increase inoperatingpro�itsof theFuel&

Lubricantsegment.Thisincludes,46%increaseinrevenuecomparedtothepreviousyear.

CorporateSocialResponsibilityisanotherkeyelementoftheCompany.DuringtheyearunderreviewmostofourCSRprojects

focusedonenhancingeducationinthesouthernprovince.Accordingly,fullyequippedmediaunithasestablishedattheWilpita

MahaVidyalaya,Akuressa.InformationTechnologyisanotherdeservingareaineducation.Consideringthis,Companyprovided

all the furniture and �ittings to the new IT section of Thelijjawila Central College.WewahamanduwaWanigasekaraMaha

Vidyalayaisanotherschoolwithlessfacilitieswherewepreviouslyrenovateditsmainhall.Thisyear,Companyhasprovided

studydesksandchairsforthenewadmissionstogradeone.

Apartfromthat,thecompanycontributesinvariouswaystoupliftthestatusofneedypeopleinthesocietyincluding,distribution

ofwhitecanesforblindwomeninMataradistrict.

ThecompanycontinuestosupporttheacademiceventsorganizedbytheUniversityofRuhunawhichisthemaineducationhubof

southernprovince.Thisyearalso,companysponsoredtwointernationalconferencesorganizedbythefacultyofManagement

andfacultyofScience.Further,companyisoneofcorporatesponsorfortheAssociationofAccountingTechniciansofSriLanka,a

leadingprofessionalbody.

S.N.SamarasingheManagingDirectorJuly19,2019

7

FullyequippedmediaunitwasdonatedtoWilpitaMahaVidyalaya,Akuressa.

ITroomofThelejjawilacentralcollegewasequippedwithfurniture&�ittings,airconditioningmachinesandotherrelatedequipment.

ThelijjawilaCentralCollege

WewahamanduwaWanigasekaraMahaVidyalayaisanotherschoolwithlessfacilitieswherewehadpreviouslyrenovateditsmainhall.Thisyear,weprovidedstudydesksandchairsforthenewadmissionstogradeone.

WilpitaMahaVidyalaya

WewahamanduwaWanigasekaraMahaVidyalaya

8

Distribution of white canes for blind women in Matara district tocommemorateInternationalWhiteCaneDay2018.

Employeeswhocontinuously served25years were felicitated at a specialceremony.

Staff trip to Anuradhapura for staffmembers and their familieswithvariousentertainmentandreligiousactivities.

InternationalWhiteCaneDay

AnnualTrip

ServiceAppreciation

9

CORPORATEGOVERNANCE

"CorporateGovernance"isagenerictermthatdescribesthewaysinwhichrightsandresponsibilitiesaredistributedamongthe

variouscorporatebodiesaccordingtotherules,processesorlawstowhichtheyaresubject.Inpractice,corporategovernance

de�inesthedecision-makingsystemsandstructurethroughwhichownersdirectlyorindirectlycontrolacompany.TheBoardof

DirectorsofHarischandraMillsPLCiscommittedtoensuringbusinessintegrityandprofessionalisminallitsactivities.Asapart

ofthiscommitment,theBoardofDirectorshasproactivelyencouragedgoodcorporategovernancepracticewithintheCompany

basedonagenerallyacceptedpolicyframework,whichemphasizestransparency,controlandaccountability.

BoardofDirectorsanditsRole

TheBoardofDirectorsasof31March2019hassevenmembers;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

otherstatutoryregulations.

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

24.05.2018 26.07.2018 10.08.2018 09.11.2018 14.02.2019

A�endance of Board Mee�ngs

04.05.2018

Excused Excused Excused

ü ü ü ü üü

ü ü ü ü üü

ü ü ü ü üü

ü ü ü ü ü

ü ü

ü ü ü

ü

ü

ü

ü

ü

ü

ü

ü

ü ü ü

10

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�ilesaregivenonpage20inthisAnnualReport.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�inancialyear2018/2019givenonPage17and18of

theAnnualReport.

AttendanceofAuditCommitteeMeetings

Mr.T.K.Bandaranayake


18.05.2018 20.07.2018 03.08.2018 02.11.2018 08.02.2019

ü ü ü ü ü

ü ü ü ü ü

11


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)


TheRemunerationCommitteemetinfollowingoccasionsduringtheyear.

RelatedPartyTransactionsReviewCommittee

Themainobjectiveofthecommitteeistoensureconsistencyofthetransactionswiththecodeofbestpracticesonrelatedparty

transactionsissuedbytheSEC.Followingdirectorsservedasmembersofthecommitteeduringthe�inancialyear.

- Mr.M.A.Bastiansz(ChairmanoftheCommittee)


- Mr.S.N.Samarasinghe

DuringtheFinancialyear2018/2019,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.

ThedirectorsarealsoresponsibletoensurethatreasonablemeasuresaretakentosafeguardtheassetsoftheCompanyatall

times.Inthiscontext,theyhaveestablishedappropriatesystemsofinternalcontrolswithaviewtopreventinganddetectingof

fraudsandotherirregularities.

Mr.M.A.Bastiansz

24.05.2018 10.08.2018 09.11.2018


Mr.S.N.Samarasinghe

Director

AttendanceofRemunerationCommitteeMeetings

09.11.2018 14.02.2019

Mr.M.A.Bastiansz


ü

ü ü ü ü

ü ü ü ü

ü ü ü ü

ü

ü ü

14.02.2019

12


Inpreparingaccounts,thedirectorscontinuetoadoptthegoingconcernbasis.ThedirectorsafterreviewingtheCompany's

budgetandborrowingfacilitiesareoftheviewthattheCompanyhasadequateresourcestocontinueinoperation.

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.Thetableinpage14

containstherequiredaf�irmativestatementinthatregards.

CompanySecretary

TheCompanysecretaryisquali�iedtoactinthisroleaspertheprovisionsoftheCompaniesActNo.07of2007.

InternalandExternalAuditors

TheCompany'sInternalAuditfunctionhasbeenoutsourcedandquarterlyreportsaresubmittedbytheInternalAuditor.The

managementdecidesontheareasthatneedtobeauditedbytheInternalAuditorforagivenquarter.

TheExternalAuditorsareappointedbytheshareholdersattheAnnualGeneralMeetingandareresponsibletogivetheiropinion

ontheFinancialStatementspreparedbytheCompany.

th ndAtthe66 AnnualGeneralMeetingofHarischandraMillsPLCheldon22 September2018,theshareholdersreappointedthe

AuditorsM/s.KPMGandauthorisedthedirectorsto�ixtheirremuneration.Theindependentauditorsconducttheannualaudit

inordertoprovideanexternalandobjectiveassuranceonthewayinwhichtheFinancialStatementshavebeenpreparedand

presented.

TheCompanybelievesthattherealvalueofcorporategovernanceliesnotinblindlysatisfyingacodeofbestpracticeprinciplebut

ratherinactuallysecuringthecon�idenceoftheinvestorsandtherebyachievingalowercostofequitybyconductingitsaffairs

withutmostintegrity&fairnesstoallstakeholders.

13

7.10.1Non-ExecutiveDirectors

Atleastonethirdofthetotalnumberofdirectorsshouldbenon-executivedirectors

Therearethreenonexecutivedirectorsintheboard

Allthreenon-executivedirectorsareindependent.

Pleasereferpage11

Pleasereferpage20

Pleasereferpage16

Pleasereferpage16

Pleasereferpage16&61

Pleasereferpage11

Pleasereferpage11

Pleasereferpage17



NamesofthemembersofAuditCommitteearesetoutinPages17&18

Pleasereferpage16

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)


TheAuditCommittee;•

•

•

•

Shallcompriseofnon-executivedirectorsamajorityofwhomwillbeindependent.

Onenon-executivedirectorshallbeappointedastheChairmanofthecommittee

ChiefExecutiveOf�icerandtheChiefFinancialOf�icershouldattendAuditCommitteeMeetings

TheChairmanoftheAuditCommitteeoronemembershouldbeamemberofaprofessionalaccountingbody

Complied

Complied

Complied

Complied

Complied

Complied

Complied

Submittedtheindependentdeclarationsaccordingly.

Rule Requirement CompanyStatus

Remarks

14

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

15

REMUNERATIONCOMMITTEEREPORT

TheRemunerationCommitteeconsistsoftwononexecutivedirectors,Mr.M.A.Bastiansz(Chairmanofthecommittee)andMr.

S.A.S.Jayasundara.

TheroleoftheRemunerationCommitteeincludesreviewandrecommendstotheboardtotalremunerationforexecutiveandnon

executive directors for the year. The committee evaluates the remuneration by considering the existingmarket rates and

compensationpackagesofferedbyothersimilarcompanies.

Apartfromrecommendingremunerationofexecutivedirectors,thecommitteereviewstheremunerationpolicyoftheCompany.

TheremunerationpolicyoftheCompanytakesintoaccount;marketrates,experienceandskillsoftheemployees,employee

gradeandperformancewhendeterminingtheremunerationpackageofemployees.Thiswillhelpnotonlytoretaintheexisting

staffbutalsotoattracthighcalibreemployees.

Aggregateremunerationpaidtoexecutivedirectorsandnonexecutivedirectorsaredisclosedatpage61.

M.A.BastianszChairman-RemunerationCommitteeJuly19,2019

16

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

TheAuditcommitteemet�ivetimesinthe�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.

17

AUDITCOMMITTEEREPORT(CONTD.)

ExternalAudit

ThecommitteemetwiththeExternalAuditors,MessrsKPMGpriortocommencementoftheannualauditandapprovedtheaudit

planpresentedbythem.Attheconclusionoftheannualaudit,thecommitteemettheauditorstodiscussthe�indingsoftheaudit.

Non-executivedirectorshadseparatemeetingswithauditorstodiscussanysensitiveissuesandensuretheyhadnocauseto

compromiseontheirindependence.Auditors'ManagementLettertogetherwiththeManagement'sresponsetheretoandthe

AuditedFinancialStatementswerereviewedwiththeauditors.TheAuditCommitteehasrecommendedtotheBoardofDirectorsstthat Messrs. KPMG be reappointed as Auditors for the �inancial year ending 31 March 2020 subject to the approval of

shareholdersatthenextAnnualGeneralMeetingatafeetobedeterminedbytheBoard.

T.K.Bandaranayake

Chairman-AuditCommittee

July19,2019

18

RELATEDPARTYTRANSACTIONSREVIEWCOMMITTEEREPORT

TheRelatedPartyTransactionsReviewCommittee("TheCommittee")wasformedon01stJanuary2016intermsoftheCodeof

bestpracticeonRelatedPartytransactions("code")issuedbytheSecurities&ExchangeCommissionofSriLankaandSection9of

theListingRulesoftheColomboStockExchange("ListingRules").TheCommitteecomprisesthreeDirectorsincludingtwoNonstExecutiveDirectors.ThecompositionoftheCommitteeasat31 March2019is;

- MrM.A.Bastiansz(Chairman,NonExecutiveIndependentDirector)

- MrS.A.S.Jayasundara(NonExecutive,IndependentDirector)

- MrS.N.Samarasinghe(ExecutiveDirector)

ObjectiveoftheCommittee

TheobjectiveoftheCommitteeistoensurethattheinterestsofshareholdersasawholearetakenintoaccountbythe

CompanywhenenteringintoRelatedPartyTransactions,incompliancewiththeprovisionsoftheCodeandListingRules.

RoleandResponsibilities

ThemandateoftheCommitteeisderivedfromtheCodeandtheListingRulesandincludesmainlythefollowing:

- DevelopingandmaintainingarelatedpartytransactionspolicyconsistentwiththeprovisionsoftheCodeand

theListingRules.

- ReviewingallproposedRelatedPartyTransactions("RPT")toensurecompliancewiththeprovisionsofthe

CodeandtheListingRules.

- AdvisingtheBoardofDirectorsonmakingimmediatemarketdisclosuresanddisclosuresintheAnnualReport

wherenecessary,inrelationtonon-recurrentandrecurrentrelatedpartytransactions.

- Settingguidelinesforseniormanagementtofollowinsuchcircumstances.

ReportingtotheBoard

TheCommitteeheldmeetingseveryquarterandreviewedallrelatedpartytransactionsoftheCompanyinordertoensurethat

thosetransactionshavetakenplaceinaccordancewiththeguidelinesestablishedbytheCommitteeincompliancewiththeCode

andListingrules.TheCommitteewassatis�iedthatallrelatedpartytransactionswereincompliancewiththeCodeandListing

Rules.TheminutesofthemeetingsaretabledatBoardmeetings.

OnbehalfoftheBoardRelatedPartyTransactionsReviewCommittee.

M.A.Bastiansz

Chairman-RelatedPartyTransactionsReviewCommittee

July19,2019

19

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.


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

20

ANNUALREPORTOFTHEBOARDOFDIRECTORSONTHEAFFAIRSOFTHECOMPANY

ThedirectorsoftheHarischandraMillsPLChavepleasureinpresentingtheirreportandtheauditedFinancialStatementsforthestyearended31 March2019.

PRINCIPALACTIVITIES

TheprincipalactivitiesofHarischandraMillsPLCandtheGrouparemanufacturinganddistributionofFoodProducts,Soapsand

FuelandLubricantswhicharedescribedunderNote1tothe�inancialStatementsonpage37.

GroupFinancialResults; 2018/2019 2017/2018

Rs.000 Rs.000

Pro�itbeforetaxation 247,644 204,478

Taxation (74,848) (81,635)

Aftertaxpro�itattributabletoshareholders 172,796 122,843

Capitalizationofreserves - (95,980)

Othercomprehensiveincome - (4,435)

Unappropriatedpro�itbroughtforwardfrompreviousyear 1,122,009 1,179,714

Pro�itavailableforappropriation 1,294,805 1,202,142

DistributionofPro�it:

Interimdividendpaid 38,392 38,392

Finaldividendpaid 47,991 42,232

Forfeitureofunclaimeddividend - (491)

86,383 80,133

1,208,422 1,122,009

AUDITORS'REPORT

Theauditors'reportonthe�inancialstatementsisgivenonpage28.

ACCOUNTINGPOLICIESstTheGroupandtheCompanypreparedtheirFinancialStatementsforallperiodsuptoandincludingtheyearended31 March

2019,inaccordancewithSriLankaAccountingStandards(SLFRS/LKAS)whichhavemateriallyconvergedwiththeInternational

FinancialReportingStandards(IFRS),allexisting/newSriLankaAccountingStandardswerepre�ixedasSLFRSandLKAS.The

signi�icantAccountingPoliciesadoptedinthepreparationoftheFinancialStatementsoftheGroupandtheCompanyaregivenon

pages37to50ofAnnualReport.

REVIEWOFBUSINESS

TheChairman'sReview,theManagingDirector'sReportandtheCorporateGovernanceReportwhichformanintegralpartofthe

Director'sReportonthestateofaffairsoftheCompany,containadetaileddescriptionoftheoperationsofHarischandraMillsPLCstduringtheyearended31 March2019andcontainafairreviewoftheaffairsofHarischandraMillsPLCandtheGroup.

21

ANNUALREPORTOFTHEBOARDOFDIRECTORSONTHEAFFAIRSOFTHECOMPANY(CONTD.)

DIRECTORS'RESPONSIBILITYFORFINANCIALREPORTING

ThedirectorsareresponsibleforthepreparationoftheFinancialstatementsofHarischandraMillsPLCtore�lectatrueandfair

viewofthestateofitsaffairs.Thedirectorscon�irmedthattheseFinancialStatementshavebeenpreparedinconformitywiththe

requirementsoftheSriLankaAccountingStandards,theCompaniesActNo.7of2007andtheListingRulesoftheColomboStock

Exchange.

Thedirectorsaresatis�iedthatFinancialStatementsgiveatrueandfairviewofthestateofaffairsofHarischandraMillsPLCandsttheGroupasat31 March2019aswellasthepro�itfortheyearthenended.

Thedirectorsconsiderthat,inpreparingtheseFinancialStatements,appropriateaccountingpolicieshavebeenusedwhichare

appliedconsistentlyandthatallapplicableaccountingstandardshavebeenfollowed.TheFinancialStatementsarepreparedona

goingconcernbasis.

CORPORATEGOVERNANCE

DetailreportoncorporategovernancepracticesandprinciplesoftheCompanyaresetoutonpages10to14ofthisreport.The

directorsareresponsibleforthegovernanceofHarischandraMillsPLCincludingtheestablishmentandmaintenanceofthe

systemsofinternal�inancialcontroloftheCompany.

Thedirectorsaresatis�iedthatastrongcontrolenvironmentisestablishedwithinHarischandraMillsPLCandthoseinternal

controlsystemsareoperatingeffectively.

CORPORATESOCIALRESPONSIBILITY

DetailsofsocialworkcarriedoutareincludedintheManagingDirector'sreportsetoutonPage07.

DONATIONS

DonationswereRs.4,646,607/-comparedtoRs.4,748,654/- donatedinthelastyear.Nodonationstopoliticalorganizations

weremadebythegroupduringtheyear.

GROUPTURNOVER

Theturnoverof theCompanyand itssubsidiarytogetherwiththesegmentalperformancearesetoutonthe"Notestothe

FinancialStatements".

FINALDIVIDEND

rdThedirectorspaidaninterimdividendofRs.20/-pershareamountingtoRs.38,392,000/-on23 April2019,andproposea�inal

dividendofRs.30/-pershare,tobepaidoutofthepro�itsofHarischandraMillsPLCanddividendreceivedforthe�inancialyear

ended2018/2019.Inrecommendingthepaymentofthisdividend,thedirectorsunanimouslydeclarethat,intheiropinion,the

Companywill satisfy thesolvency test stipulated insection57of theCompaniesActNo.07of2007 immediatelyafter the

distributionismadeandhaveobtainedacerti�icateofsolvencyfromtheAuditorstothiseffect.HarischandraMillsPLCpaidan

interimdividendofRs.20/=and�inaldividendofRs.25/=pershareforthepreviousyear.

22


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

chargesfortheyearareshowninNote11totheFinancialStatementsonpage55.

STATEDCAPITAL&RESERVES

ThestatedcapitalofHarischandraMillsPLCatthebeginningoftheyearunderreviewwasRs.105,578,000/-,consistingof

1,919,600OrdinaryShares.

st stThe total reserves of the Company as at 31 March 2019 amounted to Rs.1,242,966,929/- (as at 31 March 2018 -stRs.1,076,895,311/-) where as the Group total reserve amounted to Rs.1,250,619,156/- (as at 31 March 2018 -

Rs.1,161,682,212/-)ThecompositionofthereservesisshownintheStatementofChangesinEquityanddetailsofreservesare

setoutinNote19and20totheFinancialStatements.

POSTBALANCESHEETEVENTS

rdInterimdividendofRs.20/-persharewerepaidon23 April2019.

Otherthantheabove,therehavebeennosigni�icanteventssubsequenttothebalancesheetdatethatrequiresadjustmentsor

discloseinthe�inancialstatements.

GOINGCONCERN

Theboardissatis�iedthattheCompanyhasadequateresourcestocontinueitsoperationsintheforeseeablefutureandthe

directorshaveadoptedthegoingconcernbasisinpreparingtheFinancialStatements.

CAPITALCOMMITMENTSANDCONTINGENCIES

stTherewerenosigni�icantcapitalcommitmentsandcontingenciesasat31 March2019.

RELATEDPARTYTRANSACTIONS

ThecompanydidnotcarryoutanyNon-recurrentrelatedpartytransactionsduringtheyearunderreviewandallrecurrent

relatedpartytransactionswerelessthan10%ofthenetrevenue.

23


HUMANRESOURCES

stAsat31 March2019Companyemployed589employeeswhereasitwas580inthelastyearend.Aggregatetotalremunerationin

respectoftheyearwasRs.416.1MncomparedtoRs.378.9Mnforthelastyear.

ISSUESPERTAININGTOEMPLOYEESANDINDUSTRYRELATIONS

Therewerenomaterial issuespertaining toemployeesand industryrelationsduring theyearunderreviewtodiscloseas

requiredunderrule7.6(vii)oftheCSEListingrules.

SHAREHOLDERS'INFORMATION

Distributionoftheissuedsharesamongtheshareholdersandclassi�icationofshareholdersareindicatedinpage71oftheAnnualstReport.Therewere527(2017/18-540)registeredshareholdersasat31 March2019.

DIRECTORATE

ThedirectorsofHarischandraMillsPLCduringtheyearended31.03.2019areasfollows.

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�ilesaresetoutonpage20intheAnnualReport.

MAJORSHAREHOLDERS

stThe20largestshareholdersofHarischandraMillsPLCasat31 March2019aregivenonpage71togetherwithananalysisofthe

shareholdings.AsatthatdateHarischandraMillsPLChad527shareholders.

SUB-COMITTEESOFTHEBOARD

Therearethreepermanentsub-committeesoftheBoardwhichareasfollows:

01. AuditCommittee : Mr.T.K.Bandaranayake(Chairman)


02. RemunerationCommittee : Mr.M.A.Bastiansz(Chairman)


03. RelatedPartyTransactions

ReviewCommittee : Mr.M.A.Bastiansz(Chairman)


Mr.S.N.Samarasinghe

24


(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 26 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

TheaggregateremunerationpaidtoexecutiveandnonexecutivedirectorsinrespectoftheGroupandtheCompanyforthest�inancialyearended31 March2019wererecordedasRs.41,779,072/-(2017/2018Rs.36,365,643/-).

DIRECTORSSHAREHOLDING

st stNameofDirector 31 March2019 01 April2018

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

setoutonpage14inthisannualreport.

25


(CONTD.)

AUDITORS

stTheFinancialStatementsfortheyearended31 March2019havebeenauditedbyM/s.KPMGCharteredAccountants.The

auditorsdonothaveanyrelationshipwithoranyinterestintheCompanyoritssubsidiaryotherthanauditors.

FeestoAuditors

The feesof theAuditorsduring theyearwereRs.1,050,000/-(2017/18-Rs.1,025,000/-) forauditworkandRs.315,000/-

(2017/18-Rs.342,474/-)forauditrelatedservices.

Re-AppointmentofAuditors

TheAuditorshaveindicatedtheirwillingnesstoofferthemselvesforre-appointment.AresolutionappointingM/s.KPMGas

Auditorsandauthorizingthedirectorsto�ixtheirremunerationwillbeproposedattheAnnualGeneralMeeting.

ANNUALGENERALMEETING

TheSixtySeventhAnnualGeneralMeetingoftheCompanywillbeheldattheregisteredof�iceoftheCompany,No.11,

stC.A.HarischandraMawatha,Matara,onthe21 September2019at11.00a.m.TheNoticeoftheSixtySeventhAnnualGeneral

Meetingisonpage04oftheAnnualReport.

ForandonbehalfoftheBoard

HarischandraMillsPLC

S.N.Samarasinghe G.S.V.DeSilva

ManagingDirector Director

CorporateServices(Private)Limited

Secretaries

July19,2019

26

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,shownonpage28to30setsouttheirresponsibilitiesinrelation

totheFinancialStatements

ByorderoftheBoard

CorporateServices(Private)Limited

Secretaries

July19,2019

27

KeyAuditMatters

Keyauditmattersarethosemattersthat,inourprofessionaljudgment,were

ofmostsigni�icanceinourauditofthecompany�inancialstatementsandthe

consolidated�inancialstatementsofthecurrentperiod.Thesematterswere

addressedinthecontextofourauditofthecompany�inancialstatementsand

theconsolidated·�inancialstatementsasawhole,andinformingouropinion

thereon,andwedonotprovideaseparateopiniononthesematters.

RecoverabilityOftradereceivables

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 subsidiaries ("the Group"),

which comprise the statement of �inancial

position as at March 31, 2019, income

s t a temen t , p ro � i t o r l o s s and o the r

comprehensiveincome,statementofchanges

inequityandstatementof cash �lows for the

year then ended, and notes to the �inancial

statements,includingasummaryofsigni�icant

accountingpoliciesassetoutonpages37to68

ofthisAnnualReport.

In our opinion, the accompanying �inancial

statementsoftheCompanyandtheGroupgive

atrueandfairviewofthe�inancialpositionof

the Company and the Group as atMarch 31,

2019,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

ofEthics)andwehaveful�illedourotherethical

responsibilitiesinaccordancewiththeCodeof

Ethics.Webelievethat theauditevidencewe

haveobtainedissuf�icientandappropriateto

provideabasisforouropinion.

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

Principals - S.R.L. Perera FCMA (UK), LLB, A�orney-at-Law, H.S. Goonewardene ACA

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

RefertoNote3.4(accountingpolicy)andNote16totheseFinancialStatements.

TheGrouphasrecognizedatotalimpairmentprovisionforbaddebtorsamountingtoRs.3,186,614/-inthetotaltradereceivablebalanceofRs.349,628,180/-

TheGroup'sprovisionforimpairmentarebasedonthemanagementestimateoftheexpectedcreditlossestobeincurred,whichisestimatedbytakingintoaccounttheagingofoverduebalances,therepaymenthistoryoftheGroup'sindividualCustomers,currentmarketconditionsandcustomerspeci�icconditions,allofwhichinvolvesasigni�icantdegreeofmanagementjudgment.

Weidenti�iedrecoverabilityoftradereceivablesasakeyauditmatterforouraudit,asitrequiresmanagementtoexercisesubjectivejudgmentinmakingassumptionsandestimatesfortheassessmentofimpairmentallowanceontradereceivables.

Ourauditproceduresincluded;

• Testingthedesignandoperatingeffectivenessofthekeycontrolsmanagementhasestablishedinarrivingattheimpairmentprovisionsrequiredtobemadefortradereceivables.

• Evaluatingmethodology,keyassumptionsandkeyinputsusedinthemeasurementofimpairmentprovision.

• Onsamplebasis,assessingtherecoverabilityofthetradereceivablesthroughsubsequentrealizations.

• EvaluatingtheadequacyoftheGroup'sdisclosuresregardingthedegreeofjudgmentandestimationinvolvedinarrivingattheallowancefordoubtfuldebts,andthesensitivityoftheassumptionsandestimates.

RiskDescription Ourresponse

28

CarryingvalueofInventories

OtherInformation

Managementisresponsiblefortheotherinformation.Theotherinformation

comprisestheinformationincludedintheannualreport,butdoesnotinclude

the�inancialstatementsandourauditor'sreportthereon.

Ouropiniononthe�inancialstatementsdoesnotcovertheotherinformation

andwewillnotexpressanyformofassuranceconclusionthereon.

Inconnectionwithourauditofthe�inancialstatements,ourresponsibilityis

toreadtheotherinformationand,indoingso,considerwhethertheother

informationismateriallyinconsistentwiththe�inancialstatementsorour

knowledge obtained in the audit or otherwise appears to be materially

misstated.

If,basedontheworkwehaveperformedweconcludethatthereisamaterial

misstatementofthisotherinformation,wearerequiredtoreportthatfact.

RiskDescription Ourresponse

RefertoNote3.9(accountingpolicy)andNote15totheseFinancialStatements.

TheGrouphasrecognizedatotalimpairmentprovisionofRs.6,887,199/-inrelationtothetotalinventoryvaluedatRs.195,734,694/-asatMarch31,2019.

Assessingcarryingvalueisanareaofsigni�icantjudgment,particularlywithregardstotheestimationofprovisionsforslow-movingandnon-movinginventorytoensurethatinventoryiscarriedatlowerofcostornetrealizablevalue.

Weidenti�iedcarryingvalueofinventoryasakeyauditmatterforouraudit,asitrequiresmanagementtoexercisesubjectivejudgmentinarrivingatprovisionagainstcostinrespectofslowmovingandobsoleteinventoriestoarriveatvaluationbasedonlowerofcostandnetrealisablevalue.

Ourresponsesincluded,

• Testingthedesignandoperatingeffectivenessofthekeycontrolsmanagementhasestablishedoverrecognitionandmeasurementofinventoryandinventoryprovisioning.

• Evaluatingthenetrealizablevalueusedforprovisioncomputationfortheselectedsamplecoveringalltheinventorycategories.

• Evaluatingtheappropriatenessoftheassumptionsusedbasedonourknowledgeandinformationoftheclientandtheindustry.

• Assessingtheadequacyofinventoryprovisionsheldforslow-movingandobsoleteinventorybyre-calculatingitemsincludedwithintheprovisiontoensuretheaccuracyofprovision.

• AssessingwhethertheGrouppolicieshadbeenconsistentlyappliedandtheadequacyoftheGroup'sdisclosuresinrespectofinventoryprovisioning.

Wehavenothingtoreportinthisregard.

Responsibilities ofManagement and Those

Chargedwith Governance for the Financial

Statements

Managementisresponsibleforthepreparation

of�inancialstatementsthatgiveatrueandfair

view in accordancewith Sri LankaAccounting

Standards, and for such internal control as

managementdeterminesisnecessarytoenable

thepreparationof�inancialstatementsthatare

freefrommaterialmisstatement,whetherdueto

fraudorerror.

In preparing the � inancial statements ,

management is responsible for assessing the

Group'sability tocontinueasagoingconcern,

disclosing, as applicable, matters related to

goingconcernandusingthegoingconcernbasis

ofaccountingunlessmanagementeitherintends

toliquidatetheGrouportoceaseoperations,or

hasnorealisticalternativebuttodoso.

Thosechargedwithgovernanceareresponsible

for overseeing the Company's and Group's

�inancialreportingprocess.

Auditor's Responsibilities for the Audit of

theFinancialStatements

Our objectives are to obtain reasonable

assurance about whether the � inancial

statements as a whole are free from material

misstatement,whetherduetofraudorerror,and

to issue an auditor's report that includes our

opinion.Reasonableassuranceisahighlevelof

assurance,but isnotaguaranteethatanaudit

conducted in accordance with SLAuSs will

alwaysdetectamaterialmisstatementwhenit

exists. Misstatements can arise from fraud or

errorandareconsideredmaterialif,individually

or in the aggregate, they could reasonably be

expectedtoin�luencetheeconomicdecisionsof

users taken on the basis of these �inancial

statements.

AspartofanauditinaccordancewithSLAuSs,we

exercise professional judgment and maintain

professional skepticism throughout the audit.

Wealso:

29

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,basedonthe

auditevidenceobtained,whetheramaterialuncertainty

exists related to events or conditions that may cast

signi�icantdoubton theGroup'sability to continueasa

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

�inancial information of the entities or business

activitieswithintheGrouptoexpressanopiniononthe

consolidated�inancialstatements.Weareresponsiblefor

thedirection,supervisionandperfonnanceof thegroup

audit.Weremainsolelyresponsibleforourauditopinion.

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

3272.

CHARTEREDACCOUNTANTS

Colombo,SriLanka

July19,2019

30

INCOMESTATEMENT

GROUP COMPANY

FORTHEYEARENDED31MARCH, 2019 2018 2019 2018

Note Rs. Rs. Rs. Rs.

(Restated) (Restated)

Revenue 4 3,626,418,360 3,131,674,621 3,626,418,360 3,131,674,621

Costofsales (2,926,008,650) (2,500,247,980) (2,926,008,645) (2,500,247,980)

Grosspro�it 700,409,710 631,426,641 700,409,715 631,426,641

Otherincome 5 35,756,807 20,710,222 101,976,334 90,009,727

Distributionexpenses (244,763,588) (216,923,120) (244,763,588) (216,923,120)

Administrativeexpenses (271,924,151) (246,008,619) (271,522,157) (245,702,181)

Operatingpro�it 6 219,478,778 189,205,124 286,100,304 258,811,067

Net�inanceincome 7 28,165,362 15,272,893 23,668,136 1,365,012

Pro�itbeforetax 247,644,140 204,478,017 309,768,440 260,176,079

Incometaxexpense 8 (74,847,887) (81,634,911) (59,838,063) (70,126,562)

Pro�itfortheyear 172,796,253 122,843,106 249,930,377 190,049,517

Pro�itattributabletoequityholders 172,796,253 122,843,106 249,930,377 190,049,517

-oftheCompany


Earningspershare 9 90.02 63.99 130.19 99.00

Figuresinbracketindicatedeductions.

Thenotestothe�inancialstatementsfrompage37to68formanintegralpartoftheseconsolidated�inancialstatements.

31

STATEMENTOFPROFITORLOSSANDOTHERCOMPREHENSIVEINCOME

GROUP COMPANY





OthercomprehensiveIncome

Itemsthatareormaybereclassi�ied

subsequentlytopro�itorloss

Netchangeinfairvalueofavailableforsale

Financialassets - 276,159 - 276,159

OthercomprehensiveIncome

Itemsthatwillnotbereclassi�ied

subsequentlytopro�itorloss

Re-measurementof

de�inedbene�itobligation 22.1 3,504,501 (6,159,640) 3,504,501 (6,159,640)

Relatedtax 8.2 (981,260) 1,724,699 (981,260) 1,724,699

Totalothercomprehensive

incomenetoftax 2,523,241 (4,158,782) 2,523,241 (4,158,782)

Totalcomprehensiveincomeattributable

toownersoftheCompany 175,319,494 118,684,324 252,453,618 185,890,735



32

STATEMENTOFFINANCIALPOSITION

GROUP COMPANYASAT31MARCH, 2019 2018 2019 2018 Note Rs. Rs. Rs. Rs.AssetsNon-currentassetsProperty,plantandequipment 11 810,219,979 787,305,302 810,219,979 787,305,302Intangibleassets 12 1,532,058 2,262,277 1,532,058 2,262,277Investmentinsubsidiary 13 - - 70 70Availableforsaleinvestment 14 - 39,876,300 - 39,876,300Totalnon-currentassets 811,752,037 829,443,879 811,752,107 829,443,949

CurrentassetsInventories 15 188,847,495 190,453,727 188,847,495 190,453,727Tradeandotherreceivables 16 418,463,281 423,157,504 418,463,281 423,157,504Investmentinunittrusts 14 5,379,000 - 5,379,000 -Cashandcashequivalents 17 301,272,343 255,516,549 295,985,158 255,340,499Totalcurrentassets 913,962,119 869,127,780 908,674,934 868,951,730Totalassets 1,725,714,156 1,698,571,659 1,720,427,041 1,698,395,679

EquityStatedcapital 18 105,578,000 105,578,000 105,578,000 105,578,000Othercapitalreserves 19 7,010,944 7,010,944 11,014 11,014Availableforsalereserve - 19,820,705 - 19,820,705Generalreserve 20 12,841,000 12,841,000 12,841,000 12,841,000Retainedearnings 1,230,767,212 1,122,009,563 1,230,114,915 1,044,222,592TotalequityattributabletoownersoftheCompany 1,356,197,156 1,267,260,212 1,348,544,929 1,182,473,311

LiabilitiesNon-currentliabilitiesDeferredtaxliabilities 21 41,250,533 50,403,473 41,250,533 50,403,473Employeebene�itobligation 22 95,384,457 87,999,722 95,384,457 87,999,722Relatedpartypayables 24 - - 4,257,289Totalnon-currentliabilities 136,634,990 138,403,195 136,634,990 142,660,484

CurrentliabilitiesTradeandotherpayables 23 190,806,556 239,131,771 190,588,247 238,959,075Relatedpartypayables 24 - - - 77,000,000Currenttaxliabilities 25 13,542,676 25,120,288 16,126,097 28,646,616Bankoverdraft 17 28,532,778 28,656,193 28,532,778 28,656,193Totalcurrentliabilities 232,882,010 292,908,252 235,247,122 373,261,884Totalliabilities 369,517,000 431,311,447 371,882,112 515,922,368Totalequityandliabilities 1,725,714,156 1,698,571,659 1,720,427,041 1,698,395,679


Icertifythatthese�inancialstatementscomplywiththerequirementsofCompaniesAct.No.07of2007.

C.T.GajanayakeChiefFinancialOf�icer

TheBoardofDirectorsisresponsibleforthepreparationandpresentationoftheseconsolidated�inancialstatements.Approved&SignedonbehalfoftheBoard.

S.N.Samarasinghe G.S.V.DeSilvaManagingDirector DirectorJuly19,2019

33

STATEMENTOFCHANGESINEQUITY

GROUP

StatedAvailablefo

rsale/

OtherCapital

General

Retained

Total

Capital

FVOCIR

eserve

Reserve

Reserve

Earn

ings

Equity

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Balanceasat0

1April2

017

9,598,000

19,544,546

7,010,944

12,841,000

1,179,713,9481,228,708,438

Totalcomprehensivein

come

Pro�itfortheyear

--

--

122,843,106

122,843,106

Cap

italizationofreserves

95,980,000

(95,980,000)

Otherco

mprehensivein

come

Re-measuremen

tofde�ined

ben

e�itsobligation

--

--

(6,159,640)

(6,159,640)

Related

taxes

--

--

1,724,699

1,724,699

Netchan

geinfairvalueofavailab

leforsale�inan

cialassets

-276,159

-

276,159

Totalo

therco

mprehensivein

comefo

rtheyear

276,159

--

(4,434,941)

(4,158,782)


comefo

rtheyear

95,980,000

276,159

--

22,428,165

118,684,324

Transactionswithownersofthecompany,reco

gnizeddirectlyin

equity

Interimdividen

d

--

--

(38,392,000)

(38,392,000)

Finaldividen

d

--

--

(42,231,750)

(42,231,750)

Forfeitureofunclaimed

dividen

d-Note(a)

491,200

491,200

Totaltransactionswithownersofthecompany

--

--

(80,132,550)

(80,132,550)

Balanceasat3

1March2018

105,578,000

19,820,705

7,010,944

12,841,0001,122,009,5631,267,260,212

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(Note3.23)

-(19,820,705)

--

19,820,705

-Adjusted

Balan

ceasat0

1April2018

105,578,000

-7,010,944

12,841,000

1,141,830,2681,267,260,212


come

Pro�itfortheyear

--

--

172,796,253

172,796,253

Otherco

mprehensivein

come

Re-measuremen

tofde�ined

ben

e�itsobligation

--

--

3,504,501

3,504,501

Related

taxes

--

--

(981,260)

(981,260)

Totalo

therco

mprehensivein

comefo

rtheyear

-

--

2,523,241

2,523,241


comefo

rtheyear

--

--

175,319,494

175,319,494


gnizeddirectlyin

equity

Interimdividen

d

--

--

(38,392,000)

(38,392,000)

Finaldividen

d

--

--

(47,990,550)

(47,990,550)


--

--

(86,382,550)

(86,382,550)

Balanceasat3

1March2019

105,578,000

-7,010,944

12,841,0001,230,767,2121,356,197,156

Note(a)-T

heGrouppolicyistoforfeitthedividen

dswhichareoutstandingformoreth

ansixyearsinwhichth

edividen

dshavebeeninitiallydeclared.

Figureinbracketindicateded

uctions.

Thenotestoth

e�inan

cialstatemen

tsfrompage37to68form

anintegralparto

ftheseconsolidated

�inan

cialstatemen

ts.

.

34

STATEMENTOFCHANGESINEQUITY(CONTD.)

COMPANY

StatedAvailablefo

rsale/

OtherCapital

General

Retained

Total

Capital

FVOCIR

eserve

Reserve

Reserve

Earn

ings

Equity

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Balanceasat0

1April2

017

9,598,000

19,544,546

11,014

12,841,000

1,034,720,0161,076,714,576


come

Pro�itfortheyear

--

--

190,049,517

190,049,517

Cap

italizationofreserves

95,980,000

--

-(95,980,000)

Otherco

mprehensivein

come

Re-measuremen

tofde�ined

ben

e�itsobligation

--

--

(6,159,640)

(6,159,640)

Related

taxes

--

--

1,724,699

1,724,699

Netchan

geinfairvalueofavailab

leforsale�inan

cialassets

-276,159

--

276,159

Totalo

therco

mprehensivein

comefo

rtheyear

-276,159

--

(4,434,941)

(4,158,782)


comefo

rtheyear

95,980,000

276,159

--

89,634,576

185,890,735


gnizeddirectlyin

equity

Interimdividen

d

--

--

(38,392,000)

(38,392,000)

Finaldividen

d

--

--

(42,231,200)

(42,231,200)

Forfeitureofunclaimed

dividen

d-Note(a)

491,200

491,200


--

--

(80,132,000)

(80,132,000)

Balanceasat3

1March2018

105,578,000

19,820,705

11,014

12,841,0001,044,222,5921,182,473,311

Balanceasat0

1April2

018

105,578,000

19,820,705

11,014

12,841,000

1,044,222,5921,182,473,311

Impacto

fadoptingSL

FRS09on1April2018(Note3.23)

-(19,820,705)

--

19,820,705

-Adjusted

Balan

ceasat01April2018

105,578,000

-11,014

12,841,000

1,064,043,2971,182,473,311


come

Pro�itfortheyear

--

--

249,930,377

249,930,377

Otherco

mprehensivein

come

re-m

easuremen

tofde�ined

ben

e�itsobligation

--

--

3,504,501

3,504,501

Related

taxes

--

--

(981,260)

(981,260)

Totalo

therco

mprehensivein

comefo

rtheyear

--

--

2,523,241

2,523,241


comefo

rtheyear

--

--

252,453,618

252,453,618


gnizeddirectlyin

equity

Interimdividen

d

--

--

(38,392,000)

(38,392,000)

Finaldividen

d

--

--

(47,990,000)

(47,990,000)


--

--

(86,382,000)

(86,382,000)

Balanceasat3

1March2019

105,578,000

-11,014

12,841,0001,230,114,9151,348,544,929

Figureinbracketindicateded

uctions.

Thenotestoth

e�inan

cialstatemen

tsfrompage37to68form

anintegralparto

ftheseconsolidated

�inan

cialstatemen

ts.

.

35

STATEMENTOFCASHFLOWS

GROUP COMPANY



Cash�lowsfromoperatingactivities

Pro�itbeforetax 247,644,140 204,478,017 309,768,440 260,176,079

Adjustmentfor

Provisionforemployeebene�it 22 16,897,069 15,143,111 16,897,069 15,143,111

Depreciation/amortization 11&12 88,989,773 83,417,905 88,989,773 83,417,905

Interestexpenses 7 2,736,889 6,593,547 7,234,115 20,501,428

Provisionofslowmovinginventories 15 4,250,058 - 4,250,058 -

Changeinfairvalueofunittruts 5 (346,500) - (346,500) -

Lossondisposalofunittrusts 5 3,175,751 - 3,175,751 -

Pro�itondisposalofproperty,plant&equipment 5 (23,626,059) (4,911,442) (23,626,059) (4,911,442)

Dividendincome 5 - (985,256) (66,219,527) (70,284,761)

Interestincome 7 (26,346,983) (20,299,119) (26,346,983) (20,299,119)

Operatingpro�itbeforeworkingcapitalchanges 313,374,138 283,436,763 313,776,137 283,743,203

Changeininventories (2,643,826) (35,800,247) (2,643,826) (35,800,247)

Changeintradeandotherreceivables 10,852,246 (57,525,001) 10,852,246 (57,525,001)

Changeinrelatedpartypayables - - (15,037,761) (85,060,185)

Changeintradeandotherpayables (48,325,218) 84,314,913 (48,370,831) 84,281,442

Cashgeneratedfromoperations 273,257,340 274,426,425 258,575,965 189,639,212

Gratuitypaid 22 (6,007,833) (3,489,905) (6,007,833) (3,489,905)

Interestpaid (2,736,889) (6,593,547) (7,234,115) (6,579,501)

Incometaxpaid 25 (96,559,683) (40,046,693) (82,492,767) (23,889,689)

Netcash�lowsgeneratedfromoperatingactivities 167,952,935 224,296,280 162,841,250 155,680,117

Cash�lowsfrominvestingactivities

Interestreceived 20,188,960 15,018,650 20,188,960 15,018,650

Dividendreceived - 985,256 - 70,284,761

Proceedsfromdisposalofavailableforsaleinvestment 31,668,049 31,668,049

Proceedsfromdisposalofproperty,

plantandequipment 23,731,839 5,867,807 23,731,839 5,867,807

Acquisitionofproperty,plantandequipment 11 (111,280,024) (95,658,439) (111,280,024) (95,658,439)

Investmentinunits - (535,256) - (535,256)

Cash�lowsfrom/(usedin)investingactivities (35,691,176) (74,321,982) (35,691,176) (5,022,477)

Cash�lowsfrom�inancingactivities

Dividendspaid (86,382,550) (80,132,550) (86,382,000) (80,132,000)

Cash�lowsusedin�inancingactivities (86,382,550) (80,132,550) (86,382,000) (80,132,000)

Netchangeincashandcashequivalents 45,879,209 69,841,748 40,768,074 70,525,640

Cashandcashequivalentsatthebeginning 226,860,356 157,018,608 226,684,306 156,158,666

Cashandcashequivalentsattheend 17 272,739,565 226,860,356 267,452,380 226,684,306



36

1.ReportingEntity

1.1DomicileandLegalForm

HarischandraMillsPLC(“theCompany”)isapubliclimited

liability company incorporated anddomiciled in Sri Lankathsince09 January1953.

Theregisteredof�iceandtheprincipalplaceofbusinessofthe

CompanyaresituatedatNo.11,C.A.HarischandraMawatha,

Matara.

TheConsolidatedFinancialStatementsoftheGroupforthestyearended31 March2019comprisetheCompanyandits

subsidiary (together referred to as the “Group” and

individuallyas“Groupentities”).

1.2Subsidiaries

The Company has a fully owned subsidiary, HarischandrardMills (Distributors) Limited which is incorporated on 03

February1993.

FinancialstatementsoftheCompanyandthesubsidiaryare

prepared for a common �inancial year, which ends on 31

March.

1.3PrincipalActivitiesandNatureofOperations

Theprincipal activities of theCompany aremanufacturing

and distributing food, soap items and sales of fuel and

lubricants.

Intheyear2014directorsoftheCompanydecidedtotransfer

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

ThenumbersofemployeesoftheGroupandCompanyasatst31 March2019areasfollows:

Group 589(2018-580)

Company 589(2018-580)

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 2019were authorized for issue in accordancewith

resolutionoftheBoardofDirectorson19July2019.

2.BasisofPreparation

2.1StatementofCompliance

The consolidated �inancial statements of the Group and

Company which comprise of the Statement of Financial

Position,incomestatementStatementOtherComprehensive

income, Statement of Changes in Equity and Statement of

CashFlowshavebeenpreparedinaccordancewithSriLanka

Accounting Standards (hereinafter referred to as SLFRS /

LKASs)asissuedbytheInstituteofCharteredAccountantsof

SriLanka, and in compliancewith the requirementsof the

Company'sActNo.07of2007.

2.2BasisofMeasurement

TheConsolidatedFinancialStatementshavebeenprepared

on the historical cost basis except for the following items,

whicharemeasuredonalternativebasisoneachreporting

date.

· De�inedBene�itObligationsareactuariallyvaluedand

recognizedatthepresentvalue.

· FinancialAssetsclassi�iedasAvailableforSale/FVOCI

aremeasuredatfairvalue.

Noadjustmentshavebeenmadeforin�lationaryfactorsinthe

�inancialStatements.

2.3FunctionalandPresentationCurrency

The consolidated �inancial statements are presented in Sri

Lankan Rupees, which is the Company's functional and

presentation currencyof allGroupentities. Therewasno

changeintheGroup'spresentationandfunctionalcurrency

during the year under review. All �inancial information

presented in Sri Lankan Rupees has been rounded to the

nearestthousands,unlessstatedotherwise.

37

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

measuringfairvalueisincludedinnote34.2.

2.6MaterialityandAggregation

Eachmaterialclassofsimilaritemsispresentedseparately.

Items of dissimilar nature or function are presented

separatelyunlesstheyareimmaterial.

2.7GoingConcern

TheDirectorshavemadeanassessmentoftheGroup'sability

tocontinueasagoingconcernintheforeseeablefuture,and

theydonotintendeithertoliquidateorceasetrading.

2.8ComparativeInformation

Thecomparativeinformationhasbeenreclassi�ied/restated

where necessary to conform to the current year's

classi�icationinordertoprovideabetterpresentation.

3.SummarySigni�icantAccountingPolices

ThecompanyhasappliedSLFRS15andSLFRS9from01April

2018. Based on the assessment carried out by the

Managementthereisnosigni�icantimpactduetoadoptionof

theSLFRS15andSLFRS9.

Accordingly,theaccountingpoliciessetoutthebelowhave

beenappliedconsistently toallperiodspresented in these

�inancialstatements.

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

Note3.10-Provisions

Note3.12-EmployeeBene�its

Note3.14-CapitalCommitmentsandContingencies

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

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.

NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)

38

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

unrealized pro�its are eliminated in full in the Financial

Statements. Unrealized losses resulting from intra-group

transactions are eliminated unless the cost cannot be

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.

3.3FinancialInstruments

(i)RecognitionandMeasurement

A �inancial instrument is any contract that gives rise to a

�inancialassetofoneentityand�inancialliabilityorequity

instrumentofanotherentity.

Receivablesanddebtsecuritiesissuedareinitiallyrecognized

when they are originated. All other �inancial assets and

liabilities are initially recognized when the Company

becomes a party to the contractual provisions of the

instrument.

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

aredirectly attributable to its acquisitionor issue.A trade


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

theconsolidated�inancialstatementsfromthedateonwhich

controlcommencesuntilthedateonwhichcontrolceases.

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

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 intheGroup's interest inaSubsidiarythatdonot

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.

39

All �inancialassetsnotclassi�iedasmeasuredatamortised

costorFVOCIasdescribedabovearemeasuredatFVTPL.This

includesallderivative�inancialassets.Oninitialrecognition,

theCompanymayirrevocablydesignatea�inancialassetthat

otherwise meets the requirements to be measured at

amortisedcostoratFVOCIasatFVTPLifdoingsoeliminates

orsigni�icantlyreducesanaccountingmismatchthatwould

otherwisearise.

TheCompanyhasclassi�iedits investmentsinunittrustas

FVTPL.

a)Financialassets-Businessmodelassessment

TheCompanymakesanassessmentof theobjectiveof 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

reportedtotheCompany'smanagement;

- therisksthataffecttheperformanceofthebusinessmodel

(andthe�inancialassetsheldwithinthatbusinessmodel)

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

forthispurpose,consistentwiththeCompany'scontinuing

recognitionoftheassets.

Financialassetsthatareheldfortradingoraremanagedand

whose performance is evaluated on a fair value basis are

measuredatFVTPL.


receivable without a signi�icant �inancing component is

initiallymeasuredatthetransactionvalue.

FinancialAssets-PolicyApplicablefrom1April2018

(ii) Classi�ication and subsequent measurement of

�inancialassetsoninitialrecognition

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

recognitionunlesstheCompanychangesitsbusinessmodel

for managing �inancial assets, in which case all affected

�inancial assets are reclassi�iedon the �irstdayof the �irst

reportingperiodfollowingthechangeinthebusinessmodel.

A�inancialassetismeasuredatamortisedcostifitmeetsboth

ofthefollowingconditionsandisnotdesignatedasatFVTPL:

- itisheldwithinabusinessmodelwhoseobjectiveistohold

assetstocollectcontractualcash�lows;and

- itscontractualtermsgiveriseonspeci�ieddatestocash

�lowsthataresolelypaymentsofprincipalandintereston

theprincipalamountoutstanding.

Financialassetsarenotreclassi�iedsubsequenttotheirinitial

recognitionunlesstheCompanychangesitsbusinessmodel

for managing �inancial assets, in which case all affected

�inancial assets are reclassi�iedon the �irstdayof the �irst

reportingperiodfollowingthechangeinthebusinessmodel.

Company's' �inancial assets classi�ied and measured at

amortizedcostare limitedtorelatedpartyreceivablesand

cash&cashequivalents.

AdebtinvestmentismeasuredatFVOCIifitmeetsbothofthe

followingconditionsandisnotdesignatedasatFVTPL:

- it is heldwithin a businessmodelwhose objective is

achievedbybothcollectingcontractualcash�lowsand

selling�inancialassets;and

- itscontractualtermsgiveriseonspeci�ieddatestocash

�lowsthataresolelypaymentsofprincipalandinterest

ontheprincipalamountoutstanding.

Oninitialrecognitionofanequityinvestmentthatisnotheld

for trading, theCompanymay elect to present subsequent

changesintheinvestment'sfairvalueinOCI.Thiselectionis

madeonaninvestment-by-investmentbasis.

40

PolicyApplicablebefore1April2018

TheGroupclassi�iesnon-derivative�inancialassetsintothe

following categories: �inancial assets at fair value through

pro�it or loss, held-to-maturity �inancial assets, loans and

receivablesandavailable-for-sale�inancialassets.

TheGroupclassi�iesnon-derivative �inancial liabilities into

the following categories: �inancial liabilities at fair value

throughpro�itorlossandother�inancialliabilities.

(i) Non-derivative�inancialassets-Measurement

Group'snonderivative�inancialsassetscompriseofloansand

receivables,andavailable-for-sale �inancialassetsasat the

reportingdate.Theirsubsequentmeasurementisasfollows.

Loansandreceivables

Loans and receivables are �inancial assets with �ixed or

determinable payments that are not quoted in an active

market.Suchassetsarerecognizedinitiallyatfairvalueplus

any directly attributable transaction costs. Subsequent to

initial recognition, loans and receivables are measured at

amortizedcostusingtheeffectiveinterestmethod,lessany

impairmentlosses.

Loansandreceivablescompriseofcashandcashequivalents,

tradereceivablesandotherreceivables.

(ii) Non-derivative�inancialliabilities-Measurement

The Company and the Group classi�ies non-derivative

�inancialliabilitiesintotheother�inancialliabilitiescategory.

Such�inancialliabilitiesarerecognizedinitiallyatfairvalue

lessanydirectlyattributabletransactioncosts.Subsequentto

initialrecognition,these�inancialliabilitiesaremeasuredat

amortizedcostusingtheeffectiveinterestmethod.

Other�inancialliabilitiescomprisetradeandotherpayables,

amountsduetorelatedpartiesandbankoverdrafts.

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


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,theCompanyconsiders

the contractual terms of the instrument. This includes

assessingwhetherthe�inancialassetcontainsacontractual

termthatcouldchangethetimingoramountofcontractual

cash �lows such that it would not meet this condition. In

makingthisassessment,theCompanyconsiders:

- contingenteventsthatwouldchangetheamountortiming

ofcash�lows

- terms that may adjust the contractual coupon rate,

includingvariable-ratefeatures

- termsthat limittheCompany'sclaimtocash�lowsfrom

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

prepaymentfeatureisinsigni�icantatinitialrecognition.

(iii) Financial assets - Subsequent measurement and

gainsandlosses

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.

41

Whendeterminingwhetherthecreditriskofa�inancialasset

hasincreasedsigni�icantlysinceinitialrecognitionandwhen

estimating ECLs, the Company considers reasonable and

supportable information that is relevant and available

withoutunduecostoreffort.Thisincludesbothquantitative

and qualitative information and analysis, based on the

company's historical experience and informed credit

assessmentandincludingforward-lookinginformation.

The Company considers a �inancial asset to be in default

when:

- theborrowerisunlikelytopayitscreditobligationstothe

Company in full, without recourse by the Company to

actionssuchasrealisingsecurity(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 Company is

exposedtocreditrisk.

MeasurementofECL

ECL are a probability-weighted estimate of credit losses.

Credit lossesaremeasuredas thepresentvalueofallcash

shortfalls(i.ethedifferencebetweenthecash�lowsduetothe

entityinaccordancewiththecontractandthecash�lowsthat

theCompanyexpectstoreceive).ECLsarediscountedatthe

effectiveinterestrateofthe�inancialasset.

Credit-impaired�inancialassets

At each reporting date, the Company assesses whether

�inancial assets carried at amortised cost and equity

investmentsatFVOCIarecredit-impaired.A�inancialassetis

'credit-impaired' when one or more events that have a

detrimentalimpactontheestimatedfuturecash�lowsofthe

�inancialassethaveoccurred.

Evidencethata�inancialassetiscredit-impairedincludesthe

followingobservabledata:

- signi�icant�inancialdif�icultyoftheborrowerorissuer;

- abreachofcontractsuchasadefaultinpayments

- therestructuringofaloanoradvancebytheCompanyon

termsthattheCompanywouldnotconsiderotherwise;


loss.Other�inancialliabilitiesaresubsequentlymeasuredat

amortizedcostusingtheeffectiveinterestmethod.Interest

expenseandforeignexchangegainsandlossesarerecognised

inpro�itor loss.Anygainor lossonde-recognition is also

recognisedinpro�itorloss.

De-recognition

The Company derecognises a �inancial asset when the

contractualrightstothecash�lowsfromthe�inancialasset

expire,orittransferstherightstoreceivethecontractualcash

�lowsinatransactioninwhichsubstantiallyalloftherisks

and rewards of ownership of the �inancial asset are

transferredor inwhich theCompanyneither transfersnor

retainssubstantiallyalloftherisksandrewardsofownership

anditdoesnotretaincontroloverthetransferredasset.Any

interestinsuchderecognized�inancialassetsthatiscreated

orretainedbytheCompanyisrecognizedasaseparateasset

orliability.

The Company derecognises a �inancial liability when its

contractualobligationsaredischargedorcancelled,orexpire.

TheCompanyalsoderecognisesa�inancialliabilitywhenits

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,andonlywhen, theCompanycurrentlyhasa legally

enforceablerighttosetofftheamountsanditintendseither

tosettlethemonanetbasisortorealizetheassetandsettle

theliabilitysimultaneously.

3.4Impairment

3.4.1PolicyApplicablefrom1stApril2018

(a)FinancialAssets

ThecompanyrecogniseslossallowancesforECLson�inancial

assetsmeasuredatamortisedcost.TheCompanymeasures

lossallowancesatanamountequal to lifetimeECLs,other

debtsecuritiesandbankbalances.Lossallowancesfortrade

receivableisalwaysmeasuredatanamountequaltolifetime

ECLs.

42

- observable data indicating that there is ameasurable

decrease in the expected cash �lows from a group of

�inancialassets.

Financialassetsmeasuredatamortizedcost

The Company considers evidence of impairment for these

assetsatbothan individualassetandacollective level.All

individually signi�icant assets are individually assessed for

impairment. Those found not to be impaired are then

collectively assessed for any impairment that has been

incurredbutnotyet individually identi�ied.Assets thatare

not individually signi�icant are collectively assessed for

impairment.Collectiveassessmentiscarriedoutbygrouping

togetherassetswithsimilarriskcharacteristics.

In assessing collective impairment, the Company uses

historical information on the timing of recoveries and the

amountoflossincurred,andmakesanadjustmentifcurrent

economicandcreditconditionsaresuchthattheactuallosses

arelikelytobegreaterorlesserthansuggestedbyhistorical

trends.

Animpairmentlossiscalculatedasthedifferencebetweenan

asset's carrying amount and the present value of the

estimatedfuturecash�lowsdiscountedattheasset'soriginal

effectiveinterestrate.Lossesarerecognizedinpro�itorloss

and re�lected in an allowance account. When the Group

considersthattherearenorealisticprospectsofrecoveryof

theasset,therelevantamountsarewrittenoff.Iftheamount

ofimpairmentlosssubsequentlydecreasesandthedecrease

can be related objectively to an event occurring after the

impairmentwasrecognized,thenthepreviouslyrecognized

impairmentlossisreversedthroughpro�itorloss.

The Company and the Group considers evidence of

impairmentfor�inancialassetsmeasuredatamortizedcost

(loansandreceivables)atspeci�icassetlevel.

ii) Non-�inancialassets

ThecarryingamountoftheGroup'snon-�inancialassetsother

thaninventoriesanddeferredtaxassetsarereviewedateach

reportingdatetodeterminewhetherthereisanyindicationof

impairment. If any such indication exists, or when annual

impairmenttestingforanassetisrequired,thentheasset's

recoverableamountisestimated.Goodwillistestedannually

forimpairment.

Forimpairmenttesting,assetsaregroupedtogetherintothe

smallest group of assets that generates cash in�lows from

continuing use that are largely independent of the cash

in�lows of other assets or CGUs. . An impairment loss is


- itisprobablethattheborrowerwillenterbankruptcyor

other�inancialreorganisation;or

- the disappearance of an active market for a security

becauseof�inancialdif�iculties.

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

when the Company has no reasonable expectations of

recoveringa�inancialassetinitsentiretyoraportionthereof.

Forindividualcustomers,theCompanyhasapolicyofwriting

offthegrosscarryingamountbasedonhistoricalexperience

ofrecoveriesofsimilarassets.Forcorporatecustomers,the

Companyindividuallymakesanassessmentwithrespectto

thetimingandamountofwrite-offbasedonwhetherthereis

areasonableexpectationofrecovery.TheCompanyexpects

nosigni�icantrecoveryfromtheamountwrittenoff.However,

�inancialassetsthatarewrittenoffcouldstillbesubjectto

enforcementactivitiesinordertocomplywiththeCompany's

procedurestorecoveryofamountsdue.

Impairment-Policyapplicablebefore1April2018

i) Non-derivative�inancialassets

A�inancialassetnotclassi�iedasatfairvaluethroughpro�itor

loss,includinganinterestinanequity-accountedinvestee,is

assessedateachreportingdatetodeterminewhetherthereis

objective evidence that it is impaired. A �inancial asset is

impaired if there is objective evidence of impairment as a

resultofoneormoreevents thatoccurredafter the initial

recognitionoftheasset,andthatlossevent(s)hadanimpact

ontheestimatedfuturecash�lowsofthatassetthatcanbe

estimatedreliably.

Objective evidence that �inancial assets are impaired

includes:

- defaultordelinquencybyadebtor;

- restructuringofanamountduetotheCompanyandthe

GroupontermsthattheCompanyandtheGroupwould

notconsiderotherwise;

- indicationsthatadebtororissuerwillenterbankruptcy;

- adversechangesinthepaymentstatusofborrowersor

issuers;

- the disappearance of an active market for a security

becauseof�inancialdif�iculties;

43

CategoryofAsset UsefulEconomiclifetime(Years)

Buildings

PlantandMachinery

Of�ice,factory&LaboratoryEquipment

FurnitureandFittings

MotorVehicles

50

13.33

10

20

4

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;

Depreciationofanassetbeginswhenitisavailableforuseor,

inrespectofself-constructedassets,fromthedatethatthe

assetiscompletedandreadyforuse.

Depreciationofanassetceasesattheearlierofthedatethat

theasset isclassi�iedasheldforsaleandthedatethat the

assetisderecognized.

Depreciationmethods, useful lives and residual values are

reviewedateachreportingdateandadjustedifappropriate.


recognized if the carrying amount of an asset or cash

generating unit (CGU) exceeds its recoverable amount.

Goodwillarisingfromabusinesscombinationisallocatedto

CGUsorgroupsofCGUsthatareexpectedtobene�itfromthe

synergiesofthecombination.

TherecoverableamountofanassetorCGUisthegreaterofits

valueinuseanditsfairvaluelesscoststosell.Inassessing

valueinuse,theestimatedfuturecash�lowsarediscountedto

theirpresentvalueusingapre-taxdiscountratethatre�lects

currentmarketassessmentsofthetimevalueofmoneyand

therisksspeci�ictotheassetorCGU.

Animpairmentlossisrecognizedifthecarryingamountofan

assetorCGUexceedsitsestimatedrecoverableamount.

Impairment losses are recognized in Pro�it or Loss.

Impairment losses recognized in respect of CGUs are

allocated�irsttoreducethecarryingamountofanygoodwill

allocatedtotheCGU(groupofCGUs),andthentoreducethe

carryingamountsof theotherassets in theCGU (groupof

CGUs)onaproratabasis.Animpairmentlossinrespectof

goodwillisnotreversed.Forotherassets,animpairmentloss

isreversedonlytotheextentthattheasset'scarryingamount

doesnotexceedthecarryingamountthatwouldhavebeen

determined, net of depreciation or amortization, if no

impairmentlosshadbeenrecognized.

3.5Statedcapital

Ordinaryshares

Ordinary shares are classi�ied as equity. Incremental Costs

attributabletotheissueofordinarysharesarerecognizedas

anexpense.

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.

44

ComputerSoftware5years

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.

3.8Investments

InvestmentsinsubsidiaryoftheGroupareclassi�iedasnon-

current investments, which are stated in the statement of

�inancialpositionatcostlessaccumulatedimpairmentlosses,

ifany.

3.9Inventories

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.

Net realizable value is the estimated selling price in the

ordinary course of business, less the estimated costs

necessarytomakethesale.

3.10LiabilitiesandProvisions

Liabilitiesclassi�iedascurrentliabilitiesintheStatementof

FinancialPositionarethose,whichfalldueforpaymenton

demandorwithinoneyearfromthedateoftheStatementof

FinancialPosition.

Non-current liabilities are those balances that fall due for

paymentafteroneyearfromtheendofthereportingdate.All

known liabilitieshavebeenaccounted for inpreparing the

�inancialstatement.

3.6.4.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.

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;


45

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

valuationweredeterminedareincludedinthenote22.3to

the Financial Statements. This liability is not externally

fundedandtheitemisgroupedundernon-currentliabilities

inthestatementof�inancialposition.

However,underthePaymentofGratuityActNo.12of1983

theliabilitytoanemployeearisesonlyoncompletionof�ive

yearsofcontinuedservice.

Thecompanyrecognizesallactuarialgainsandlossesarising

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.

3.13TradeandOtherPayables

Tradeandotherpayablesarestatedatcost.

3.14CapitalCommitmentsandContingencies

Contingent Liabilities are disclosed if there is a possible

futureobligationasaresultofpasteventbuteitherapayment

isnotprobableortheamountcannotbereliableestimated.

CapitalcommitmentsandcontingentliabilitiesoftheGroup

aredisclosedinnote27&28tothe�inancialstatements.

3.15EventsaftertheendoftheReportingPeriod

All material and important events which occur after the

Reportingdatehavebeenconsideredanddisclosedinnotes

tothe�inancialstatements.

3.10.1Provisions

Aprovision isrecognized if,asaresultofapastevent, the

Companyhasapresentlegalorconstructiveobligationthat

canbeestimatedreliably,anditisprobablethatanout�lowof

economicbene�itswillberequiredtosettletheobligation.

3.11CashandCashEquivalents

Cash and Cash Equivalents are de�ined as cash-in-hand,

depositsheldatcallwithbanksnetofbankoverdraft.

3.12EmployeeBene�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

BoththeCompanyandemployeeswhoarepaidonmonthly

paybasis(PayrollExpenses),contribute15%onthesalaryof

eachemployeetotheApprovedPrivateProvidentFund.

EmployeeTrustFund

Thecompanycontributes3%ofthesalaryofeachemployee

to 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.The liability recognized in

the statement of �inancial position in respect of De�ined

Bene�it Plan is the present value of the de�ined bene�it

obligation at the statement of �inancial position date. The

de�ined bene�it obligation is calculated annually by

independentactuaries,usingprojectedunitcreditmethod,as

recommendedbyLKAS19,“EmployeeBene�its”.


46

expense method present fairly the elements of the

enterprise'sperformance,hencesuchpresentationmethodis

adopted.

Expenditureincurredforthepurposeofacquiring,expanding

orimprovingassetsofapermanentnaturebymeansofwhich

tocarryonthebusinessorforthepurposeofincreasingthe

earningcapacityofthebusinesshasbeentreatedascapital

expenditure.

RepairsandrenewalsarechargedtothePro�itorLossinthe

yearinwhichtheexpenditureisincurred.

ii.NetFinanceExpense

Finance expenses consist of cost relating to �inancing

activities. Interest expenses are recognized on an accrual

basis.

Finance income comprises interest received on funds

invested and foreign invested and foreign exchange gains,

interestincomeandexpensesarerecognizedonanaccrual

basis.

3.18IncomeTaxExpenses

IncomeTaxexpensecomprisescurrentanddeferredtax.Itis

recognizedinpro�itorlossexcepttotheextentthatitrelates

to items recognized directly in equity or in other

comprehensiveincome.

a.CurrentTaxation

Currenttaxcomprisestheexpectedtaxpayableorreceivable

onthetaxableincomeorlossfortheyearandanyadjustment

tothetaxpayableorreceivableinrespectofpreviousyears.

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:

Statement of Pro�it or Loss and Other Comprehensive

Income

3.16RevenueRecognition

TheCompanyhasinitiallyappliedSLFRS15-"Revenuefrom

ContractswithCustomers"from1stApril2018.Buttheydo

not have a material effect on the Company's Financial

Statements.

Performance obligations and revenue recognition policies

SLFRS 15 establishes a comprehensive framework for

determining whether, how much and when revenue is

recognised.

As per the standard, revenue is measured based on the

consolidation speci�ied in a contact with a customer. The

Companyrecognisesrevenuewhenittransferscontrolovera

goodorservicetoacustomer.Determiningthetimingofthe

transfer of control at a point in time or over time require

judgment.

The following speci�ic criteria are used for the purpose of

recognitionofrevenue.

Revenuefromsalesofgoodsarerecognizedwhenthegoods

aredeliveredtoitscustomersastheperformanceobligations

willbesatis�iedondelivery.

Dividendincomeisrecognizedwhentheshareholders'right

toreceivethepaymentisestablished.

Pro�itorlossofarevenuenatureonthedisposalofproperty,

plantandequipmentandothernon-currentassetshavebeen

accountedintheStatementofpro�itorlosshavingdeducted

fromtheproceedsondisposal, thecarryingamountof the

assetandtherelatedsellingexpenses.

Rentalincomeisrecognizedonanaccrualbasis.

3.17Expenditure

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


47

- 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

subsidiaries, associates and joint arrangements to the

extentthattheGroupisabletocontrolthetimingofthe

reversalof the temporarydifferencesand it isprobable

thattheywillnotreverseintheforeseeablefuture;

- 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.Differedtaxassetsarereviewedateachreportingdate

andarereducedtotheextentthatitisnolongerprobablethat

therelatedtaxbene�itwillberealized;suchreductionsare

reversed when the probability of future taxable pro�its

improves.

Unrecognized deferred tax assets are reassessed at each

reportingdateandrecognizedtotheextentthatithasbecome

probablethatfuturetaxablepro�itswillbeavailableagainst

whichtheycanbeused.

Deferredtaxismeasuredatthetaxratesthatareexpectedto

beappliedtotemporarydifferenceswhentheyreverse,using

taxratesenactedorsubstantivelyenactedat thereporting

date.

The measurement of deferred tax re�lects the tax

consequencesthatwouldfollowfromthemannerinwhich

theGroupexpects,atthereportingdate,torecoverorsettle

thecarryingamountofitsassetsandliabilities.

Deferred tax assets and liabilities are offset only if certain

criteriaaremet.

3.19EarningsperShare

TheGrouppresentsbasicearningspershare(EPS)dataforits

ordinaryshares.BasicEPSiscalculatedbydividingthepro�it

orlossattributabletoordinaryshareholdersoftheCompany

by the weighted average number of ordinary shares

outstandingduringtheperiodoftheCompany.

3.20DividendDistribution

Dividendsonordinarysharesarerecognizedasaliabilityand

deducted from equity when they are approved by the

Company's shareholders. Interim dividends are deducted

fromequitywhentheyaredeclaredandarenolongeratthe

discretionoftheCompany.

3.21StatementofCashFlow

Forthepurposeofthestatementofcash�low,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

statementofcash�low.

3.22SegmentReporting

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

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

representingtheindustrysegmentoftheGroupisinnote32

&33tothe�inancialstatements.


48

b)SLFRS9FinancialInstruments

SLFRS9setoutrequirementsforrecognisedandmeasuring

�inancialassets,�inancialliabilitiesandsomecontractstobuy

orsellnon-�inancial items.ThisstandardreplacesLKAS39

Financial Instruments:RecognitionandMeasurement.Asa

resultoftheadoptionofSLFRS9,theCompanyhasadopted

consequential amendments to LKAS 1 Presentation of

FinancialInstruments,whichrequireimpairmentof�inancial

assetstobepresentedinseparatelineiteminthestatementof

pro�itorlossandOCI.

The Company has adopted consequential amendments to

SLFRS7FinancialInstruments:Disclosuresthatareapplied

todisclosuresabout2019buthavenotbeengenerallyapplied

tocomparativeinformation.SLFRS9containsthreeprincipal

classi�ication categories for �inancial assets: measured at

amortised cost, FVOCI and FVTPL. The classi�ication of

�inancial assets under SLFRS 9 is generally based on the

businessmodelinwhicha�inancialassetismanagedandits

contractualcash�lowcharacteristics.SLFRS9eliminatesthe

previousLKAS39categoriesofheldtomaturity, loansand

receivablesandavailableforsale.SLFRS9largelyretainsthe

existingrequirements inLKAS39fortheclassi�icationand

measurementof�inancialliabilities.

The Company has used an exemption not to restate

comparative information for prior periodswith respect to

classi�ication and measurement (including impairment)

requirements. Differences in the carrying amounts of

�inancial assets and �inancial liabilities resulting from the

adoptionofIFRS9arerecognizedinretainedearningsand

reserves as at 01 April 2018. Accordingly, the information

presented for 2017/18 does not generally re�lect the

requirementsofSLFRS9,butratherthoseofLKAS39.

Thefollowingassessmentshavebeenmadeonthebasisofthe

facts and circumstances that existed at the date of initial

application.

BasedonthenatureoftheGroup,segmentinformationhas

notbeenprovidedonasecondary formatrepresentingthe

geographicalarea.Intersegmentpricingisdeterminedonan

arm'slengthbasis.

Segmentresults,assetsandliabilitiesincludeitemsdirectly

attributabletoasegmentaswellasthosethatcanbeallocated

onareasonablebasis.

3.23ChangesinAccountingPolicies

TheCompanyhasappliedSLFRS15andSLFRS9(ReferA)

from1stApril2018.andtherespectivetransitionmethods

havebeenexplainedbelow.

a)SLFRS15RevenuefromContractswithCustomers

SLFRS 15 establishes a comprehensive framework for

determining whether, how much and when revenue is

recognized. It replaced LKAS 18 Revenue, LKAS 11

Construction contracts and related interpretations. Under

SLFRS15, revenue is recognizedwhena customerobtains

controlofthegoodsorservices.Determiningthetimingofthe

transfer control-at a point in time or over time- requires

judgment.

TheCompanyhasrestatedpriorperiods,aspermittedbythe

Standard, toensurecomparabilityof the incomestatement

acrosspriorperiods.ThisStandardhaschangedthewaythe

Groupaccountsforconsiderationpayabletocustomers,and

requirescertainpaymentstoindirectcustomers,previously

shownasdistributionexpenses,tobeshownasdeductions

fromrevenue.

The following table summarises the impacts of adopting

SLFRS15onCompaniesstatementofpro�itorlossandother

comprehensiveincomefortheyearthenendedforeachofthe

lineitemsaffected.Therewasnoimpactonthecomparative

�igures presented in the statement of �inancial position,

statementofchangesinequityandstatementofcash�lows.

Further,thechangeinaccountingpolicyhasnoimpactonthe

reportedamountofaccumulatedpro�itsasat31March2019.


Group/Company

InRs.'000s

Description

DistributionExpenses

Effectofchangeinaccountingpolicy

AdjustedBalance

Revenue

Aspreviouslyreported

3,178,556,180

264,028,563 47,105,443 216,923,120

46,881,559 3,131,674,621

OtherIncome 20,934,106 223,884 20,710,222

49

3.24Newstandardsissuedbutnotyeteffective

The Institute of Chartered Accountants of Sri Lanka has

issued the following standardswhich become effective for

annual periods beginning after the current �inancial year.

Accordingly, these standards have not been applied in

preparing these �inancial statements. The group will be

adoptingthesestandardswhentheybecomeeffective.

SLFRS16–'Leases'

Summaryoftherequirements

SLFRS 16 provides a single lessee accounting model,

requiring lessees to recognize assets and liabilities for all

leases unless the lease term is 12 months or less or the

underlying asset has a low value even though lessor's

accounting remains similar to current practice. This

supersedes:SriLankaAccountingStandardLKAS17“Leases”,

IFRIC4 “Determiningwhether anArrangementContains a

Lease”, SIC 15 “Operating Leases - Incentives”; and SIC 27

“EvaluatingthesubstanceofTransactionsInvolvingtheLegal

formofaLease”.

SLFRS16iseffectiveforannualReportingperiodsbeginning

onorafterJanuary01,2019.Earlierapplicationispermitted

forentitiesthatapplySLFRS15“RevenuefromContractswith

Customers”.

Possibleimpactonconsolidated�inancialstatements

Thepossibilityofimpactonthisstandardwillbeminimal.

- Thedeterminationofthebusinessmodelwithinwhicha

�inancialassetisheld.

- Thedesignationandrevocationofpreviousdesignations

of certain �inancial assets and �inancial liabilities as

measuredatFVTPL.

- The designation of certain investments in equity

instrumentsnotheldfortradingasatFVOCI.

- Ifaninvestmentinadebtsecurityhadlowcreditriskatthe

dateofinitialapplicationofSLFRS9,thentheGrouphas

assumedthatthecreditriskontheassethadnotincreased

signi�icantlysinceitsinitialrecognition.

Accordingly.Thefollowingtablesummarizestheimpactnet

oftaxofthetransitiontoSLFRS09ontheopeningbalanceof

reserves,retainedearning.

The following table and the accompanying notes below

explaintheoriginalmeasurementcategoriesunderLKAS39

andthenewmeasurementcategoriesunderIFRS9foreach

classoftheCompany's�inancialassetsasat01April2018.


Financialassets

Cash&CashEquivalent

OtherReceivables

InvestmentInUnitTrust

Total�inancialassets

Total�inancialliabilities

Bankoverdraft

AmountDuetorelatedParties

Trade&otherPayables

BankLoan

Loan&receivables

Amortizedcost 255,516,549 255,516,549

423,157,504 423,157,504

39,876,300 39,876,300

718,550,353 718,550,353

239,131,771 239,131,771

28,656,193 28,656,193

- -

267,787,964 267,787,964

Amortizedcost

Amortizedcost

Amortizedcost

Amortizedcost

Amortizedcost

Loan&receivables

Loan&receivables

Loan&receivables

Loan&receivables

Loan&receivables

Availableforsale

FVTPL

Financialliabilities

Newcarryingamountunder

SLFRS9

Newclassi�icationunderSLFRS9

Originalcarryingamountunder

LKAS39

Originalclassi�icationUnderLKAS39

Group

Balanceasat31March2018

ImpactofadoptingSLFRS09

19,820,705

-

(19,820,705)

RevenueReserves-Group

AdjustedBalance01April2018

1,122,009,563

1,141,830,268

19,820,705 -

RetainedEarnings

1,154,671,268

1,154,671,268

TotalRevenueReserves

12,841,000

12,841,000

-

GeneralReserve

-

AvailableforSaleReserve

Financialassets

Cash&CashEquivalent

OtherReceivables

InvestmentInUnitTrust

Total�inancialassets

Total�inancialliabilities

Bankoverdraft

AmountDuetorelatedParties

Trade&otherPayables

BankLoan

Loan&receivables

Amortizedcost 255,340,499

423,157,504

39,876,300

718,374,303

238,959,075

28,656,193

81,257,289 81,257,289

348,872,557 348,872,557

Amortizedcost

Amortizedcost

Amortizedcost

Amortizedcost

Amortizedcost

Loan&receivables

Loan&receivables

Loan&receivables

Loan&receivables

Loan&receivables

Availableforsale

FVTPL

255,340,499

423,157,504

39,876,300

718,374,303

238,959,075

28,656,193

Financialliabilities

Newcarryingamountunder

SLFRS9

Newclassi�icationunderSLFRS9

Originalcarryingamountunder

LKAS39

Originalclassi�icationUnderLKAS39

Company

RevenueReserves-Company

-

Balanceasat31March2018

ImpactofadoptingSLFRS09

19,820,705

-

(19,820,705)

AdjustedBalance01April2018

1,044,222,592

1,064,043,297

19,820,705

RetainedEarnings

1,076,884,297

1,076,884,297

TotalRevenueReserves

12,841,000

12,841,000

-

GeneralReserve

-

AvailableforSaleReserve

50

NOTESTOTHEFINANCIALSTATEMENTS(CONTD.

4. REVENUE

TheeffectofintiallyapplyingSLFRS15ontheGrouprevenuefromcontractswithcustomersisdescribedinNote3.23duetothe transition method chosen in applying SLFRS 15. Comparative information has been related to re�lect the newrequirements.

RevenueStreams

a) TheGroupgeneratesrevenueprimaryfromfood,soap,fuelandlubricantsegments(Note32)

GROUP COMPANY

FORTHEYEARENDED31MARCH

2019 2018 2019 2018

Rs. Rs. Rs. Rs.


RevenueAnalysis

GrossRevenue 3,676,070,725 3,178,556,180 3,676,070,725 3,178,556,180

TaxestothegovernmentofSriLanka (49,652,365) (46,881,559) (49,652,365) (46,881,559)

Netrevenue 3,626,418,360 3,131,674,621 3,626,418,360 3,131,674,621

Revenuefromcontractwithcustomers.

Salesofgoods,netoftaxes 3,626,418,360 3,131,674,621 3,626,418,360 3,131,674,621

b) Disaggregationofrevenuefromcontractwithcustomers.

Inthefollowingtable,revenuefromcontractswithcustomersisdisaggregatedbymajorproducts.Thetimingofrevenuerecognitionisthepointintimeofproducttransferredtothecustomers.

GROUP COMPANY


2019 2018 2019 2018

Rs. Rs. Rs. Rs.

MajorProducts (Restated) (Restated)

Foodproducts 2,193,624,009 2,108,958,506 2,193,624,009 2,108,958,506

Soapproducts 303,874,465 247,382,660 303,874,465 247,382,660

FuelandLubricants 1,128,919,886 775,333,455 1,128,919,886 775,333,455

3,626,418,360 3,131,674,621 3,626,418,360 3,131,674,621

c) ContractBalances

Followingtableprovidesinformationaboutreceivables,contractliabilitiesfromcontractswithcustomers

GROUP COMPANY


2019 2018 2019 2018

Rs. Rs. Rs. Rs.


Receivableswhichareincludedin

tradeandotherreceivables 349,628,180 360,819,749 349,628,180 360,819,749

ContractLiabilities.(Note4.C.1) - - - -

349,628,180 360,819,749 349,628,180 360,819,749

Note4.C.1

Contractliabilitiesprimarilyrelatetotheadvanceconsiderationreceivedfromcustomersforwhichrevenuehasnotbeenrecognized.

51


GROUP COMPANY


2019 2018 2019 2018

Rs. Rs. Rs. Rs.


5. OTHERINCOME

Dividendincome - 985,256 66,219,527 70,284,761

Rentalincome 1,161,600 1,125,882 1,161,600 1,125,882

Pro�itondisposalofproperty,

plant&equipment 23,626,059 4,911,442 23,626,059 4,911,442

Lossondisposalofunittrusts (3,175,751) - (3,175,751) -

Changeinfairvalueofunittrusts 346,500 - 346,500 -

Staffloaninterestincome 2,653,935 3,532,523 2,653,935 3,532,523

Sundryincome(Note5.1) 11,144,464 10,155,119 11,144,464 10,155,119

35,756,807 20,710,222 101,976,334 90,009,727

5.1 Sundryincome

Saleofdisposablematerial 9,085,765 8,958,583 9,085,765 8,958,583

Sundryreceipts 2,058,699 1,196,536 2,058,699 1,196,536

11,144,464 10,155,119 11,144,464 10,155,119

6. RESULTSFROMOPERATINGACTIVITIES

Resultsfromoperatingactivitiesarestatedafterchargingallexpensesincludingfollowing;

Directors'emoluments 41,779,072 36,365,643 41,779,072 36,365,643

Auditors'remuneration

Audit 1,050,000 1,025,000 900,000 875,000

Auditrelated 315,000 342,474 315,000 263,920

Depreciationandamortization 88,989,787 83,417,905 88,989,787 83,417,905

Donations 4,646,607 4,748,654 4,646,607 4,748,654

Staffrelatedexpenses(Note6.1) 416,148,183 378,972,366 416,148,183 378,972,366

6.1 Staffrelatedexpenses

Salariesandwages 278,627,046 255,966,394 278,627,046 255,966,394

De�inedcontributionplan 39,774,129 36,499,197 39,774,129 36,499,197

Bonus 49,212,202 46,521,414 49,212,202 46,521,414

Staffwelfare 31,637,737 24,842,250 31,637,737 24,842,250

De�inedbene�itplan-Retiringgratuity 16,897,069 15,143,111 16,897,069 15,143,111

416,148,183 378,972,366 416,148,183 378,972,366

Averagenumberofemployees 589 580 589 580

52


GROUP COMPANY


Rs. Rs. Rs. Rs.

7. NETFINANCEINCOME

7.1 Financeincome

Interestincomeon�ixeddeposits 26,346,983 20,299,119 26,346,983 20,299,119

Pro�itfromtranslationof

foreigncurrencies 4,555,268 1,567,321 4,555,268 1,567,321

30,902,251 21,866,440 30,902,251 21,866,440

7.2 Financeexpenses

Interestexpensesonoverdraftfacilities (2,736,889) (6,593,547) (2,728,404) (6,579,495)

Interestexpensesonrelatedpartypayable(Note24.1) - - (4,505,711) (13,921,933)

(2,736,889) (6,593,547) (7,234,115) (20,501,428)

Net�inanceincome 28,165,362 15,272,893 23,668,136 1,365,012

8. INCOMETAXEXPENSE

8.1 Amountsrecognizedinpro�itorloss

Currenttaxexpense

Oncurrentyearpro�its(Note8.3) 71,118,913 63,090,981 69,972,247 59,282,577

Adjustmentsinrespectofprioryears 3,083,234 - - -

Taxesonintercompanydividend 10,779,924 7,699,945 - -

Deferredtaxexpense

Originationoftemporarydifferences(Note21) (10,134,184) 10,843,985(10,134,184) 10,843,985

Taxexpenseoncontinuingoperations 74,847,887 81,634,911 59,838,063 70,126,562

8.2 Amountsrecognisedinothercomprehensiveincome

Deferredtaxreversalonactuarialloss(Note21) 981,260 (1,724,699) 981,260 (1,724,699)

981,260 (1,724,699) 981,260 (1,724,699)

8.3 Taxreconciliationstatement

Pro�itbeforeincometaxexpense 247,644,140 204,478,017 309,768,440 260,176,081

Incomenotliabletotax - (985,256)(92,566,510) (90,583,880)

Aggregatenondeductibleexpensesfortax 181,671,735 170,661,450 181,671,735 170,661,450

Aggregatedeductibleexpensesfortax (173,086,057) (145,982,183)(173,086,057) (145,661,693)

Adjustedpro�it/(Loss)fromcompany 256,229,818 228,172,029 225,787,608 194,591,958

Nonbusinessincome - - 26,346,983 20,299,119

Assesableincome 256,229,818 228,172,029 252,134,591 214,891,077

Qualifyingpayments (2,233,706) (3,010,857) (2,233,706) (2,690,366)

Taxablepro�it 253,996,112 225,161,171 249,900,885 212,200,711

Incometaxat12% - 100,217 - 100,217

Incometaxat28% 71,118,913 62,990,764 69,972,247 59,182,360

Oncurrentyearpro�its 71,118,913 63,090,981 69,972,247 59,282,577

Effectivetaxrate 28.72% 30.85% 22.59% 22.79%

Applicabletaxrates.

AspertheInlandRevenueActNo.24of2017thecompanyisliabletopayincometaxat28%onlocalsalesand12%onexportsales.

53


9 BASICEARNINGSPERSHARE

9.1Basicearningspershare

Basicearningspershareiscalculatedbydividingthepro�itfortheyearattributabletotheordinaryshareholdersbytheweightedaveragenumberofordinarysharesoutstandingduringtheyear.

GROUP COMPANY


Rs. Rs. Rs. Rs.

Pro�itattributableto

ordinaryshareholders 172,796,253 122,843,106 249,930,377 190,049,517

Numberofordinaryshares 1,919,600 1,919,600 1,919,600 1,919,600

Basicearningspershare(Rs.) 90.02 63.99 130.19 99.00

10. DIVIDENDPERSHARE

Equitydividendonordinarysharesdeclaredandpaidduringtheyear.

Interimdividend 38,392,000 38,392,000 38,392,000 38,392,000

Finaldividend 47,990,550 42,231,750 47,990,000 42,231,200

86,382,550 80,623,750 86,382,000 80,623,200

Numberofordinaryshares 1,919,600 1,919,600 1,919,600 1,919,600

Dividendpershare(Rs.) 45.00 42.00 45.00 42.00

54

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

2019

2018

laboratory

equipment

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Cost

Asat01April

299,062,500

98,698,296

321,159,494

57,675,262

419,786,522

24,875,2641

,221,257,3381,115,118,968

Additions

-29,963

1,343,320

1,978,650

-

464,160

3,816,093

2,271,663

TransfersfromCWIP(Note11.1)

-11,604,161

23,867,741

1,349,373

67,102,098

6,396,333

110,319,706

113,228,628

Disposals

--

(107,500)

(114,163)

(24,252,055)

(8,500)

(24,482,218)

(9,361,921)

Asat3

1March

299,062,500

110,332,420

346,263,055

60,889,122

462,636,565

31,727,2571

,310,910,9191,221,257,338

Accumulateddepreciation

Asat01April

-23,271,398

76,610,062

25,140,358

329,317,737

4,452,639

458,792,194

385,170,014

Chargefortheyear

-4,162,543

23,976,828

5,385,861

51,383,190

2,872,426

87,780,848

82,027,737

Ondisposals

--

(52,556)

(76,914)

(24,240,097)

(6,872)

(24,376,439)

(8,405,557)

Asat3

1March

-27,433,941

100,534,334

30,449,305

356,460,830

7,318,193

522,196,603

458,792,194

Carryingamountsasat3

1March2019

299,062,500

82,898,479

245,728,721

30,439,817

106,175,735

24,409,064

788,714,316

Carryingamountsasat3

1March2018

299,062,500

75,426,898

244,549,432

32,534,904

90,468,785

20,422,625

-762,465,144

Cap

italworkinprogress(N

ote11.1)

21,505,663

24,840,158

Netcarryingamounta

sat3

1March

810,219,979

787,305,302

11.1Capitalw

ork

inpro

gress(CWIP)

Asat01April

24,840,158

44,922,510

Incurred

duringtheyear

107,315,931

93,318,776

Cap

italized

duringtheyear

Tan

gibleassets

(110,319,706)(113,228,628)

Intangibleassets

(330,720)

(172,500)

Asat31March

21,505,663

24,840,158

11.2Thecostoffullydep

reciated

property,plantandequipmen

tasatrep

ortingdateam

ountedtoRs.260,527,496/-(2018,Rs.232,641,540/-)

11.3NoPropertyplant&

Equipmen

tpledgedassecurityforliab

ilities.

55

NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)11.4 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 42 80,580,237

Mawatha,Matara.

455,Bauddhaloka

Mawatha,Colombo08 02 12,522,967

44 93,103,204

GROUP COMPANY

ASAT31MARCH, 2019 2018 2019 2018

Rs. Rs. Rs. Rs.

12. INTANGIBLEASSETS

ComputerSoftware

Cost

Asat01April 8,072,030 7,831,530 8,072,030 7,831,530

Additions 148,000 68,000 148,000 68,000

TransferredfromCWIP 330,720 172,500 330,720 172,500

Disposals - - - -

Asat31March 8,550,750 8,072,030 8,550,750 8,072,030

Amortization

Asat01April 5,809,753 4,419,585 5,809,753 4,419,585

Amortizationduringtheyear 1,208,939 1,390,168 1,208,939 1,390,168

Disposals - - - -

Asat31March 7,018,692 5,809,753 7,018,692 5,809,753

Carryingvaluesasat31March 1,532,058 2,262,277 1,532,058 2,262,277

COMPANY

2019 2018

13. INVESTMENTINSUBSIDIARY

Ordinaryshares 70 70

(Fullyownedsubsidiary) 70 70

Numberofshares

1992/93issuedtosubscribers 7 7

1995/96scriptissue 699,993 699,993

Total 700,000 700,000

14. INVESTMENTINUNITTRUST

TheeffectofinitiallyapplyingSLFRS9intheGroups�inancialinstrumentsisdescribedinNote3.23DuetothetransitionmethodchoseninapplyingSLFRS9,comparativeinformationhasnotbeenrestatedtore�lectthenewrequirement.

WiththeadoptionofSLFRS9on01April2018,theGroupclassi�ieditsinvestmentsinunittrustsunderfairvaluethroughpro�itorlosscategorywhichwasearlierclassi�iedas"Availableforsale"underLKAS39.

GROUP/COMPANY

ASAT31MARCH, 2019 2018

No.ofunit FairValue No.ofunit FairValue

Rs. Rs.

NonCurrentAssets

NationalEquityFund - - 1,086,953 34,843,800

NDBGrowth&IncomeFund - - 150,000 5,032,500

Balanceasat31March - - 1,236,953 39,876,300

CurrentAssets

NDBGrowth&IncomeFund 150,000 5,379,000 - -

150,000 5,379,000 - -

56


GROUP COMPANY

ASAT31MARCH, 2019 2018 2019 2018 Rs. Rs. Rs. Rs.15. INVENTORIES Rawmaterialsandconsumables 96,549,721 101,444,311 96,549,721 101,444,311 Workinprogress 26,285,143 27,204,055 26,285,143 27,204,055 Finishedgoods 47,810,398 42,513,771 47,810,398 42,513,771 Machineryspares 25,089,432 21,928,731 25,089,432 21,928,731 195,734,694 193,090,868 195,734,694 193,090,868 Less: Provisionforslowmovingmachineryspares (6,887,199) (2,637,141) (6,887,199) (2,637,141) (Note15.1) 188,847,495 190,453,727 188,847,495 190,453,727

15.1Provisionforslowmovingmachineryspares Asat01April 2,637,141 2,637,141 2,637,141 2,637,141 Provisionmadeduringtheyear 4,250,058 - 4,250,058 - Asat31March 6,887,199 2,637,141 6,887,199 2,637,141

16. TRADEANDOTHERRECEIVABLES Tradereceivables 349,628,180 360,819,749 349,628,180 360,819,749 Provisionofimpairment (3,186,614) - (3,186,614) - 346,441,566 360,819,749 346,441,566 360,819,749 Otherreceivables(Note16.1) ` 72,021,715 62,337,755 72,021,715 62,337,755 418,463,281 423,157,504 418,463,281 423,157,504

16.1Otherreceivables Loanstoemployees 52,972,290 41,434,815 52,972,290 41,434,815 Advances&prepayments 15,156,814 16,252,584 15,156,814 16,252,584 Tradedeposits 2,535,566 3,085,846 2,535,566 3,085,846 Sundrydebtors 1,357,045 1,564,510 1,357,045 1,564,510 72,021,715 62,337,755 72,021,715 62,337,75517. CASH&CASHEQUIVALENTS Cashinhand 1,865,340 3,483,144 1,865,340 3,483,144 Cashatbank 17,154,565 60,601,540 11,867,380 60,425,490 Shorttermdeposits 282,252,438 191,431,865 282,252,438 191,431,865 Cashandcashequivalents 301,272,343 255,516,549 295,985,158 255,340,499 Bankoverdrafts(secured)(Note17.1) (28,532,778) (28,656,193) (28,532,778) (28,656,193) Cashandcashequivalentsforthepurpose ofstatementofcash�lows 272,739,565 226,860,356 267,452,380 226,684,306

17.1 Bankoverdraftisfullysecuredonshorttermdepositsheldwithbanks.

57


GROUP COMPANY

ASAT31MARCH, 2019 2018 2019 2018

Rs. Rs. Rs. Rs.

18. STATEDCAPITAL

1,919,600Ordinaryshares 105,578,000 105,578,000 105,578,000 105,578,000

18.1 Theholdersofordinarysharesareentitledtoreceivedividendsasdeclaredfromtimetotimeandareentitledto

onevotepershareattheshareholdersmeetingsoftheCompany.

18.2 InordertocomplywiththerequirementsDirisaviboard,attheExtraOrdinaryGeneralMeetingheldon05thJune

2017,shareholderspassedanordinaryresolutiontocapitalizeRs.95,980,000/-fromandoutofretainedearnings

byallocating959,800ordinarysharesasfullypaidsharesamongtheshareholders.

19. OTHERCAPITALRESERVES

19.1 Othercapitalreserves

Reserveonscriptissue(Note19.1.1) 6,999,930 6,999,930 - -

Reserveonshareissue(Note19.1.2) 11,014 11,014 11,014 11,014

7,010,944 7,010,944 11,014 11,014

19.1.1 Reserveonscriptissueinconsolidated�inancialstatementshasarisenonscriptissueof699,993sharesofRs.10/-

eachbythefullyownedsubsidiary,HarischandraMills(Distributors)Limitedintheyear1995/96.

19.1.2Reserveonshareissuecompriseunclaimedfundsofshareapplicationandallotmentaccounttransferredtocapital

reserves.Thisreservecannotbedirectlydistributedtoshareholders.

20. 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

21. DEFERREDTAXATION

Deferredtaxliabilitiesarisingonproperty

plantandequipment(Note21.1) 82,518,181 75,043,395 82,518,181 75,043,395

Deferredtaxassetonemployeebene�it

obligation(Note21.2) (41,267,648) (24,639,922) (41,267,648) (24,639,922)

NetDeferredtaxliabilities 41,250,533 50,403,473 41,250,533 50,403,473

21.1 Deferredtaxliabilities

Balanceasat01April 75,043,395 60,936,513 75,043,395 60,936,513

deferredtaxliabilityoriginating

duringtheyear,

-recognizedinpro�itorloss 7,474,786 14,106,882 7,474,786 14,106,882

Balanceasat31March 82,518,181 75,043,395 82,518,181 75,043,395

21.2 Deferredtaxasset

Balanceasat01April 24,639,922 19,652,325 24,639,922 19,652,325

deferredtaxassetoriginating/(reversal)

duringtheyear,

-provisionforbonus 14,560,000 - 14,560,000 -

-Employeebene�itobligation 3,048,986 3,262,898 3,048,986 3,262,898

-recognizedinothercomprehensiveincome (981,260) 1,724,699 (981,260) 1,724,699


58


GROUP COMPANY

ASAT31MARCH, 2019 2018 2019 2018

Rs. Rs. Rs. Rs.

22. EMPLOYEEBENEFITOBLIGATION

Retiringgratuity

Asat01April 87,999,722 70,186,876 87,999,722 70,186,876

Chargefortheyear(Note22.1) 13,392,568 21,302,751 13,392,568 21,302,751

101,392,290 91,489,627 101,392,290 91,489,627

Gratuitypaid (6,007,833) (3,489,905) (6,007,833) (3,489,905)


22.1Chargefortheyear

Interestcost 9,679,969 8,422,425 9,679,969 8,422,425

Currentservicecost 7,217,100 6,720,686 7,217,100 6,720,686

Acturialloss/(gain) (3,504,501) 6,159,640 (3,504,501) 6,159,640

13,392,568 21,302,751 13,392,568 21,302,751

AmountchargedtoIncomeStatement 16,897,069 15,143,111 16,897,069 15,143,111

AmountchargedtoOtherComprehensive

Income (3,504,501) 6,159,640 (3,504,501) 6,159,640

13,392,568 21,302,751 13,392,568 21,302,751

22.2Anactuarialvaluationontheretiringgratuitieswascarriedoutasat31March2019byMr. M.Poopalanathan, AIA, M/s

ActuarialandManagementConsultants(Pvt)Limited,a�irmofprofessionalactuaries.Thevaluationmethodusedbythe

actuaries tovaluethe liability is the"ProjectedUnitCreditMethod", themethod recommended by the Sri Lanka

AccountingStandardNo.19(LKAS19)"EmployeeBene�its."

22.3Actuarialassumptions

2019 2018

a. Financialassumptions

Discountrateasat31March 11.5% 11%

Futuresalaryincreases 10% 10%

b. Demographicassumptions

Thedemographic assumptionsunderlying the valuation are retirement age at 55 years, earlywithdrawal from

servicesanddeathbeforeandafterretirement.Assumptionregardingthefuturemortalityarebasedonthe1967-70

mortalitytableissuedbytheInstituteofActuaries,London.

22.4SensitivityofAssumptionsUsed

Possiblechangesatthereportingdatetooneoftheactuarialassumptions,holdingotherassumptionsconstantwouldhave

affectedthede�inedbene�itobligationsasfollows;

23. TRADE&OTHERPAYABLES

Tradepayables 55,191,085 73,373,817 55,191,085 73,373,817

Otherpayables(Note23.1) 135,615,471 165,757,954 135,397,162 165,585,258

190,806,556 239,131,771 190,588,247 238,959,075

Discountrate1%

SalaryIncrement1%

EffectonchargedtoStatementofPro�itorLossandOthercomprehensiveIncome

1% Increase

4,656,222 (5,188,717) (4,656,222) 5,188,717

5,073,2225,565,7045,073,222(5,565,704)

1% Decrease 1% Increase

EffectonEmployeeBene�itObligationsIntheStatementofFinancialPosition

1%Decrease

59


23. TRADE&OTHERPAYABLES(CONTD.)

GROUP COMPANY

ASAT31MARCH, 2019 2018 2019 2018

Rs. Rs. Rs. Rs.

23.1 Otherpayables

Accruedexpenses 32,395,362 68,617,704 32,177,058 68,445,006

VATpayable 32,175,363 32,656,382 32,175,363 32,656,382

NBTpayable 4,959,828 4,701,202 4,959,828 4,528,504

Trade&customerdeposits 6,562,291 6,132,291 6,562,291 6,132,291

Provisionforbonus 52,000,000 48,000,000 52,000,000 48,000,000

Others 7,522,627 5,650,375 7,522,622 5,823,075

135,615,471 165,757,954 135,397,162 165,585,258

24. RELATEDPARTYPAYABLES

HarischandraMills(Distributors)Limited(Note24.1) - - - 81,257,289

- - - 81,257,289

Amountsduewithinoneyear - - - 77,000,000

Amountsdueafteroneyear - - - 4,257,289

- - - 81,257,289

24.1 Companyhadenteredintoanagreementspecifyingthetermsofsettlementofthisrelatedpartypayabletoitsfully

ownedsubsidiary"HarischandraMills(Distributors)Limited".Theloanispayableondemandandinterestwillbe

accruedatAWPLRintherespectivemonth+2%commencingfrom01/04/2015.

25. CURRENTTAXLIABILITIES/(RECOVERABLE)

Asat01April 25,120,288 (5,623,944) 28,646,616 (6,746,271)

Provisionfortheyear(Note08) 71,118,913 63,090,981 69,972,247 59,282,577

Prioryearunderprovision(Note08) 3,083,234 - - -

Taxonintercompanydividend 10,779,924 7,699,945 - -

110,102,359 65,166,982 98,618,863 52,536,306

Paymentsduringtheyear (96,559,683) (40,046,694) (82,492,766) (23,889,690)

Asat31March 13,542,676 25,120,288 16,126,097 28,646,616

26. TRANSACTIONSWITHRELATEDPARTIES

TheGroupcarriesouttransactionsintheordinarycourseofitsbusinesswithpartieswhoarede�inedasrelatedpartiesin

SriLankaAccountingStandardLKAS24"RelatedPartyDisclosures.",thedetailsofwhicharereportedbelow.

26.1 Parentandultimatecontrollingparty

IntheopinionofDirectorstheCompanydosenothaveanidenti�iableparentofitsown.

26.2 Keymanagementpersonnelcompensation

AccordingtoSriLankaAccountingStandardLKAS24"RelatedPartyDisclosures",keymanagementpersonnelare

those having authority and responsibility for planning. directing and controlling the activities of the entity.

Accordingly,thedirectorsoftheCompanyhavebeenclassi�iedasKMPoftheCompanyandtheGroup.

AstheCompanyistheultimateparentofitssubsidiary,HarischandraMills(Distributors)LimitedandtheBoardof

theCompanyhastheauthorityandresponsibilityforplanning,directingandcontrollingoftheGroup,thedirectorsof

theCompanyhavebeenidenti�iedastheKMPoftheGroup.

i) LoanstoDirectors

NoloanshavebeengiventothedirectorsoftheCompany.

60


26. TRANSACTIONSWITHRELATEDPARTIES(CONTD.)

ii) Keymanagementpersonnelcompensationcomprised:

GROUP COMPANY

FORTHEYEARENDED31MARCH 2019 2018 2019 2018

Rs. Rs. Rs. Rs.

Shorttermbene�its 35,991,793 31,728,428 35,991,793 31,728,428

Longtermbene�its 5,787,279 4,637,215 5,787,279 4,637,215

Total(Note06) 41,779,072 36,365,643 41,779,072 36,365,643

26.3 Transactionswithsubsidiary

Recurrenttransactions

2019 2018

Nameofthe Natureof Volumeof Balance Volumeof Balance

relatedparty transaction transaction asat31.03.19 transaction asat31.03.18

Harischandra Interestexpenses 4,505,711 - 13,921,933 -

Mills FundTransfers (19,543,474) - (18,760,680) -

(Distributors) Dividendpayment (66,219,527) - (66,299,505) -

Limited OutstandingBalances

Loan(Note24.1) - - - (81,257,289)

26.4 Transactionswithotherentities

Other related entities are those which are controlled or signi�icantly in�luenced, directly by key ManagementPersonnel(KMP)oftheCompany.Therewerenosigni�icanttransactionswithotherrelatedentitiesduringtheyear.

27. CAPITALEXPENDITURECOMMITMENTS

Therewerenomaterialcommitmentswhichrequiredisclosureasatthereportingdate.

28. CONTINGENTLIABILITIES

TheCompanydidnothaveanycontingentliabilitiesoutstandingasatthereportingdate.

29. EVENTSOCCURRINGAFTERTHEREPORTINGDATErd InterimdividendofRs.20.00persharepaidon23 April2019.

Otherthanthat,nocircumstanceshavearisensincethereportingdatewhichrequireadjustmentstoordisclosureintheFinancialStatements.

30. COMPARATIVEINFORMATION

Comparativeinformationhasbeenrearrangedandreclassi�iedtoconformwiththecurrentyearpresentation.

31. DIRECTORS'RESPONSIBILITY

DirectorsoftheCompanyareresponsibleforthepreparationandpresentationoftheseFinancialStatements.

61

NOTESTOTHEFIN

ANCIA

LSTATEMENTS(CONTD.)

32.

SEGMENTALIN

FORMATIO

N

GROUP

Inform

ationbasedonth

eprimarysegments

FoodPro

ducts

FuelandLubrica

ntSoap

Total

Fortheyearended31March

2019

2018

2019

2018

2019

2018

2019

2018

(Restated)

(Restated)

(Restated)

(Restated)

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Revenue:

Totalsales

2,193,624,009

2,108,958,5061,128,919,886

775,333,455303,874,465

247,382,6603,626,418,3603,131,674,621

Operatingpro

�it:

Segm

ento

peratingpro�itb

eforedep

reciation

252,217,984

271,582,799

19,207,898

8,270,227

1,285,876

(27,940,219)

272,711,758

251,912,807

Dep

reciationandamotization

(77,700,910)

(75,295,821)

(525,263)

(286,197)

(10,763,614)

(7,835,887)

(88,989,787)

(83,417,905)

Segm

ento

peratingpro�it

174,517,074

196,286,978

18,682,635

7,984,030

(9,477,738)

(35,776,106)

183,721,971

168,494,902

Otheroperatingincome/(exp

ense)

35,756,807

20,710,222

Net�inan

ceincome

28,165,362

15,272,893

Pro�itb

eforeincometaxexpen

se

247,644,140

204,478,017

Incometaxexpen

se

(74,847,887)

(81,634,911)

Pro�itafterincometax

172,796,253

122,843,106

Assets:

Operatingassets

861,646,245

949,499,412

443,434,962

342,288,519119,360,606

111,390,8791,424,441,8131,403,178,810

Otherinvestmen

ts

-39,876,300

Cash&cashequivalen

ts

301,272,343

255,516,549

Totalassets

1,725,714,1561,698,571,659

Liabilities:

Operatingliab

ilities

190,376,729

257,751,825

97,974,892

92,917,899

26,372,170

30,238,250

314,723,791

380,907,974

Deferredtaxliab

ilities

41,250,533

50,403,473

Incometaxpayab

le

13,542,676

-

Totalliabilities

369,517,000

431,311,447

62

NOTESTOTHEFIN

ANCIA

LSTATEMENTS(CONTD.)

33.

SEGMENTALIN

FORMATIO

N

COMPANY

Inform

ationbasedonth

eprimarysegments

FoodPro

ducts

FuelandLubrica

ntSoap

Total

Fortheyearended31March

2019

2018

2019

2018

2019

2018

2019

2018

(Restated)

(Restated)

(Restated)

(Restated)

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Revenue:

Totalsales

2,193,624,009

2,108,958,5061,128,919,886775,333,455

303,874,465

247,382,6603,626,418,3603,131,674,621

Operatingpro

�it:

Segm

ento

peratingpro�itb

eforedep

reciation

252,571,072

271,857,061

19,207,898

8,270,227

1,334,787(27,908,043)

273,113,757

252,219,245

Dep

reciation

(77,700,910)

(75,295,821)

(525,263)

(286,197)

(10,763,614)

(7,835,887)

(88,989,787)

(83,417,905)

Segm

ento

peratingpro�it

174,870,162

196,561,240

18,682,635

7,984,030

(9,428,827)

(35,743,930)

184,123,970

168,801,340

Otheroperatingincome/(exp

ense)

101,976,334

90,009,727

Net�inan

ceincome

23,668,136

1,365,012

Pro�itb

eforeincometaxexpen

se

309,768,440

260,176,079

Incometaxexpen

se

(59,838,063)

(70,126,562)

Pro�itafterincometax

249,930,377

190,049,517

Assets:

Operatingassets

861,646,286

957,135,203443,434,985345,041,173

119,360,612

112,286,6741,424,441,8831,414,463,050

Otherinvestmen

ts

-39,876,300

Cash&cashequivalen

ts

295,985,158

255,340,499

Totalassets

1,720,427,0411,709,679,849

Liabilities:

Operatingliab

ilities

190,244,674

315,006,123

97,906,931113,557,710

26,353,877

36,955,062

314,505,482

465,518,895

Deferredtaxliab

ilities

41,250,533

50,403,473

Incometaxpayab

le

16,126,097

-

Totalliabilities

371,882,112

515,922,368

63


34. FINANCIALINSTRUMENTS-FAIRVALUEANDRISKMANAGEMENT

34.1 FinancialRiskManagement

TheGroupisexposedtofollowingrisksarisingfrom�inancialinstruments.Inparticular,thekey�inancialrisk

categoriesare:

A.Creditrisk

B.Liquidityriskand

C.Marketrisk

34.1.1 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.

34.1.2 CreditRisk

Creditriskisthe�inanciallosstothegroupifacustomerorcounterpartytoa�inancialinstrumentfailstomeetits

contractualobligation,andarisesprincipallyfromthegroupreceivablefromcustomers.

34.1.2.1ExposuretoCreditRisk

Thecarryingamountof�inancialassetsrepresentingthemaximumcreditexposure.Themaximumexposureto

creditriskatthereportingdatewas,

GROUP COMPANY

ASAT31MARCH, 2019 2018 2019 2018

Rs. Rs. Rs. Rs.

Tradeandotherreceivables 404,074,959 406,904,918 404,074,959 406,904,918

Cashatbank 17,154,565 60,601,540 11,867,380 60,425,490

Shorttermdeposits 282,252,438 191,431,865 282,252,438 191,431,865

Investmentinunittrust 5,379,000 - 5,379,000 -

Availableforsale - 39,876,300 - 39,876,300

708,860,962 698,814,623 703,573,777 698,638,573

(a) TradeandOtherReceivables

TheGroup'sexposuretocreditriskisin�luencedmainlybytheindividualcharacteristicofeachcustomer.However,

managementalsoconsider thedemographicsof thecompany'scustomerbase, including thedefault riskof the

industryandcountryinwhichcustomeroperate,asthesefactorsmayhaveanin�luenceoncreditrisk.

Theagingoftradeandotherreceivablesattheendofthereportingperiodthatwerenotimpairedwasasfollows,

1-60days 342,949,024 345,796,798 342,949,024 345,796,798

61-180days 25,766,388 28,958,312 25,766,388 28,958,312

Above181days 35,359,547 32,149,808 35,359,547 32,149,808

404,074,959 406,904,918 404,074,959 406,904,918

64


Tominimizethecreditriskfromcustomers,Companyobtainsbankguaranteesfromitstradingcustomerswheninitiatingthe

business relationships. The Company monitors the level of transaction with the guarantee and increases the guarantee

amountwherenecessary.Further,creditperiodsareestablishedandthereceivablebalancesaremonitoredcontinuously.The

amountspastduebymore than181daysare still consideredcollectible in full,basedonhistoricalpaymentbehaviorand

analysisofcustomercreditrisk.

(b)CashandCashEquivalents

TheGroupheldcashandcashequivalentsofRs.301millionasat31stMarch2019(2018:Rs.255million),whichrepresentits

maximumcredit exposure on these assets. Cash and cash equivalents areheldwithbank,Which are rateAA (LKA) toA+

(LKA),basedonFitchratings.

(c)InvestmentinUnitTrust

Investment inunit trust ismade inunitsmanagedbyNDBwealthmanagementLtd. (2018NationalEquityFundandNDB

wealthmanagementLtd.)

34.1.3 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.

Asat31March2019

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 - - -

Asat31stMarch2018



Group Carrying 6monthor 6-12month 2-5years morethan

amount less 5years

LIABILITIES

Bankoverdraft 28,656,193 28,656,193 - - -



65


Asat31March2019



Company Carrying 6monthor 6-12month 2-5years morethan

amount less 5years

LIABILITIES

Bankoverdraft 28,532,778 28,532,778 - - -



Asat31March2018



Company Carrying 6monthor 6-12month 2-5years morethan

amount less 5years

LIABILITIES

Bankoverdraft 28,656,193 28,656,193 - - -


Relatedpartypayables 81,257,289 - 77,000,000 4,257,289 -

Totalliabilities 348,872,557 267,615,268 77,000,000 4,257,289 -

34.1.4. MarketRisk

Market risk is the risk that the fair valueof future cash flowsof a financial instrumentwill fluctuatebecauseofchangesinmarketprice.Marketriskcomprisesthreetypesofriskscurrencyrisk,interestrateriskandothermarketpricerisk.

34.1.4.1CurrencyRisk

Company'sfunctionalcurrencyisSriLankanRupeesandreceivedforeigncurrenciesfromexportsales.Atpresent,99.5% of the total sales are made to local customer and hence currency risk is insignificant in relation to theCompanyassuchthesensitivityanalysisonforeigncurrencyfluctuationswillnotapply.

34.1.4.2InterestRateRisk

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.

34.2 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,relatedpartypayables,tradeandotherpayableandbankoverdraft.

66

NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)Group

Asat31March2019

FVTPL Amortized Other Total Fairvalue Fairvalue

investments cost �inancial carrying hierarchy

liabilities amount level

Rs. Rs. Rs. Rs. Rs. 123

Cashandcashequivalents - 301,272,343 - 301,272,343 - ---

Tradeandotherreceivables - 404,074,959 - 404,074,959 - ---

Investmentsinunittrust 5,379,000 - - 5,379,000 5,379,000 5,379,000

Tradeandotherpayables - - (190,806,556) (190,806,556) - ---

Overdraft - - (28,532,778) (28,532,778) ---

5,379,000 705,347,302(219,339,334) 491,386,968 5,379,000 5,379,000

Company

Asat31March2019

FVTPL Amortized Other Total Fairvalue Fairvalue

investments cost �inancial carrying hierarchy

liabilities amount level




Investmentsinunittrust 5,379,000 - - 5,379,000 5,379,000 5,379,000


Overdraft- - - (28,532,778) (28,532,778) ---

5,379,000 700,060,117 (219,121,025) 486,318,092 5,379,000 5,379,000

Group

Asat31March2018

Availablefor Loans Other Total Fairvalue Fairvalue

sale receivables �inancial carrying hierarchy

investments liabilities amount level




Availableforsaleinvestments 39,876,300 - - 39,876,300 39,064,300 39,064,300


Overdraft - - (28,656,193) (28,656,193) - ---

39,876,300 662,421,469(267,787,964) 434,509,805 39,064,300 39,064,300

Company

Asat31March2018

Availablefor Loans Other Total Fairvalue Fairvalue

sale receivables �inancial carrying hierarchy

investments liabilities amount level




Availableforsaleinvestment 39,876,300 - - 39,876,300 39,064,300 39,876,300


Relatedpartypayable - - (77,000,000) (77,000,000) - ---

Overdraft - - (28,656,193) (28,656,193) - ---

39,876,300 662,245,419(344,615,268) 357,506,451 39,064,300 39,876,300

67


Thefollowingtableshowsthevaluationtechniqueusedinmeasuringlevel2fairvalues,aswellasthesigni�icantunobservable

inputsused.

34.3 CapitalManagement

TheBoard'spolicyistomaintainastrongcapitalbasetomaintaincon�idenceoftheinvestors,creditorsandthemarket

whilesustainingfuturedevelopmentofthebusinesscapitalconsiststototalequity.Theboardofdirectorsmonitorsthe

returnoncapitalaswellasthelevelofdividendstoordinaryshareholders.

TheCapitalStructureofthegroupconsistsofdebtandequityofthegroup.ThecapitalstructureoftheGroupisreviewedby

theBoardofDirectors.

TheGroupmonitorscapitalusingtheratioofnetdebttoequity.Forthispurposeadjustednetdebtisde�inedastotal

liabilitiescomprisinginterestbearingloansandborrowings,lesscashandcashequivalents.

Type Valuationtechnique Signi�icantunobservableinputs

Inter-relationshipbetweenkeyunobservableinputsandfairvaluemeasurement

Investmentsinunittrusts

Fairvalueisbasedonthepublishedunitprices

Basedonpublishedunitprices

Theestimatedfairvaluewouldincrease(decrease)if:thepublishedunitpriceswerehigher(lower)

GROUP COMPANY

ASAT31MARCH, 2019 2018 2019 2018

Rs. Rs. Rs. Rs.

TotalLiabilities 317,517,000 383,311,447 319,882,112 467,922,368

Less:CashandCashEquivalents (301,272,343) (255,516,549) (295,985,158) (255,340,499)

AdjustedNetDebt 16,244,657 127,794,898 23,896,954 212,581,869

TotalEquity 1,356,197,156 1,267,260,212 1,348,544,929 1,182,473,311

NetDebttoEquityRatio 0.01 0.10 0.02 0.18

68

STATEMENTOFVALUEADDED

FORTHEYEARENDED31MARCH, 2019 2018

Rs.000 Rs.000

Turnover 3,626,418 3,131,674

OtherIncome 66,659 42,577

3,693,077 3,174,251

CostofGoods&Servicesboughtin (2,851,176) (2,420,166)

ValueAdded 841,901 754,085

Distributionasfollows % Rs.000 % Rs.000

ToEmployees 49.43 416,148 50.26 378,972

ToGovernment 8.89 74,848 10.83 81,635

ToLenders 0.33 2,737 0.87 6,594

ToShareholders 10.26 86,382 10.69 80,623

RetainedinBusiness Depreciation 10.57 88,990 11.06 83,418

Pro�itRetained 20.52 172,796 16.29 122,843

100.00 841,901 100.00 754,085

ToEmployees

ToGovernment

ToLenders

ToShareholders

Depreciation

Pro�itRetained

2018

10.83

10.69

11.0650.26

16.29

0.87

2019

49.43

10.26

8.89

20.52

10.57

0.33

69

TENYEARSSTATISTICALSUMMARY

Reportedasper

SLAS

SLFRS/LKAS

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

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

Rs.000's

Resu

lts

-

--

--

--

--

-

Groupturnover

1,311,139

1,326,383

1,475,664

2,245,1672,577,9272,599,069

2,720,160

2,826,223

3,003,8243,131,674

3,626,418

Pro�itbeforetax

111,017

134,781

115,317

150,554

138,773

172,727

219,644

218,034

179,075

204,478

247,644

Taxation

(43,837)

(61,962)

(51,227)

(49,572)

(42,338)

(55,409)

(69,886)

(76,646)

(53,930)

(81,635)

(74,848)

Pro�itaftertax

67,180

72,819

64,090

100,982

96,435

117,318

149,758

141,388

125,145

122,843

172,796

FundsEmployed

Stated

Cap

ital

9,598

9,598

9,598

9,598

9,598

9,598

9,598

9,598

9,598

105,578

105,578

Cap

italreserves

90,245

90,245

89,871

30,849

32,643

19,852

19,852

19,852

19,852

19,852

7,010

Reven

uereserves

327,829

376,654

414,244

850,872

908,9151,000,021

1,084,325

1,147,187

1,199,2581,141,830

1,243,608

Shareh

olders'funds

427,672

476,497

513,713

891,319

951,1561,029,471

1,113,775

1,176,637

1,228,7081,267,260

1,356,197

AssetsEmployed

Noncurren

tassets

227,247

242,832

234,834

539,604

579,502

652,533

680,855

786,226

817,348

829,444

811,752

Curren

tassets

408,143

479,701

536,254

596,997

641,114

697,172

780,909

723,606

783,556

869,128

913,962

Curren

tliab

ilities

(135,420)

(175,689)

(197,442)

(184,499)

(200,413)

(240,976)

(251,841)

(227,679)

(260,725)

(292,908)

(232,882)

Provisions

(72,298)

(70,347)

(59,933)

(60,783)

(69,047)

(79,258)

(96,148)

(105,516)

(111,471)

(138,404)

(136,635)

Cap

italemployed

427,672

476,497

513,713

891,319

951,1561,029,471

1,113,775

1,176,637

1,228,7081,267,260

1,356,197

Cash

Flow

Netcashin

�low/(out�low)fromoperatingactivities

47,067

83,170

33,348

75,457

89,915

129,424

236,717

147,562

117,719

224,296

167,953

Netcashin

�low/(out�low)fromin

vestingactivities

(19,545)

(15,180)

(13,772)

(44,958)

(48,244)

(108,877)

(29,988)

(154,718)

(67,707)

(74,322)

(35,691)

Netcashin

�low/(out�low)from�inan

cingactivities

(25,720)

(29,240)

(37,791)

(28,794)

(38,392)

(43,191)

(62,387)

(76,784)

(81,584)

(80,133)

(86,383)

Increase/(decrease)incashandcashequivalen

ts

1,802

38,750

(18,215)

1,705

3,279

(22,644)

144,342

(83,940)

(31,572)

69,841

45,879

KeyIndicators

Earningspershare

69.99

75.87

66.77

106.25

100.47

122.23

156.03

147.31

130.38

63.99

90.02

Netassetspershare

445.37

499.78

535.23

928.65

990.99

1,072.59

1,160.42

1,225.92

1,280.17

660.17

706.50

Marketpricepershare

450.00

950.00

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

Returnonequity

15.71

15.18

12.48

11.44

10.14

11.40

13.44

12.02

10.19

9.69

12.74

Priceearningratio

6.34

12.41

14.23

20.69

24.76

18.00

15.05

18.33

21.47

21.11

15.43

Dividen

dpershare

22.00

25.00

30.00

30.00

40.00

45.00

65.00

80.00

85.00

42.00

45.00

th

**On05June2017,shareh

olderspassedanordinaryresolutiontocap

italizeRs.95,980,000/-fromandoutofretained

earningsbyallocating959,800ordinarysharesasfullypaidshares.

**

70

INVESTORINFORMATION

01. StockExchangeListing

TheissuedOrdinarySharesofHarischandraMillsPLCarelistedwiththeColomboStockExchangein1983.

02. OrdinaryShareholders

2.1Distributionofstatedcapital

Asat31stMarch

2019 2018

Range No.of Total Percentage No.of Total Percentage

From To Shareholders Holdings % Shareholders Holding %

1 1,000 489 45,387 2.36 502 47,256 2.46

1,001 10,000 26 57,137 2.98 26 58,345 3.04

10,001 100,000 7 233,428 12.16 7 233,428 12.16

100,001 1,000,000 5 1,583,648 82.50 5 1,580,571 82.34

Over 1,000,001 0 - - 0 - -

527 1,919,600 100.00 540 1,919,600 100

2.2 Classi�icationofShareholders

No.of Total Percentage No.of Total Percentage

Shareholders Holdings % Shareholders Holding %

Directors 4 353,790 18.44 4 353,790 18.44

Institutionalinvestors 8 2,008 0.10 8 2,008 0.10

Employees 13 1,170 0.06 12 838 0.05

Others 502 1,562,632 81.40 516 1,562,964 81.42

527 1,919,600 100.00 540 1,919,600 100

2.3 Twentylargestshareholdersofthecompany

Shareholder'sname No.ofShares % No.ofShares %

01. SeylanBankPLC/SenthilverlT. 480,101 25.01 477,841 24.88

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 13.94 266,754 13.90

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

15. SigamoneyC. 4,494 0.23 4,714 0.25

16. JayanthaD. 3,800 0.20 4,494 0.23

17. ThirugnanasambandarSenthilverl 3,752 0.20 3,570 0.19

18. WijayawardhaneC.J. 3,570 0.19 3,800 0.20

19. AbeysekaraS. 2,800 0.15 2,800 0.15

20. JayasinghaD.A. 2,720 0.14 2,720 0.14

21. EstateofMohommedRafeek 2,668 0.14 2,668 0.14

71

INVESTORINFORMATION(CONTD.)

FORTHEYEARENDED31MARCH 2019 2018

03. Detailsofsharetransactionsduringtheyear

No.oftransactions 230 689

No.ofsharetraded 4,544 6,436

Valueoftransactions(Rs.) 6,450,623 10,647,660

04. Thetransactedvalueofanordinaryshare

Rs. Rs.

HighestPrice 1749.90 2894.20

LowestPrice 1057.10 1150.00

LastTradedPrice 1388.90 1351.10

05. Dividend 38,392,000 38,392,000

Interim 47,990,000 42,231,000

Final 86,382,000 80,623,000

06. Earning

Earningspershare(Rs.)

Basic 90.02 63.99

Diluted 90.02 63.99

Priceearningratio 15.43 21.11

07. Dividedpershare(Rs.) 45.00 42.00

08. Dividedcover(Times) 2.00 1.52

09. DividendYield(%) 3.24 3.11

10. DividendPayout(%) 49.99 65.63

AsAt31March 2019 2018

11. PublicHolding

No.ofshares 818,138 821,215

Percentage 42.62% 42.78%

No.ofpublicshareholders 521 534

The Company had float adjustedmarket capitalization of Rs.

1,137,638,712.15andcompanyqualifiesunderoption fiveof

the minimum public holding requirement for the Diri Savi

BoadoftheCSE.

12. NetAssetpershare(Rs.) 706.50 660.17

13. Currentassetratio 3.92:1 2.97:1

14. Quickassetratio 3.11:1 2.32:1

15. Equitytototalassetratio(%) 78.59 74.61

72

FORMOFPROXY

I/We:.......................................................................................................................................................................................................................................................

of................................................................................................................................................................................................................................................................

beingaShareholder/ShareholdersofHarischandraMillsPLC,doherebyappoint

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. : ..................................................) ofth..............................................................................................as*my/ourProxytoattendandvoteatthe67 AnnualGeneralMeetingofthe

stCompanytobeheldattheregisteredofficeoftheCompanyatNo.11,C.A.HarischandraMawatha,Matara0n21 September

2019at11.00a.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,Mrs.M.P.DeSilvaasaDirector,whoretiresintermsof

Article98oftheArticlesofAssociation.

4. Tore-appointasaDirector,Mr.T.K.BandaranayakeintermsofSection210ofthe

CompaniesActNo.7of2007.

5. Tore-appointasaDirector,Mrs.R.K.Samarasinghe in termsofSection210of

theCompaniesActNo.7of2007.

6. To re-appoint as a Director,Mr.M. A. Bastiansz in terms of Section 210 of the


7. To re-appoint as aDirector,Mr. G. S. V.De Silva in termsof Section210of the


8. Tore-appointM/sKPMG,CharteredAccountants,astheAuditorsoftheCompany

andauthorizetheDirectorstofixtheirremuneration.

9. To approve the donations and contributionsmade by theDirectors during the

yearunderreview,andtoauthorisetheDirectorstodeterminecontributionsto

charitiesfortheensuingyear.

Signedthis............................................dayof.............................2019

........................................

Signature/s

Note:Instructionsastocompletionarenotedonthereversehereof.

For Against

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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.

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Harischandra Annual Report Inner Pages new 2

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