1

Alliances

Leveraging Alliance towards Growth and Sustenance

(GRI 103-2 and 103-3)

In today’s dynamic and competitive business climate, corporate sustainability hinges

on the social license and strength of stakeholder relationships. Following our vision

to be a top of the mind financial services provider with a deep sense of corporate

responsibility, MI always strives to maximize organizational value for each

stakeholder group through a ‘shared growth’ approach. While engaging stakeholders

in our strategic decision making process, we cement lasting bonds and relationships

which we call “Alliances”, creating win-win solutions for either party. By staying

receptive, we cater to untapped credit needs of society and also offer attractive

investment opportunities which have helped us cement lasting alliances. Going

beyond the commercial boundaries, we focus on supporting varying other needs of

society, especially those unmet needs of the poor and less privileged.

Today, MI capitalizes on the unblemished and trusted brand image built among our

stakeholders through these mutually beneficial alliances that enabled us to drive

towards this sustainable business journey of over 5 decades.

Value Criterion Attached Alliances

Creating and uplifting lasting

bonds with customers

Ethical Conduct

Constructive and trustworthy

relationships

Respecting and safeguarding

investor rights

Underpinning the fulfillment

of societal requirements

Commercial Alliances

Customer Relationships

Investor Relations

Intermediary Partnerships

Social Alliances

MI’s Shared

Growth

Approach

2

Commercial

Alliances

Personalized relationships to grow

client base

Bottom line growth by upholding

shared growth prospects

Medium-Term Goals

Increasing retail client relationships

Create pragmatic alliances with

corporate companions

Short-Term Goals

Enhance brand image and loyalty

Doubling alliances and partnerships

within the next 5 years

Long-Term Goals

Capital Inputs

Current client base

Customer loyalty and sound

relationships with business

intermediaries.

Customers’ and partners’

perceptions and inputs

Employee interpersonal

skills

Corporate culture and

relationships

Key Management Activities

Attributable to:

Customer Relationships

Building customer

intelligence

Innovative business solutions

Expanding customer reach

Responsible business

practices

Creating a legendary

customer experience

Investor Relations

Building lasting investor

relations

Intermediary Partnerships

Strengthening sustainable

intermediary networks

Being a financial services provider, the relationships we build and nurture with our clients play

a pivotal role in building repeat business and brand image. Broad based strategies have been

adopted to further strengthen commercial alliances and transform them into assets which we can

capitalize in differentiating our products and services in the market to gain a competitive edge.

Customer Relationships

Having understood the importance of a customer centric business approach, the MI Board and

management have geared its corporate strategies to build strong and mutually beneficial

relationships, by continuing to offer innovative economical financial solutions to meet evolving

customer demands, while strengthening service quality. With its unparalleled services, offered

for over five decades, MI has built trust and a vibrant brand image among customers, attracting

and retaining a loyal customer base despite the intensified market competition.

Investor Relations

Whilst our ordinary investor share base is limited, we continued to sustain lasting bonds with all

our investors through continuous engagements with them. As the primary corporate objective,

we aligned strategic direction towards maximizing shareholder wealth through sustainable

returns.

Intermediary Partnerships

We have created rewarding and sustainable business partnerships with our funding

intermediaries, vendors, suppliers and other intermediaries through our “Partnering a Shared

Growth” business proposition. Having understood the importance of their pivotal role in our

supply chain, we strive to build lasting relationships through mutually beneficial strategic

initiatives.

3

Outputs

Customer Relationships

New customers attracted >

19,000

Maintained a sound deposit

retention level over 70%

Investor Relationship

Shareholder funds Rs. 8.9

billion

Greater investor corporate

involvement

Optimal management of

portfolio

Intermediary partnerships

Effective liquidity and

gearing management

High quality products and

services

Value Adding Outcomes

For our Customers

Innovative personalized

solutions

Convenient transacting

Customer privacy and

confidentiality

Lasting trust and business

confidence

For our Investors

Sound Returns

Financial stability

Prudent decision making and

confidence

For our Intermediaries

• Shared growth prospects

Primary Impacts on Other Capitals

Trade-Offs

Although we spent large amounts to acquire, retain and nurture

alliances with customers, investors and business intermediaries,

these alliances will yield greater returns monetarily in the longer

time horizon also boosting the MI brand, trust and loyalty. The long

standing alliances we have built have enriched our financial wealth,

human resource capabilities and also, infrastructure, intellect and

nature, in the past and will continue to do so in the future.

Customer deposits mobilized – Rs. 5.4 billion

Customer lending – Rs. 19 billion

Number of training hours on competency

development 4,568 hours

Conversion of 7 service centers into branches

Enhancement of brand image

Green lending for hybrid and electric vehicles

4

Customer Relationships

Building Customer Intelligence

Operating in a highly competitive market, “Customer Intelligence Building” has become an integral

part of our business model which has paved the way for us to identify evolving customer needs and to

introduce innovative financial solutions to attract and retain customers. This enabled us to sustain our

market share with the changing perceptions and rapid advancement of digital platforms and a dynamic

economic, political and regulatory environment, while generating sustainable stakeholder returns.

While we carry out customer surveys as a key mechanism to acquire customer information, we

continuously gather customer concerns through formal and informal communication channels as a

means of enhancing our legendary service. The Marketing Department together with the IT Division

and Corporate Planning Division carried out studies on market intelligence to accumulate customer

information focusing on evolving customer needs and service expectations. This constructive process

assisted us to address emerging customer trends through product life cycle management and

marketing strategies.

Based on the customer feedback we received from ‘customer and local community satisfaction

survey-2019/20’, we focused our efforts on introducing affordable products, enhancing our delivery

speed and customer convenience, while satisfying the emerging social needs.

Innovative Business Solutions

The knowledge we gathered through our customer intelligence development process was then used to

maximize the customer value proposition, while enhancing efficiency and effectiveness of our service

through innovative business solutions. Innovation in business was supported primarily by designated

teams, including our newly set up business process re-engineering function, product development

committee and the digitalization committee. This enabled us to deliver products with greater

flexibility and convenience to our customers through unique product features that differentiated

products from our peers. During the year, we automated several key internal processes directly linked

to front end sales while streamlining supporting functions to enhance processing time and customer

convenience. Considering the growing demand for financing urgent customer needs, we introduced

“Draft on Property”, micro and auto lending to expand the product mix.

Expanding Customer Reach

This year we extended our branch footprint by converting our seven service centers into branches,

which allowed us to strengthen our customer relationships and bonds through enhanced services.

Going beyond mere physical presence, we enhanced customer accessibility and convenience through

our mobile sales teams, web inquiries and social networking, offering differentiated services to our

customers, supported by direct marketing and communications. Furthermore by re-launching our

website in 2020, we facilitated greater customer convenience and awareness. Upgrading our reach via

social networks enabled us to promote our products among the youth population while strengthening

our customer alliances and instant feedback mechanisms effectively.

With the COVID 19 outbreak, despite the challenges we faced, we extended our service even during

the lockdown to facilitate the urgent and essential financial needs of our depositors while ensuring all

the precautionary measures are taken for their health and safety. This enhanced the bonding we have

with our customers while maximizing customer convenience and satisfaction.

Facing intensifying competition

Material Concerns Addressed

5

Responsible Business Practices (GRI 417-1, 417-2, 417-3, 418-1, 419-1)

Our business operations are managed in a responsible manner that catered to the needs and

expectations of our customers. The concept of responsibility is inculcated in our products, marketing,

and operations and in IT and technology functions as part of information safety. Reflecting the

effectiveness of undertaking business operations in a responsible manner, there were no fines or non-

monetary sanctions reported against our business for non-compliance with laws and regulations in the

social and economic area, product responsibility requirements, which includes product and service

information and labelling.

Product Responsibility We ensure all products before launch is evaluated and verified by the MI’s “Product Development

Team” and if required by our “Digitalization Committee” strengthening product value addition before

taking the final product to the customers. By doing this, we ensured that we follow ethical and

responsible standards in the product planning, product designing and service delivery. We are in the

process of evaluating and finalizing borrowers in keeping to regulatory request to grant them extended

time via a moratorium, to settle dues during the COVID 19 outbreak. The lasting bonds, trust and

confidence we have built among our customers over five decades and our business success, reflect our

responsible and transparent business practices.

Product Responsibility Policy

With the objective of providing a fulfilling product that will yield maximum satisfaction to our

customers, we expect to extend a professional service that will fulfil our product responsibility

obligations. The product policies, practices and standards embraced have been developed with due

care, taking into consideration regulatory obligations and industry practice, whilst also ensuring MI

continue to be fair competitors in the market. All our marketing communication activities conform to

the highest levels of integrity and honesty, in a socially acceptable manner and do not in any way

resort to or condone unethical communications to mislead the public.

Responsible Marketing The responsible marketing practices we adopt are aimed at enhancing the awareness of our existing

and potential customers about our product offerings, product safety and terms and conditions. The

customer protection framework which was introduced in the previous year was continued this year

too, with transparent disclosures and controls in place and thus, no incidents were reported on non-

compliance in marketing communications. While ensuring that our product information is freely

available in all three languages, Sinhalese, Tamil and English, our marketing and sales teams were

educated and provided with adequate training to provide clear information to our customers.

MI does not engage in insider dealing activities or promote banned products that are socially and

publicly debatable.

Broad basing value partnerships

Material Concerns Addressed

6

Information Security and Customer Privacy In keeping with MI’s corporate values, we embedded a responsible corporate culture, with the aim of

safeguarding trust and privacy of our customers. Since we consider customer privacy as a high

priority aspect for us, we deployed effective risk mitigation strategies to assure customer information

security risk is minimized. The Board approved enhanced Information Security Policies to address

the potential risks in IT systems, security features are incorporated into the systems that control

unauthorized access and cyber-attacks including malware and virus threats, with proper back up

strategies to manage our operations without any interruptions.

We did not receive any negative feedback regarding breach of customer privacy or data integrity

during the period under review and we established counter mechanisms to ensure we are safe from

future potential threats.

Legendary Customer Experiences

“Customer Centricity” is at the heart of MI’ s business strategy and we always aim to offer an

exceptional customer experience in keeping with our tag line “Service that extends beyond”. “Think

like a customer” is central to everything we do at MI. We reinforced our efforts to maximize

satisfaction levels and to exceed expectations. Speed of delivery coupled with personalized service

has sustained lasting customer bonds for us, a vital feature in the current dynamic finance industry.

Going beyond the conventional business relationships, we provided our customers a platform to

choose a product that best suited their financial requirements and payment capacity. Our vehicle sales

showroom, after sales assistance services, insurance support and vehicle registration support in

tandem with workshops offer a one-stop experience. We have continued expanding the branch

network for the purpose of providing a diversified service to our customers while creating lasting

bonds with our customers.

During the year, our sales and marketing teams together with front line staff attended numerous

training programs aimed at enhancing service delivery and customer satisfaction levels and identified

level of customer satisfaction through customer and local community satisfaction survey conducted

during the year.

Our business success is driven by the valuable suggestions and opinions of our customers and we

follow up on feedbacks and complaints through a formal and centralized complaint resolution

mechanism across the branch network.

6%

37%

22%

35%

Depositor Loyalty Profile

Customers acquired during the year

Relationship between 1-5 years

Relationship between 5-10 years

Relationship above 10 years

7

Investor Relations

Investor Relationship Building

With a relatively small ordinary investor share base, we are able to maintain close relations with our

investors, meeting our investors, meeting their return expectations and on-going information

demands, while protecting investor rights. We utilized quarterly publications, website communication

and articles to provide general investor information, with AGM’s and special investor meetings to

communicate activities and progress of the company. We kept investors closely apprised of the

corporate strategies, actual progress against planned performance, actions to realign with the plan,

future forecasts and key strategic issues and risks. The information we provided to our investors met

their expectations accurately and in a timely manner and all material information we disclosed were

highly supportive for our investors’ decision making.

As an outcome of our efforts, in meeting shareholder expectations, we were able to generate

sustainable returns by way of dividends and capital appreciation, despite the economic slowdown and

adverse impacts after Easter events. Our unwavering commitment toward our investor expectations to

create steadfast value and sustainable growth over the years has seen MI’s investor related KPIs

moving at a healthy pace with our Earnings per Share, Return on Capital Employed and dividends at

expected levels, uplifting their trust and confidence to greater heights.

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

-

500

1,000

1,500

2,000

2,500

3,000

3,500

2015/16 2016/17 2017/18 2018/19 2019/20

Investor Value Addition

Market Value Per Share (LHS) Net assets per share (LHS) ROCE (RHS)

8

Intermediary Partnerships (GRI 102-9, 102-10, 204-1)

We recognize that the relationships we build with our business intermediaries are vital in enhancing

our stakeholder value creation. In strengthening our relationships, we strived to deliver the

expectations of our funding intermediaries, vendors, suppliers and other intermediaries, through trust

and shared values. We created sustainable business partnerships through frequent engagements and

addressing their grievances. The existing supplier selection process and termination procedures were

continued as there were no dramatic changes to the size and structure of the organization and the

supply chain.

Contribution from Network of Agents, Vendors and Other Intermediaries The success of our core lending business continued to be propelled by our vehicle sales agents and

other intermediaries who contribute towards promoting especially lease financing and vehicle based

lending products, which helped us acquire different market segments and create differentiation. Thus,

we continued to build and nurture lasting bonds with them by affording shared growth propositions

with potential while recognizing their contribution towards our value creation. During the year, we

offered special promotions for our vehicle agents and tied up with intermediaries for mutual benefits.

Currently, we have joined with over 9,000 vehicle sales agents who facilitated us to reach our

markets, fuelling our business growth.

Funding Provider Partnerships With funding playing a major role in optimizing costs and liquidity, it is vital for MI to maintain

constructive relationships with our lenders which mainly comprise our banking partnerships, financial

institutions and other funding providers. Thus, we continued to earn trust and confidence of our

funding intermediaries, through sound financial results and meeting their required asset security loan

covenants on time. This enabled us to finance our lending growth at a minimal cost and offer

competitive rates to our customers, while maintaining our expected interest spread and margins.

Consumable Item Suppliers We require considerable amount of consumable supplies and general stationary to support our

operational activities with the continuous expansion of our businesses. Our centralized procurement

strategy enabled us to build lasting bonds with our key suppliers while supporting our sustainable

procurement practices. This ensured sourcing quality products and services to suit our requirement in

a timely manner with reasonable prices, to support the business operations, while minimizing

interruptions and lead times.

Our suppliers are reviewed periodically to make an assurance on the quality, cost effectiveness, and

regulatory compliance together with environmental sustainability. Our computer based procurement

system assisted us to place orders and identify reorder quantities without unnecessary delays in the

operational processes. In addition to the material suppliers, we maintained sound relationships with

our utility providers, media, and consultancy and advisory services enabling us to streamline our

operational activities. During the year, 3 new suppliers joined us, bringing the total number of

suppliers to 78.

Broad basing value partnerships

Material Concerns Addressed

9

Procurement practices and supplier spends

Type

2019/20 2018/19 2017/18

Head Office Other Locations Head Office Other Locations Head Office Other Locations

Rs.000 % Rs. 000 % Rs.000 % Rs. 000 % Rs.000 % Rs. 000 %

Electricity 18,969 6.62 18,766 7.41 17,670 6.29 17,164 7.50 18,589 7.42 17,033 9.46

Telephone 13,908 4.85 34,857 13.75 16,684 5.94 31,666 13.84 22,670 9.05 27,802 15.45

Maintenance of premises 15,802 5.51 22,753 8.98 9,131 3.25 22,030 9.63 7,122 2.84 18,355 10.2

Security Charges 18,314 6.39 6,409 2.53 15,779 5.61 6,284 2.75 13,843 5.52 6,001 3.33

Water 1,394 0.49 2,039 0.80 1,300 0.46 2,320 1.01 1,580 0.63 1,913 1.06

Stationary 15,255 5.32 19,297 7.61 15,288 5.44 17,978 7.86 23,754 9.48 13,861 7.7

Fuel 36,826 12.85 57,597 22.73 47,169 16.78 46,934 20.51 38,567 15.39 38,686 21.5

Insurance 35,869 12.51 9,805 3.87 38,675 13.76 10,474 4.58 43,376 17.31 966 0.54

Rent 3,509 1.22 62,364 24.61 4,105 1.46 56,571 24.72 3,025 1.21 48,665 27.04

Advertising & Promotions 104,151 36.33 9,761 3.85 95,650 34.03 7,012 3.06 63,914 25.5 4,304 2.39

Computer Equipment and Maintenance 22,688 7.91 9,772 3.86 19,601 6.97 10,425 4.56 14,185 5.66 2,375 1.32

Total Spending on suppliers 286,685 253,420 281,052 228,858 250,625 179,961

* All our direct suppliers were located within Sri Lanka

10

Social

Alliances

Empower people to improve living

standards

Medium-Term Goals

Support people and communities to

meet their basic needs

Periodic information submission of

large cash transactions to regulators

Short-Term Goals

Strengthen MI’s brand image across

all strata of society and increase

contribution to per-capita and GDP

Long-Term Goals

Capital Inputs

Social bonds built over 50

years

Social regulations and

obligations

Societal values and norms

Human rights

Key Management Activities

Financial empowerment

Social assistance beyond

business

Instilling cultural and

ethical practices

Continuous engagement

and community feedback

resolution

Creating Meaningful Relationships and Social Impacts

We have adopted a broader view to business, going beyond commercial boundaries for

the betterment of society. While being a responsible corporate citizen, we have

embedded corporate sustainability into our business model and corporate strategy, to

create a sustainable future for the society, by looking at various avenues to satisfy their

varying needs, empowering them to pursue their goals and raising their living

standards.

In our journey towards sustainable value creation, we strived to optimize the positive

impacts to society while maintaining our negative impacts at minimal level. During the

year, we continued to broad base our efforts in uplifting communities and securing the

sustainable well-being of our employees. With these broader social goals in mind, the

Sustainability Governance Committee is entrusted with pursuing proposed future

sustainable development goals, which form part of the next three year corporate plan.

Social Alliances Value Creation in a Nutshell

With the objective of creating a more inclusive future, where everyone has the

opportunity to prosper, we continued to build a sustainable development platform for

the community by way of greater financial empowerment, social assistance and ethical

business practices. These efforts in turn enriched our brand equity in terms of increased

brand awareness and recognition, while directly contributing to uplift the living

standards of communities towards a sustainable nation.

11

Outputs

Deep sense of corporate

acceptance and bonding

Social investment stood at

Rs. 1.8 million

Wider employee

contribution towards

building social alliances

Value Adding Outcomes

Beneficiaries meeting

needs from social projects

Development of

sustainable communities

with improved earning

capacity

Improved quality of life of

those supported

Controlling financial

crimes and adverse social

activities

Primary Impacts on Other Capitals

Trade-Offs

In creating an effective sustainable development platform, we have

already invested money, management time and effort and this will

be an ongoing journey. However, we foresee intangible positives

reciprocating back mostly in the longer term, which will enrich our

business in terms of increased brand image and reputation as a

“Responsible Corporate Citizen”

Perceived long term benefits to revenue

Number of employment opportunities created

346

Improved social awareness among employees

Lending support towards agriculture – Rs. 1.5

billion

12

Financial Empowerment

We utilized our expertise in business to cater to untapped credit needs of society by penetrating into

diverse segments, which includes low income earners who lack access to finance. We enabled

financial inclusivity by promoting credit at flexible and affordable rates throughout our branch

network. We provided financial assistance for SME based business start-ups across all major

industries, to propel sustainable development in the long run. Despite the new regulatory challenges

posed on micro financing, we strengthened our microfinance arm by introducing a Micro Auto

Product to assist low income earners in improving their lives and livelihoods. Furthermore, with the

objective of instilling the savings habit among low income earners, we introduced a micro loan

product coupled with micro savings, the bases of which grew astoundingly by 547% to Rs. 146

million from Rs. 22 million.

Social Assistance beyond Business

(GRI 413-1, 413-2)

Social Engagement We engaged with communities to understand their unmet basic needs and strived to address burning

issues by providing our assistance wherever necessary. This includes education support, creating a

more sustainable environment to meet future climate emergencies, community empowerment, better

healthcare and sanitation. This year, we initiated and completed 9 social assistance projects and the

total social investment, as a percentage of MI’s post tax profit, stood at 0.61%.

We closed branches and halted staff movements on specified days declared by the Sri Lankan

government as special holidays, in order to mitigate the spreading of Coronavirus. Our protective

approach allowed us to secure both our staff, and outsiders from being exposed to COVID 19, while

eliminating other indirect impacts on society.

18%

30%

22%

30%

Community Support Areas FY 2019/20

Education

Health

social

Environmental

Creating sustainable communities

Material Concerns Addressed

13

How the Social Needs Identification/Negative Impact Process Operates Our sustainability initiatives are derived from the outcomes of our stakeholder engagement process

and stakeholder concerns, gathered from our surveys and community networks which are routed

through the Sustainability Governance Committee, is responsible for planning and implementing the

programs. Once the project proposals are submitted, the Committee conducts a cost benefit analysis

considering both financial and non-financial aspects of the proposals, in order to ensure that the

expected outcome would be in line with the sustainability development goals of the organization.

Social Impacts The Sustainability Governance Committee closely monitored both MI’s social and environmental

impacts. The process provided the committee with a bird’s eye view of our activities and whether

anticipated benefits were achieved, without any negative societal impacts. For the year under review,

there were no material instances reported of negative impacts to communities that we operate in and

society in general. (Refer Impact Management Report web content).

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2015/16 2016/17 2017/18 2018/19 2019/20

Rs.

00

0

Community Investment

Project monitoring

Project execution Employee awareness

Sustainability Governance

Committee MI Branches

Social Needs and Negative Impact Identification

Evaluation

Fund allocation

14

Inculcating Cultural and Ethical Attributes

(GRI 102-17, 205-1, 205-2, 205-3)

The way we govern our business and the value system we practice ensure that we conduct our

activities in a professional, responsible and ethical manner, adhering to regulatory requirements and at

the same time implementing best industry practices to safeguard public assets and key interests of our

stakeholders.

To support society, we adopt stringent anti-money laundering policies that help control financial

crimes and other illegal activities that are harmful to the general public. We also uphold strong

governance practices that include a whistle blowing policy to discourage fraud and corruption and we

maintain clear communication channels to report improper activities.

Combating Money Laundering We adhered to the provisions of the Financial Transactions Reporting Act (FTRA) through the Head

of Compliance. Regulations issued by the Financial Intelligence Unit were monitored on a regular

basis and any concerns were reported to the Board. We continued to comply with our new anti-money

laundering policy approved by the Board, which entrusted up to date vigilant controls in terms of

customer due diligence and customer verification.

The enhanced Know Your Customer (KYC) policy has helped curb illegal activities that have a

negative impact on society. We placed greater emphasis on tightening our internal processes, which

extend beyond regulatory obligations. We carried out regular trainings, risk assessments and strived to

develop an Anti-Money Laundering (AML) culture, which in turn helps us detect and minimize AML

risks at the first instance.

Anti-Corruption Practices Integrity is a key value driver which is encouraged and supported by the corporate management

primarily through the company’s Fraud and Whistle Blowing Policy. Greater emphasis was placed on

strengthening internal policies and procedures while conducting training sessions to demonstrate the

importance of employee commitment towards maintaining the highest standards of ethics and

integrity in the course of their duties.

The internal audit team worked closely with the Audit Committee to detect and report shortcomings

and lapses in internal procedures, including incidents of corruption. During the year, the internal audit

team covered all material operational processes and did not come across any significant risks relating

to corruption. During the year over 20 managers received communication and training on anti-

corruption policies and procedures.

Maintaining standards of governance

Material Concerns Addressed

15

Outlook

The strength of the relationships we have nurtured with our stakeholders has become a

key differentiator to gain competitive edge in the market. Thus, it is vital that we leverage

these relationships through our shared growth approach. Therefore, we have planned to

invest further in building employee capacity levels with customized training programs for

relationship management and also provide other infrastructure upgrades that improve the

quality of alliances. Accordingly, our corporate plan up to 2022 focused on numerous HR

strategies to empower our staff with the required relationship management skills to

capitalise on future market opportunities. With the COVID 19 outbreak, we focused our

attention to create a more convenient operational platform where our stakeholders could

communicate and transact with us safely, while adhering to the best practices and

guidelines on social distancing and health and safety measures. Thus online

communication and transacting solutions and remote access payment modes will be

utilized towards capturing and nurturing relationships and providing invaluable services

that will pave the way to attract and retain our alliances in a competitive Industry.