Coconut Development Authority

Annual Report

2009

Board of Directors in 2009

1. Mr. Keerthi Sri Weerasinghe - Chairman

2. Mr. J.W.K. Pemaratna - Board Member (Representative of the Ministry of Plantation Industries)

3. Mr. N.M.D. Navaratna - Board Member (Representative of the Treasury)

4. Mrs. W.M.K.R. Balachandra - Board Member(Representative of the Ministry ofTrade, Commerce, Consumer Affairsand Marketing Development)

5. Mr. Felix Fernandopulle - Board Member (Chairman, Association of Desiccated Coconut Millers)

6. Mr. Densil Aponsu - Board Member (Chairman, Association of Coconut Cultivation)

7. Mr. Indrajith Piyasena - Board Member (Chairman, Lanka Coir Exporters Association)

Audit and Management Committee

1. Mr. N.M.D. Nawaratna - Chairman of the committee(Board Member /

Representative of the Treasury)

2. Mr. J.W.K. Pemaratna - Member(Board Member / Representativeof the Ministry)

3. Mr. Felix Fernandopulle - Member (Board Member)

Board of Directors including the Chairman and

Heads of Divisions - 2009

Front row from the left - Mr. Densil Aponsu (Board Member), Mr. Felix Fernandopulle

(Board Member), Mr. Indrajith Piyasena (Board Member), Mr.

Keerthi Sri Weerasinghe (Chairman), Mr. T.B. Weerakone

(Director General), Mrs. W.M.K.R. Balachandra (Board Member),

Mr. N.M.D. Navaratna (Board Member), Mr. J.W.K. Pemaratna

(Board Member)

Back row from the left - Mrs. S.S. Purasinghe, Director (Quality control and Quality

Assurance), Mrs. M.P.Sandya Kanthi, Director (Finance), Mr. A.T.

Ranasinghe, Engineer, Mr. R.J.A. Fonseka, Director (Marketing

Development and Research), Mr. W.L.W.K. Liyanage (Acting

Director (Processing Development), Mrs. S.S. Rajakaruna,

Director (Administration/ Secretary to the Board of Directors)

Contents

Chapter No.

Chairman’s Review

Introduction 01

Processing Development Division 02

Quality Control and Quality Assurance Division 03

Marketing Development and Research Division 04

Administration Division 05

Finance Division 06

Report of the Audit and Management Committee 07

Auditor General's Report 08

1

Chairman’s Review - 2009

Coconut cultivation has a very prominent place among the major crops in Asian

Countries such as India, Philippine, Malasiya, Vietnam, Indonesia and Sri Lanka. This

crop which is integrated with the livelihood of the people in Asian Countries has spread

over an area of land equal to 20% of the cultivable land in Sri Lanka. In particular,

Small Coconut holders extend great contribution towards this cultivation. Their

contribution is about 82% of the entire cultivation and their coconut cultivation has

been their day-to-day livelihood and it is utilized to fulfill their essential needs.

Coconut tree has a very close relationship with the day-to-day economy in the human

society and various parts of this tree are utilized in different ways for the production of

variety of products. Coconut and related products as not in the past but in the preset

time have been a major contribution towards the economy through the introduction of

such products to the world market as value added products and thereby food and

domestic needs of lakhs of people in third world countries like our country are fulfilled.

Coconut and related industries in the various parts of the country, North West, Western

and Southern provinces particularly extend invaluable contribution towards the national

product. Only export income derived from coconut and related products is around Rs.

28 million in 2008 and its contribution is 1.8% of the gross domestic product.

Production harvest is 2,762 million nuts in 2009 and the export income received during

this year has been only Rs. 29 million.

During the year under review, the Authority has provided subsidies to the private

industrialists (small and large scale) for the purchase of new equipment of modern

technology required by them for the improvement of the coconut industry and extended

financial assistance needed for the development of quality control to be achieved for

the enhancement of quality in the factories under Mahinda Chinthana programme.

During this year many programs have been launched for the distribution of hand

machines and to hold training courses for the small entrepreneurs engaged in the

coconut industry in Trincomalee and Ampara districts under ‘Negenahira Navodaya’

programme and plans have already been drawn up to carry out work in 2010 under

‘Uthuru Wasanthaya programme’

2

In addition, during this year a model mill was established at Dunkannawa in

Naththandiya for the introduction of new technology for the development of coconut

industry with the co-operation of CFC. This has been very helpful to the coir

industrialists the enhance their everyday production capacity and quality.

It was possible to achieve proper understanding about new products of coconut and

related industries and the demand for such products in the market and the contribution

to the world market network through the application of modern technology for the

industry participating in several international seminars and two seminars held in India

and Philippine in relation to coconut industry in 2009.

I fervently believe that it is possible to carry out enormous quantity of work for the

development of this industry in the future and extend a contribution to the national

product greater than earlier through the knowledge I achieved from the discussions ,

seminars in which I participated and discussions, seminars held with industrialists and

other entrepreneurs in the relevant field and the knowledge I acquired with self-effort

during the period about one year from the appointment to the post of chairman in the

coconut Development Authority as a newcomer in the field of coconut industry. I wish

to place on record my gratitude to Hon. Minister of Plantation Industry D.M. Jayaratna

and Secretary to the Ministry Mrs. Indrani Sugathadasa for the instructions and co-

operation extended with regard to the improvement made in the industry.

Keerthi Sri Weerasinghe

Chairman

Coconut Development Authority

3

1. Introduction

1.1 The Coconut Development Authority has been established by parliamentary Act

No. 46 of 1971. Powers vested in the Coconut Development Authority and its

functions have been analyzed subject to the subsequent amendments to the said

Act and the respective amendments made thereto under Acts No. 24 of 1975,

No. 45 of 1984 (special) No. 7 of 1986, No 08 of 1986, No. 40 of 1987 and the

amendments made on 12.05.2003 and the amendments published in the gazettes

(Extraordinary) No. 15009 / 1 of 5th May 1972 and No. 69/4 of 31st of

December 1979.

The Coconut Development Authority, in pursuance of its powers, performs the

activities such as processing, quality control and quality assurance, exercise of

regulatory powers, supervision, control, guidance, provision of technology as

the apex body involved in the industry in the performance of other affiliated

functions in relation to the assistance extended to the Minister in the

formulation of policies pertaining to the industry and in the fields of research

and local and foreign marketing development , granting approvals and financial

assistance required for the projects.

The Coconut Development Authority, prior to its establishment, was originally

set up under the name of Coconut Board and subsequently, it was promulgated

as Coconut Processing Board, Fibre Board and Coconut Marketing Board. The

present Coconut Development Authority was restructured in 1980 with

amalgamation of all such institutions as the apex body involved in the industry

subject to the above Act, amendments made there under and the Gazettes

(Extraordinary)

In addition, The Coconut Development Authority has been empowered to bear

responsibility in the direct operational functions such as development activities

and provision of facilities, supervision and regulatory activities in respect of the

small medium and large scale entrepreneurs engaged in the industry relating to

processing, quality control and quality assurance and for the improvement of

entire industry.

4

1.2 Institutional functions

1.2.1 To assist and advise the Minister and the Ministry in the formulation of

policies and in the determination of development priorities in regard to the

coconut industry.

1.2.2 To bring about development activities for the long term commercial and

profitable sustainability of the coconut industry.

1.2.3 To maintain under reasonable prices the coconut and coconut oil which are

domestic requirements.

1.2.4 To provide a maximum quantity of coconuts for the processing industry

through the minimization of wastage in the domestic consumption.

1.2.5 To achieve diversification of maximum production marketing by exporting

coconut based products.

1.2.6 To earn a maximum exchange rate by exporting coconut based products.

1.2.7 To provide the maximum contribution to the gross domestic production

generating employments at rural level.

1.2.8 To promote coconut based products of high quality.

1.3 In addition to the above activities, the following functions specified in Section 20

of the coconut Development Act, have also been assigned to the Authority, by

order published in the Gazette (Extraordinary) No. 69/4 dated 31st December

1979, vesting responsibility for supervision and development of all activities

connected with processing production, domestic and export marketing.

1.3.1 Functions

v Manufacture of coconut products, assistance in the manufacture,

improvement and regulation of coconut products.

v Improvement and direction of modernization activities in the

establishments manufacturing coconut products and assistance in

enhancing the efficiency of such establishments.

v Prescription and maintenance of standard of quality of coconut products

manufactured in or exported from Sri Lanka.

v Purchase and sale and regulation of the purchase and sale of coconut

products and formulation and implementation or assistance in the

5

formulation and implementation of minimum and maximum price

schemes and price stabilization schemes, for coconut products in general

and for small holders coconut products in particular.

v Export and import of coconut products and regulation of export and

import price.

v Maintenance, promotion and creation of demand for coconut products in

Sri Lanka by advertising, initiating, financing, supporting and

controlling the promotional work, by establishing trade stalls and

agencies, by organizing, assisting and participating in the exhibitions

and fairs and by other means necessary for the purpose.

v Conduct of market research into all aspects of the transport and

marketing of coconut products within and outside Sri Lanka.

v Promotion of Co-operative and collective forms of management and

ownership of coconut plantations and establishments manufacturing and

trading in coconut products.

1:3:2 Powers

v Registration of millers and other manufactures of coconut products,

auctioneers and brokers engaged in the purchase and sale of coconut

products and traders of coconut products and shippers.

v Determination of qualifications, requirements and conditions,

procedures and annual payable charges for such registration and removal

of any name from the register or re-inclusion of a name in the register.

v Manufacturing, packing, storing, transporting and engagement in the

sale of coconut products and regulation, control, study, direction,

management and inspection of such activities.

v Inspection , supervision, regulation and management of factories, store

yards, buildings, equipment and machinery used or available to be used

for manufacturing, packing and storing coconut products.

v Engagement in the purchase, sale, transport, storing export and import of

coconut products and regulation, control, supervision, direction,

management and inspection of such activities.

6

v Establishment of trade stalls for the purchase and sale of coconutproducts and determination of procedure to be adopted in such tradestalls and procedures relating to giving in change and taking in changeof any product sold in such trade stalls and cash payment for suchproducts.

v Issue of licenses for the export of coconut products and determination ofqualifications, requirements and conditions and procedures for the issueof licenses and refusal of issue of license and cancellation of license.

Subsequent to the liberalization of restrictions on the coconut trade in the latter part of

decade in 1980 attention of the Authority has been focused in the main activities such

as formulation and implementation of policies and programmes for the promotion and

development of processing and marketing sectors with special emphasis on the export

sector. Control functions have been limited to those pertaining to the maintenance of

standards of quality of products.

1.4 Board of Directors

The Board of Directors of the Authority is the governing body and this Board consists

of 11 members in terms of the provisions of the Coconut Development Act and the

amendments thereto. All members are appointed by the Minister in charge of the

relevant subject. One member of the Board is appointed on the recommendation of the

Minister of Internal and External Trade. One of the members of the Board is appointed

as the chairman of the Authority by the Minister in charge of the subject. The members

of the Board hold office for a period of three years and are eligible for re-appointment.

In addition to engaging in the functions of assisting the Ministry identifying and

formulating major policies regarding the development of the coconut industry in order

the give effect to its operational role in supervision and development of the processing

and marketing sectors, functionally the CDA comprises five Divisions to viz.

processing Development, Quality Control and Quality Assurance, Marketing

Development and Research, Finance and Administration. Each headed by a Director.

The Director in charge of the Administration Division, also functions as the secretary to

the Board. The Engineering Division and the Internal Audit Division assist the above

Divisions in the performance of such functions. The Director General functions as the

chief Executive officer and he is responsible for the Director and supervision of the

functions of the Authority and the implementation of policies and programmes

prepared by the Board.

7

2. Processing Development Division

Providing technical services and guidance for the development of the processing units,

planning and implementation of modernization programmes, assistance in the

maintenance and improvement of quality standards, assistance in the research and

development work, development of human resources involved in the industry are the

major activities carried out by the Processing Development Division.

Special activities carried out by the Processing Development Division in 2009 are as

follows

2.1 Registration and supervision of processing units.

2.2 Certification of microbiological and physical quality and encouragement of

production institutions for quality control.

2.3 Implementation of development and modernization programmes of the

processing units and assisting it.

2.4 Exchange of technology and decentralization of services.

2.5 Maintenance and supervision of pilot project of efficient coir processing and

quality control.

2.6 Assistance in the preparation of standards and specifications for the coir fibre.

2.7 Discussions, seminars, training and awareness programmes for the development

of human resources of the industrialists. Conduct of courses in joint with

technical colleges.

2.8 Improvement of rural coconut based industry through the Gama Neguma project

2.9 Active contribution towards Negenahira Navodaya and Uthuru Wasanthaya.

The progress and performance of each function is indicated below in detail.

2.1 Registration and supervision of processing units

346 processing units namely, desiccated coconut, partially defatted granulated

coconut (PDGC), coconut milk based products, coconut oil, copra, fibre and

fibre based finished products, activated carbon, charcoal have obtained

registration in 2009.

During the last year 38656.85 MT desiccated coconut was produced and 51

mills contributed in the production of desiccated coconut. The samples from

8

DC Production (M/T)

0

1000

2000

3000

4000

5000

6000

Jan. Feb. Mar April May June July Aug. Sep Oct Nov Dec

Month

Pro

duct

in (M

/T)

20082009

such products have been drawn by the Processing Development Unit for

microbiological and physical analysis and the factories were inspected.

Minor increase in shown in the production of desiccated coconut production in

2009 when compared with 2009 and 2008. According to the following graph

decrease in the production is shown as usually during the months of April,

November and December.

12250 factories were inspected for desiccated coconut, coconut oil and coir

industry during the year 2009 and 34 visits have been made to the shippers’

stores and warehouses for the certification of quality of D C products. 1605 DC

bags have been re-sampled and quality of 24.01MT was defective and 4.6 MT

was found contaminated with salmonella.

2.2 Certification of microbiological and physical quality andencouragement of production institutions for quality control

2.2.1 Issue of quality certificates for desiccated coconut

Quality certificates are issued on the results released after testing at the

laboratory the samples drawn from the daily production by the

inspectors of the Authority.

8333 samples out of 38656.85 MT desiccated coconut produced during

the year were submitted for microbiological and physical quality. 739

quality certificates were issued for 15,624.27 MT desiccated coconut

processed for the export according to the Sri Lanka standards.

2.2.2. Issue of analysis reports

Certificates were issued based on the analysis results of water samples

and specific samples of partially defatted granulated coconut (PDGC),

9

Issuing of Quality Certificates & Analysis Reports- 2009

66%8%

6%

2%

3%

0%

3%

1%

0%

0%

DC

DC Special

PDDC

Copra

Coconut Oil

Virgin C. Oil

Coir & Coir Based Products

Poonac

Fresh Coconut

Coconut Milk Powder

Other

Copra, white coconut oil, Virgin coconut oil, coconut powdered milk,

poonac, natural fresh coconuts, fibre, fibre related coir products and

desiccated coconut as requested by the buyers. 383 analysis reports have

been issued during this year.

Accordingly, 1122 quality certificates and analysis reports have been

issued in 2009. A detailed is given below.

2.2.3 Issue of quality certificates and analysis reports

No. of applicationsNo. of

certificates/reportsissued

Qualitycertificates

Analysisreports

Qualitycertificates

Analysisreports

Desiccated coconut 739 739Specific sample of DC 89 89Partially defattedgranulated coconut

65 65

Copra 18 18White coconut oil 36 36Virgin coconut oil 4 4Fibre and fibre relatedproducts

125 125

Poonac 30 30Natural fresh coconuts 14 14Coconut power milk 1 1Other products 1 1Total 739 383 739 383

10

2.3 Implementation of Development and modernizationprogrammes of the processing unit and assisting it

During this year modernization programmes for DC, coconut oil, Copra, fibre

and fibre finished products were implemented for the development and

modernization of processing units and production methodologies and financial

facilities have been provided from the Cess Fund for such programmes.

2.3.1 Development and modernization programmes of the kernel based products processing units

(a) Desiccated Coconut Industry

Financial assistance of Rs. 7.00 million and Rs. 15.30 million has been

allocated from the mill Development Fund and the Cess Fund

respectively in the action plan in this year for the following development

and major processing activities of the DC mills.

I. Reduction of production Cost

II. Improvement of processing facilities

III. Quality improvement

IV. Implementation of environmentally friendly programmes

V. Grant of relief wages to the employees in the DC manufactories

I. Reduction of production cost

v Provision of financial assistance for the bio-fuel boilers

An assistance scheme was implemented to purchase bio-full

boilers instead of the stove operated boilers with a view to

extending assistance to the millers in the reduction of production

cost.

The millers can either obtain a subsidy from the Cess Fund subject

to a maximum of Rs. 1 million or reimburse expenses from the

Mill Development Fund to a maximum of Rs. 0.8. During this year

4 DC mills have obtained a sum of Rs. 3.5 million from the Cess

Fund and a sum of Rs. 1.425 million has been reimbursed from the

Mill Development Fund for 2 mills. It was possible to carry out

continuous production minimizing the production cost.

11

II. Improvement of processing facilities

v Grant of financial assistance for the construction of weigh

bridge

The DC millers who have completed initial development activities

can obtain 60% of total cost from the Mill Development Fund

subject to a maximum of Rs. 0.5 million for the construction of

weigh bridge and in the reimbursement of expenses for the above

other development activities money is granted according to the

financial balance available in the fund.

Financial Facilities extended are as follows.

Modernization ofmills No. of mills Provision of funds Cost (Rs)

For the installationof conveyorsystems and cutter

01 MDF 750,000.00

weigh bridge 01 MDF 500,000.00

Total 1,250,000.00

III Improvement of quality

v Implementation of Hazard Analysis for critical control point

(HACCP) system for the DC industry.

The prime objective of this system is to encourage the millers to

control the potential hazard in the packing and transport of DC

products and introduce quality products to the market.

One DC mill has already obtained HACCP certificate and applied

for subsidy. A sum of Rs. 0.100 million was grated to the mill

from the Cess Fund.

A large amount of money has to be allocated for the millers to

continue this methodology and the millers hesitated to obtain

benefits from this system due to the economic difficulties prevailed

in 2009. In order to remedy this situation, the CDA is pursuing

action to obtain international standard certificates for the coconut

related industries in association with a local project initiated by Sri

12

Lanka Chamber of Commerce and funded by the European

commission and it is expected to create awareness among the DC,

coconut milk and coconut oil industrialists during the month of

January in 2010. They expect to proceed with a member of

activities such as technology, advice, audit, training and follow up

required for the industrialists as a free service provided by such

institutions and it is proposed to grant an incentive from the

Authority for the quality certificates obtained through the

accreditated institutions.

IV. Implementation of environmentally friendly programmes

The central Environment Authority has recommended that there

should be an environmental protection license to maintain certain

coconut based industries and accordingly programmes were

implemented to treat the waste water disposed in the DC industry.

Action is being taken to grant 50% of the estimated amount subject

to a maximum of Rs. 1.50 million as a subsidy and 30% that is, a

sum of Rs. 1 million from the MDF will be granted with a view to

encouraging the introduction of these systems for the DC industry.

During this year, under waste water treatment programme 17 DC

mills have been granted a sum of Rs 10.906 as a subsidy from the

Cess Fund while 9 DC mills have been provided a sum of Rs.

4,403 from the MDF. In addition, approval has been granted for

the necessary payments to 8 DC mills which have completed

requirements and presently it has been referred to make payments.

V. Grant of relief wages to the employees in the DC

manufactories

Action was taken to reimburse relief wages from the MDF to

prevent the skilled employees from leaving the industry in 2008

due to the trend in the decline of DC production in 2007 as a result

of escalation of production cost to the shortage of the number of

coconuts required for the industry and a sum of Rs. 0.327 million

has been granted from the MDF in 2009.

13

(b) Implementation of programmes for the development and

modernization of copra and coconut oil industry

Financial allocations of Rs. 2.47 million and Rs. 3.91 million have

been made in the action plan in 2009 for the enhancement of

productivity and sustainability of the copra industry and coconut

oil industry respectively and various programmes were

implemented for this purpose.

Subsidy and bank loan schemes were introduced to the industry

and they are being successfully implemented. The industrialists

who started development activities can obtain advance from the

subsidy Fund and total subsidy is granted on completion of all

activities The Authority has taken action as follows to pay the

Bank subject to a maximum of 13% interest of the bank loan for

those selected for bank loan facilities.

1. Copra Industry

v Bank loan and subsidy scheme for the copra industrialists

This scheme was introduced aiming at the production with

improved technology rather than the quality of copra produced in

the traditional furnaces. Accordingly, action has been taken as

follows to provide assistance for the copra furnace

Two industrialists were granted a sum of Rs. 0.100 million as a

subsidy and 2 industrialists were provided a sum of Rs. 0.063

million as bank loan interest for the above activities.

II. Coconut oil industry

v Bank loan and subsidy scheme for the coconut oil industrialists

A sum of Rs. 0.050 million has been granted to one selected

industrialist as subsidy and a sum of Rs. 0.355 million has been

provided to 8 industrialists with a view to encouraging the coconut

14

oil production through the assistance extended to the industrialists

to purchase machinery and improve infrastructure facilities.

(c) Coconut milk Industry

Manufactures of coconut milk / cream and coconut milk powder

involved in the manufacture targeting commercial level and

foreign market registered themselves in 2009.

An industrialist has been selected for the establishment of sale

centres for coconut milk products and it is due to provide financial

assistance for the purchase of machinery required to maintain this

centre as a pilot project. It is also due to grant a selected

industrialist 50% of the expenses incurred for the purchase of

necessary machinery as a subsidy under the development

programme of coconut milk, cream and related industries. Request

of one industrialist is to the referred to the committee for the

review.

(d) Coconut shell related industry

It has been confirmed from the requests made to the Authority by

the local and foreign market there has been a higher demand in the

local and foreign market for charcoal and activated carbon and

there is a trend for further increase in this demand. Accordingly,

the Authority made arrangements to initiate a programme to collect

the coconut shells disposed from the domestic consumption and

provide them to the industry Necessary awareness programmes

were initiated and island-wide agents were identified to collect and

purchase coconut shells with a view to creating a marketing

network for the collection of coconut shells.

Action was taken to hold a ceremony to give appointments to such

agents at the Kandy postal auditorium on 14.09.2009 under the

distinguished patronage of Hon. Minister of Plantation Industries,

D.M. Jayaratna. Relevant arrangements have been made for the

collection of coconut shells disposed (outside coconut triangle)

15

from the domestic consumption appointing 17 agents at district

level, 267 regional agents and sub agents. It has been aimed to

hold awareness programmes at regional level and implement the

methodology of purchasing.

I. Coconut shells are purchased through the agents under the following

standard quality.

v Without waste material (pieces of stones, sand, rubbish, metalsubstance etc.)

v Less percentage of water.

II It is expected to give a minimum price of between Rs. 3.00 and Rs.

5.00 for a 1Kg of coconut shells disposed from the domestic

consumption.

v It has been proposed to provide a reasonable amount of money to

the agents in the collection and supply to coconut shells to the

collecting centres and obtain through the agents at least, an amount

between Rs. 8.00 and Rs. 8.50 for 1 Kg including transport

charges.

v Allocation made in the action plan of the Processing Development

Division in 2009 to maintain practically the purchasing network

until this purchase is made by third party, has been granted for the

development programme of coconut shell related products.

2.3.2 Implementation of programmes for the development and

modernization of non-kernel processing units

(a) Coir Fibre Industry

Coir fibre sector consists of three major modes namely coir mills,

coir fibre finished products and coir fibre informed sector.

Financial allocations have been provided as a sum of Rs. 15.04

million for the modernization of fibre mills and fibre finished

product mills.

1. Coir Fibre Mill Modernization Scheme

This Scheme has provided financial assistance to the coir fibre

mills as follows.

16

Mill modernizationNo. of mills Cost (Rs.)

2008 2009 2008 2009

Employee’s quarters 4 1 274,727.00 50,000.00

Drying Yard 9 3 554,750.00 200,000.00

Coir Fibre machines 8 5 700,000.00 457,615.00

Finished product Units 7 9 1,039,456.00 615,110.00

Stores 6 - 400,000.00 -

Retting pit 1 - 75,000.00 -

Total 35 18 3,043,933.00 1,322,725.00

The coconut Development Authority provides financial assistance or subsidy, subject to

a maximum of 13% interest recovered for the bank loans obtained by the industrialists

with the objective of improving coir mills and coir fibre finished products.

II. Coir Fibre Finished Products

Following fields of production were improved for the minimization of

the import of coir raw materials and encouragement of value added

product exports.

v Coir ropes and ropes related products

v Coir and rubberized products

v Brushes and related products

v Coir dust and Coir dust related products.

v Geo-textile products.

Action has been taken to provide a sum of Rs. 0.514 million to 9 institutions of

coir fibre finished products.

III. Development of Coir Fibre informal sector

Industrialists were provided facilities to increase the capacity of existing

processing units to manufacture value added coir products.

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It is the aim to organize the coir fibre related informal rural industry to

provide those interested / those presently engaged in the industry

knowledge of necessary technology and direct them to manufacturing

process. 189 manual coir yarn spinning machines worth of Rs. 2.138

million have been distributed.

2.4 Decentralization of services

Regional offices established at Tangalle in the southern province and at

Kurunegala in the North western province in the coconut triangle with a view to

extending services of the Head office to the villages in the remote areas has

been a great convenience for the industrialists residing in the respective areas

and it has been possible for them to find solutions to their problems and fulfill

their related needs. A greater number of programmes planned by the Head

office for the sustainability and improvement of the coconut and coconut related

industry have been successfully implemented by the Regional offices.

The rural community residing in this area and involved in the coconut and

coconut related industry were educated on new technology and new industries

and provided training required for the correct methodology. The regional offices

played a major role to conduct such training / workshops and seminars. As a

result the CDA has been popular among the rural community.

2.5 Pilot project of efficient coir processing and quality control

With the assistance of the General Fund for consumer items, with operational

assistance of the CDA and Industrial Technology Institute and with the lateral

contribution of the industry, pilot project of quality coir production and quality

control in further being continued to strengthen the industry so as to face the

competitive market, minimize the production cost, produce quality products,

minimize the waste of raw materials and increase the production value. More

attention is focused on the following maters among the present research and

development activities.

v Minimization of the time delay of soaking the chips.

v Identification of methodology for the coir extraction with maximum

efficiency.

v Categorization and standardization of coir fibre.

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v Carrying out testing in regard to methodologies for the present efficiency of

coir drying.

2.6 Assistance for the formulation of standards and specifications

for the coir fibre related products

Standards for the coconut fibre have been submitted in association with Sri

Lanka Standards Institution.

2.7 Discussions, seminars, training and awareness programmes and

courses in joint with the technical colleges for the development of

human resources of those engaged in the field

2.7.1 Training programmes required for the production of coconut shell

related fancy items have been conducted at the following venues.

Date Venue19.05.2009 Thambuthtegama27.10.2009 Ipologama24.11.2009 Kegalle28.12.2009 Kekirawa

2.7.2 Coir Industry

Awareness programmes / training workshops/ seminars etc. were

conducted as follows in various areas for the provision of facilities and

creating awareness among the industrialists.

I. Training programmes for coir twisting and coir related

industries.

v Above programmes were conducted at Buthpitiya, Denipitiya,

Weeraketiya, Angunakolapelessa, Godakawela, Rambukkana,

Yakkalamulla and Dehiowita

v Preliminary discussion was held at the CDA on 07.12.2009 on the

awareness as to how geo-textile products were utilized for the

national development / construction field with the participation of

university consultants, industrialists, exporters and those engaged

in the field.

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II. Training programmes for the production of brooms, ekles and

doormats.

Above programmes were conducted at Hambantota, Suriyawewa,

Akmeemana, Ambalantota, Hikkaduwa, Tangalle, Embilipitiya,

Tissamaharamaya, Kegalle, Kataragama, Medirigiriya and

Nikaweratiya.

III Awareness programmes on small and medium scale coconut

and coconut related products and rural handicrafts.

v Above programmes were conducted at Kobeygama and Rajangana.

The aim of he above training programmes / Seminars/ Workshops

is to create awareness among the public on coconut and coconut

related industries, provide facilities to those interested in such

industries and directs the public to produce domestic handicrafts

using raw materials, waste materials available in plenty in their

area.

Similarly the Processing Development Division has extended the

contribution for the following exhibitions.

Date Exhibition venueFrom 20.07.2009 to 25 Rajarata Krushikarmika Dekma

Educational and trade exhibitionMahailuppallama

From 04.11.2009 to 08 Wayamba KrushikarmikaDekma Educational and tradeexhibition

Narammala

From 19.12.2009 to 24 Nathale - Trade and technicalexhibition- 2009

Katuneriya

v Course in coconut related industries - 2009, Kuliyapitiya and Beliatta

technical colleges.

Test in theory and practical was conducted on 14.05.2009 for the students

who followed the course in coconut related industries which was commenced

in August last year in collaboration with coconut Development Authority and

the technical colleges with a view to producing new entrepreneurs equipped

with technical training relating to the coconut industry and providing

vocational training to the unemployed youths after they left the school.

20

15 students who were successful at the above test were awarded the

certificates in October 2009 and the Authority assisted in introducing them to

the institutions involved in the filed to seek employment opportunities.

2.8 Gama Neguma Project

Action was taken to provide necessary training and material assistance to the

coconut related industries confined to the respective areas and industries based

on easily available or waste materials as a support for the improvement of rural

economic under Gama Neguma Project.

Training workshops on coconut related industries were held at Thambuthtegama,

Madhyama Nuwaragam Palatha, Mihinthale, Maspotha, Warakagoda,

Thricomalee and Banbaragasthenna and according to the relevant industries 38

coir twisting hand machines were distributed.

2.9 Negenahira Navodaya and Uthuru Wasanthaya Programmes

2.9.1 Action has been taken to explore he possibility of initiatingindustries

Utilizing the present coconut related waste raw materials in the areas in Ampara,

Batticaloa and Trincomalee districts where the coconut cultivation abundantly

taken place with a view to restoring coconut related cottage and small industries

affected by the war situation that prevailed over last 25 years. It has been decided

to extend training to start small and cottage industries in Ampara and grant

necessary financial and material assistance for the commencement of industries.

Accordingly, in view of the project report submitted by the Eastern provincial

council training programmes were conducted in Trincomalee and the trainees

inclined for the industry were provided 30 coir twisting hand machines and 45

coir twisting hand machines were distributed among such trainees in Ampara and

Damana.

2.9.2 Under Uthuru Wasanthaya Programme, on the instructions of the Ministry

of Plantation Industries it is proposed to establish 10 coconut oil mills with daily

production capacity of 2 MT in the Divisional Secretaries’ Divisions of

Kilinochchi, Mulativu, Palali and Alampan worse affected by the war. It is

proposed to implement the programme for the collection of required survey data

in future.

21

3. Quality control and Quality Assurance Division

The Quality control and Quality Assurance Division is mainly responsible for

guaranteeing the quality of export consignments inspecting and issuing certificates

when releasing the coconut products to the local market and giving advice for the

maintenance of coconut related products at high level through the implementation of

quality control work programmes. More attention is focused on the DC industry which

is the most prominent aspect in the field of coconut products and routine DC products

are daily tested in Quality Control and Quality Assurance Division. These products are

exported and results of such tests are helpful to issue quality certificates for such

products. This Division is equipped with a trained staff to carry out analysis on coconut

products and in addition to the tests carried out in the laboratory of the Authority a

mobile laboratory service is also maintained by this Division to provide advice to the

DC processing units, carry out microbiological tests for the promotion of coconut

manufacturing process and maintenance of a high standard, provide technical assistance

to maintain factories and inspect the factories in order to give instructions to maintain

the factories in accordance with the standards. In addition, this Division collaborates

with the Sri Lanka Standards Institute in regard to revision of Sri Lanka standards and

formulation of new standards. Quality of the coconut related products in the local

market is tested by this Division and it collaborates with the consumer Affairs

Authority and Food Control unit in the Ministry of Health which is entrusted with

controlling powers for food stuff in order to protect the consumers in particular.

The Quality Control and Quality Assurance Division continues the surveys and analysis

required for the supply of coconut products of high quality to the local market as well

as foreign market.

3.1 Certification of quality of coconut products for the export and

domestic consumption

3.1.1 Pre-shipment microbiological analysis and certification of coconut

products.

Both kernel and non-kernel products are analyzed and quality certificates and

analysis reports are issued.

22

Analysis of kernel related products is mainly carried out for the DC. Inspection

of routine products in the DC manufactories is carried out for salmonella at the

microbiological laboratory of this Division.

All DC products for export are tested in the laboratory of this Division. An

increase is shown in the number of samples submitted for salmonella test when

compared with 2008. 8199 samples have been tested in 2008 and 8290 samples

have been submitted for salmonella test in 2009. This is a progress of 100.5%.

But specific progress is shown in 2007 by testing 9909 samples which exceeded

all.

DC Sample analysis

0500

100015002000250030003500

2008 678 1569 3148 2804

2009 2359 2113 2123 1695

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

2008 2009

Sample analysis 8199 samples 8290 samples

Routing DC samples, re-processed DC samples and special routine samples

have been analyzed.

Out of DC samples analyzed in 2009, 10 samples drawn on the basis of

collection were reported to be contaminated with salmonella. Entire

contamination as a percentage was 0.12%. Contamination was 0.08% in 2008

and a minor increase is shown in 2009. The Quality Control Division has given

advice to avoid unsatisfactory position in the DC mills as reported and 2 special

tests called swabbing test have been carried out to identify correctly the exact

place of contamination. On the results of the test advice has been given to create

a contamination free environment often refinement activities are thoroughly

carried out.

Year2008

Year2009

23

Coir pith related products take priority among non-kernel products for the pre-

shipment analysis. 831 samples were tested in 2008 and the number of samples

submitted for the test was 615 in 2009. Although there has been an increase in

the number of kernel related products submitted for test when compared with

2008 a lessen number of coir pith related products have been tested (77%).

Accordingly, although there has been a comparative decrease in the number of

kernel related products in 2008 the number of coconut chip related products has

increased.

3.1.2 Pre-shipment physico - Chemical testing and certification of coconut

products

Routine DC samples, special exports, Mars/ USA exports, re-sampling of DC,

re-processed DC samples, special routine samples, sampling of old

consignments and defatted DC samples were analyzed during this year.

Testing of colour, number of granules, moisture, taste and smell, presence of

foreign matters and quantity of sulphar dioxide had been mainly carried out .DC

production depends on the size and price of coconuts and the samples received

at the laboratory. Accordingly, 8333 samples were analyzed in 2009 and 98%

progress has been achieved corresponding to the target pertaining to the year.

8381 sample were analyzed in 2008. Among the samples analyzed 159 samples

were found to be defective in physical characteristics in 2009 and when

compared with (1.9%) the previous year (2008) a decrease in the identification

of defects in the DC production (197 samples) was shown in 2009.

Among the DC samples intended for special market 18 samples were received

for USA exports in 2009 and 44 samples were received for the year 2008.

Accordingly, the number of samples received for USA exports has immensely

decreased in 2009. 66 samples were received for Mars exports in 2009 and 65

samples were analyzed in 2008. In addition, a sample of export consignment for

New Zealand has been analyzed in 2009.

3.1.3 Maintenance of analysis service of coconut products

Analysis of various products of the local manufacturers is carried out by this

Division as a maintenance of service. Various microbiological and physic-

chemical tests are carried out under this service. This service is carried out on a

24

reasonable price and results of the tests are issued in agreement with the

necessary parameters of the applicants. Analysis service of products is provided

to any person such as manufacturers, consumers, small and large scale traders

and exporters. Analysis service is maintained in regard to various coconut

products such as partially defatted DC, Copra, coconut fibre, coconut oil,

poonac, coir pith and coconut milk. The Quality Control Division purchases

modern laboratory equipment required for this purpose and releases accurate

results without delay. Analysis service is maintained under 30% discount for the

manufacturers and exporters.

Analysis of 275 samples was carried out in 2009 and only 231 samples were

analyzed in 2008.

3.2 Microbiological, Physical and Chemical testing for theimprovement of DC products process, provision of technicalassistance for the factories, factory visits and advisorycontribution

The above activities are carried out to make use of mobile laboratories for the

proper performance of the functions in the DC mills according to a plan of

programmes drawn up to cover all the DC mills in a month. All these activities

are performed to their utmost without impeding routine laboratory tests within

the limit of existing cadre and the payments such as Government approved

DC(Samples)

Poonac(Samples)

Coconut Oil(Samples) Copra

(Samples)Defatted

DC(Samples)

Coconut(Samples)

NonCoconutProducts

CoconutCharcoal(Samples)

101 30 40 18 65 14 05 01

Laboratory Services - 20095

114

18

65

40

101

30

DC PoonacCoconut Oil CopraPDGC Fresh CoconutNon Coconut Products Coconut Charcoal

25

overtime 566 visits have been made in 2009 and progress was 103%. 524 visits

have been made in 2008 and progress was 87%.

Accordingly, progress of microbiological analysis carried out for the advisory

contribution and the improvement of production standard was 74% in 2008 and

it was 108% in 2009. Microbiological chemical and heavy metal testing was

carried out for DC products and the following progress has been achieved.

Samples - 2008 Samples - 2009

Microbiological 118 236

Chemical 118 236

Heavy Metal 291 41

3.3 Conduct of training programmes

Necessary training programmes have been conducted for the employees attached

to the laboratory in regard to the activities connected with the issue of ISO

certificates launched by the Quality Control Division and analysis of coconut

products introduced under the new projects and we have conducted training

programmes for other external laboratory employees.

I. Training programmes for the employees in the Quality Control Division.

v SS Programme (02 officers)

v ISO programme (02 officers)

v Training in connection with laboratory equipment (02 officers, free of

charge)

II. Training programmes for external persons.

v Identification of Lipolitic Micro organizers (03 officers)

v Practical training for testing coconut oil (01 officer)

v Awareness workshop

v Theoretical and practical training for coconut oil production (9 students

from the University of Moratuwa)

26

In addition, one student from the university from Sabaragamuwa and another

student from the University of Colombo were assigned projects with a view to

streamlining the programmes in the Quality Control Division with the use of their

knowledge achieved in the university and the undergraduate of the University of

Sabaragamuwa has successfully completed the project. The undergraduate of the

Colombo University is preparing a software to analyze coir fibre with the use of

mechanical and computerized methodology.

3.4 Projects presently implemented

In 2006 action was initiated to achieve ISO 17025 quality certificate for the

laboratory to carry out accurate, proper and methodical tests in order to receive

international recognition for the certificates of quality issued on the results

released by the quality control Division of the Authority and provide the foreign

buyers the facilities of quality assurance in the laboratory since quality certificate

are issued for the coconut products supplied for the exports in particular.

Laboratory requirements have been fulfilled for the adoption of approved

methodology of the standard instead of the methodology for salmonella test

adopted without deviating from the Sri Lanka standard and testing was initiated

according to new methodology.

v Microbiological Laboratory

There has been no standard structure of laboratory since the places for

carrying out analysis in the microbiological section are not separated from

the places where the employees are engaged. Hence, the floor plan had

been drawn up for proper designing of the laboratory but it was difficult to

start modernization work in 2008. This was re-submitted in 2009.

3.5 New Projects

v Analysis of water used for washing coconut in the DC processing

As another step moved forward in this analysis of water, analysis of

insecticide residues was initiated. 24 samples have been analyzed and

progress was 80%.

27

v Regulation of heavy metal analysis

New accessories were purchased for this purpose and heavy metal analysisof DC washing water was carried out achieving 115% progress.

v Market supervision for adulteration of coconut oil

The analytical results received relating to mixed coconut oil have beenprovided to the Ministry of Health and Consumer Authority and the QualityControl while the Quality Assurance Divisions will provide necessaryassistance to bring the shops dealing in the sale of mixed coconut oil aspure coconut oil under control through legal procedures.

Initiated by the Quality Control and Quality Assurance Divisions of theAuthority a systematic survey was conducted in years 2006-2007, relatingto the availability of mixed coconut oil in the market, in co-ordination withthe Government Institutions such as Consumer Authority, Ministry ofHealth, Sri Lanka Standards Institution, Industrial Technology Institute,Coconut Research Institute, Municipal Analyst Department and Ministry ofPlantation Industries. Although the general public were aware of a deviceadopted for the sale of palm oil mixed with coconut oil for the consumers,this survey was conducted with the prime objective of providing awarenessof its actual position. This activity was launched under the MahindaChinthana Policy Statement for the uplift of the coconut oil industry. Adetailed report relating to this matter was issued in year 2007.

As one of the recommendations of this survey, the Coconut DevelopmentAuthority is taking action for conducting similar supervisory activitiescontinuously focused on the densely populated areas in the island and inyear 2009 too such supervision work had been implemented by covering allthe small, medium and large scale shops.

Collection of samples No. of Samples No. of Samples reported asadulterated coconut oil

Kurunegala 12 05Kuliyapitiya 03 -

Colombo 15 -

Negombo 15 -

Ratnapura 15 -

In year 2008 too, relative to year 2009 a higher level percentage was

reported relating to mixed coconut oil and it was 57%. In year 2009 it has

been reduced to 8.3%.

28

It has been studied that during the periods when the price of palm oil was

relatively less than coconut oil, the reports relating to mixed coconut was

higher.

Sri Lankan people are used to the consumption of coconut oil. Owing to

this very reason there is a demand for ‘coconut oil’ from the market. It

appears that during the periods when palm oil is available at a cheap and

low price it is mixed and introduced as coconut oil and sold at a higher

price. It is well established that the sale of this mixed coconut oil is carried

out solely with the intention of earning profits.

v Implementation of quality control programmes for the improvementof coconut oil industry

Quality control programmes were implemented in the coconut oil mills to

standardize the coconut oil production. Accordingly, Copra, Coconut oil

and poonac samples were collected from the coconut oil mills to study as

to whether the copra used as a raw material in the production of coconut

oil had been in the proper standard, the coconut oil product was of good

quality and the coconut oil extraction was in efficient condition and results

were released. Based on such results coconut oil millers were enlightened

on the shortcomings of the extraction methodology and given instructions.

Category

No. of coconut oil samples conformedto Sri Lanka Standards

No. ofCopra

Samplesconformed

to SriLanka

Standards

No. ofPoonacSamples

conformed toSri LankaStandards

Iodine(7.5-11.0)

SaponifiedValue

(248-264)

Colour(5 max)

Quantity ofoil

(68%)Minimum

Quantity oil(5%-8%)

Coconut oil(Samples)

91 99 76 - -

Copra(Samples)

- - - 22 -

Poonac(samples)

- - - - 01

29

Samples PercentageStandardized iodine value and No. of SamplesNot conformed 09 9%

Standardized saponified value and No. ofSamples not conformed 01 1%

Standardized colour and No. of Samplesnot conformed 24 24%

No. of Copra samples without standardizedquality of oil 28 56%

No. of Poonac samples without standardizedQuality of oil 29 96.6%(More quantity of oil remained in the poonacto viz. proper extraction do not take place)

v Formulation of standards

Although a number of coconut based products are manufactured in Sri Lanka it has

been a grave problem to evaluate properly the quality of such products in the absence

of Sri Lanka standards for all the products of this nature. Non-availability of standards

in Sri Lanka has been a great problem for the coconut manufactures who supply certain

exports. Therefore, Sri Lanka standards are formulated and amendments are made

annually with the participation of relevant parties as role of the Sri Lanka Standard

Institution under the initiation of coconut Development Authority.

Accordingly, from year 2007 up to the end of year 2009, setting of specifications andrevisions have been made under several stages and the specifications issued relating tothe coconut related products during this period are indicated below.

i. Specification for Aqueous Coconut Products –Part I Coconut Milk SLS 1365 – Part I : 2009

Specification for Aqueous Coconut Products –Part 2 Coconut Cream and Paste - SLS 1365 Part 2 :2009

ii. Specification for Activated Carbon made from Coconut Shell Charcoal- SLS 1319-2007

iii Specification for Coconut Milk Powder SLS -1309: 2007

iv Slightly fat removed dehydrated coconut SLS Issued in year 2008 as an annexure of SLS relating to dehydrated coconut SLS 98:1988

v Specification for Coconut Fibre ( Coir Fibre ) Part I – Brown Fibre & Mixed Fibre SLS 115 Part I – 2009

30

4. Marketing Development and Research Division

The Marketing Development and Research Division which extends positivecontribution towards the plans submitted by the Coconut Development Authority forthe promotion of coconut industry has performed a number of activities in 2009.Promotion of local and international market, improvement of coconut productmarketing, re-orientation of consumers for local coconut production, minimization ofwastage arising out of domestic consumption, popularization of king coconut as a localdrink in Sri Lanka and generation of abundant employment opportunities for the ruralcommunity through the introduction of projects are the major activities carried outduring the year.

In addition to the long-term annual programmes many new programs have beenlaunched for the improvement of the coconut industry by the Marketing Developmentand Research Division in 2009. As a result increase in the export income was shown.

The programmes launched by the Marketing Development and Research Divisionduring this year and their achievements are as follows.

4.1 Regulatory services

All exporters of coconut and coconut related products, dealers, auctioneers,brokers involved in copra auctions and estates involved in marketing of coconutand coconut related products were annually registered with the MarketingDevelopment and Research Division as usual. Domestic and export marketingchannels are maintained and requirements of all stockholders engaged in thedevelopment of the coconut industry are co-ordinated by this service.

Registrations have been made in 2008 and 2009 as follows

2008 2009

Exporters 457 494Brokers 22 20Dealers 14 02Coconut estates 116 93

4.4.1 Trade facilitation services

(a) Colombo fresh coconut Auction

The Coconut auction conducted weekly in Colombo since 1994 was continuedeven during this year holding 48 auctions. This auction will facilitate thecoconut cultivators to obtain reasonable price for the marketing of theircoconuts. These auctions have assisted to facilitate the internal marketingchannels and maintain reasonable prices for the major coconut and coconutrelated products.

31

Coconut Auction Colombo

YearNo. of nuts Average price

(Rs. 000 nuts)Quantity offered Quantity sold2009 68,267,237 38,119,899 17,494.712010 47,831,644 25,744,496 23,768.13

For the Colombo Coconut Auction Government Coconut estates such as CoconutCultivation Board, Coconut Research Institute, Chillaw Plantation Ltd., NationalLivestock Development Board, Kurunegala Plantation Ltd., Kegalle plantation andPrivet Coconut estates such as Shakerley estate, Lalan Rubber Institute, H.R.De Melsent coconuts most prominently.

(b) Regional Fresh Coconut Auction

Fresh coconut auctions conducted once in every moth at Kuliyapitiya andBeliatta were continued in 2009. Opportunities have been created for thegrowers who are unable to arrive in Colombo auction to market their coconutconsignments at this auction and the industrialists to purchase coconutconsignments required for their new products. This auction will facilitate thesmall and medium scale coconut growers to gain satisfactory prices for theirnuts throughout the year.

Coconut Auction- Kuliyapitiya

Year No. of nuts(quantity offered) Quantity sold

Average price(Rs. 000 nuts)

2009 1,907,693 1,100,177 17,583.002010 3,088,067 1,239,130 24,285.30

Coconut Auction- BeliattaYear No. of nuts

(quantity offered) Quantity soldAverage price(Rs. 000 nuts)

2009 523,500 180,000 15,603.002010 877,100 426,100 22,047.58

Only private sellers came forward to the Kuliyapitiya Coconut Auction. Mostprominent among them were Mr. A.P.A.R. Ratnayake, Mr. K.L.J. Ariyawansha,Mr. J.A. Siriwardena, Ms. H.M. Indumathi Herath, Mr. S.A.Nalin Chaminda,Mr. H.W. Sumanasiri, Mr. J.A. Kamalaratne and Vigrow Co. Generally sales atcoconut auction depends on different factors (Price of bidders, expected price ofsellers, number of coconuts to be sold...) It was observed that there is a range of50 – 70% in terms of sold quantity at coconut auctions.

Beliatta Coconut Auction was commenced at the end of 2003 but it was stoppeddue to absence of buyers. Due to the demand Beliatta Coconut Auction was re-commenced at Beliatta, but due to lack of buyers and suppliers couldn't fetchedthe expected prices there wasn't a competitive environment so that the auctioncouldn't be continued successfully. Therefore, compare to 2007 there wasreduction of supplies of coconuts in 2008 and 2009.

32

(c) Copra Auction

Copra auction conducted for many years was continued in 2009 holding 36auctions.

Copra auction prices - 2008/2009

Year Quantity offered(Kg)

Quantitysold(Kg.)

Average price(Rs. 250/kg)

HighGradeNo1

HighGrade

No 1 and 3Oil Extracted

2009 503,333 395,405 23,872 22,053 21,5002010 636,319 573,494 34,248 29,837 -

(d) Trade Related Disputes

The Marketing Development and Research Division acted as the mediator forthe trade conflicts created among the exporters, miller, brokers, traders andgrowers and settled them.

4.2 Marketing Research and Market Information ServicesAs in other years the Marketing Development and Research Division was

constantly involved in the following activities in 2009.

v Collection and distribution of information relating to coconut products.v Collection and distribution of export datav Systematic collection and distribution of information and data relating to

farm pricesv Systematic collection, companion and dissemination of data relating to

domestic coconut and coconut oil consumption.v Introduction of new marketing methods, systematic collection, recording

and advertising of information relating to present and potential coconut andcoconut related products.

Information collected, from the Sri Lanka customs, Central Bank of Sri Lanka, ExportsDevelopment Board, Department of Census and Statistics, Meteorological Department,other Government and non- governmental organizations and Asian Pacific CoconutCommunity, foreign magazines etc. (community, oil world, public Ledger, UCAP,Indian coconut Journal) was constantly provided to those expecting to get access to thecoconut field including industrialists/ exporters engaged in the field.The website of he Authority has paved the way for any person to collect valuablewealth of information about the facility of establishing trade relationship,manufacturers. exporters registered with the Authority, local price and auction prices ofcoconut and coconut based materials.

4.2.1 Local prices of coconut products have been published in many Sinhala andEnglish newspapers issued daily.

4.2.2 Weekly magazines Coco Market Focus was published with 48 publications.Local coconut prices, trade orders, coconut/ copra auction prices werepublished in this magazine.

33

4.2.3 Weekly magazine Coco Market Focus consisted of valuable data and a seriesof special articles.

4.2.4 Sri Lanka coconut statistics containing very valuable marketing data andinformation had been compiled for the information of the public even duringthis year. This publication contained data relating to the coconut oil andother eatable oil exported and imported by Sri Lanka, coconut and coconutrelated products, information of export stakeholders, international coconutharvest and exports.

4.2.5 The library of the CDA has been updated with newspapers, magazines,documents, gazettes etc. Facilities have been made available for the school/university students, those engaged and expecting to be involved in this fieldto get access to such information.

4.3 Marketing Communication and market promotional ServicesDuring the year under review the Marketing Development and ResearchDivision conducted the following programmes further for the promotion ofcoconut products for the local and foreign markets ad further development ofnew marketing strategies.

4.3.1 Local Trade Exhibitions

The Marketing Development and Research Division participated in 8 localtrade exhibitions in 2009 to educate the school children and the public aboutvarious coconut related products, benefits obtainable from such products, itssignificance and position of the market.

Name of exhibition Venue Organization

01 Deyata Kirula B.M.I.C.H Presidential Secretariat

02 Industrial and tradeexhibition

Technical CollegeMaradana

Technical College Maradana

03 Local Government week B.M.I.C.H Local Government Institution

04 Agri Biz B.M.I.C.H National Agricultural Council

05 Mahapola Tangalle Ministry of Commerce andTrade

06 Agricultural, livestockfisheries exhibition

B.M.I.C.H Small and medium scaleenterprises DevelopmentDivision of the federation ofchambers of commerce andindustry of Sri Lanka.

07 Day of the disabled SangamithtaVidyalaya Galle

Association of the Disabled

08 Janasetha mobile sale outletand exhibition

MayurapadaVidyalayaMavanella

Athauda SeneviratnefoundationJanasetha Foundation

09 Industrial and tradeexhibition

Jinaratna VidyalayaColombo 02

Jinaratna Vidyalaya

34

4.3.2 The Marketing Development and Research Division has collaborated with theMinistry of Commerce and Consumer Affairs and other relevant GovernmentInstitutions in drafting and amendment of bilateral and multilateralindependent trade agreements with a view to eliminating duty and dutybarriers affecting the coconut and coconut related products for the wide accessto the potential markets in foreign countries.

4.3.3 Kapruka Isurusala established for he encouragement of local coconut productshas made it possible for the small and medium scale industrialists to sell theirproducts at reasonable price. Another objective of this sales outlet is toencourage the people to use environmentally friendly coconut relatedproducts.

4.3.4 and other advertising methods with the objective of minimizing theAwareness was created among the public on services and new products (valueadded) of the CDA with television commercial advertisements, printedmagazines, billboards coconut waste.

4.3.5 Awareness was created among the public with TV advertisements, displayboards and newspapers with a view to encouraging the Sri Lankans for the useof environmentally friendly coconut and coconut related products

4.3.6 Popularization of natural king coconut among the public

A number of activities had been started for the popularization of king coconutwater as a local drink in 2009 and introduction of cool king coconut to themarket adding new taste was an attractive programme.

4.3.7 Awareness was created among the public with the advertisements prepared forthe use of pure coconut oil for healthy life.

4.3.8 The Authority attempted to improve coconut and coconut related industrywith provision of souvenirs for other institutions / newspapers and encouragefor the coconut and coconut related products.

4.4 Enterprise Development and promotional activities4.4.1

Around 141, 670 brushes were manufactured by the Delikanuanga brushmanufacture project at Kuliyapitiya and the brush manufacture project in thevillage of Nelliya and exported to various countries through the principalexporter Ravi establishment. Activities such as taking to the rural level thetechnology confined to the city, minimization of rural unemployment,producing skilled labourers and development of the export capacity of valueadded finished products are carried out under these projects.

There was a proposal to commence six more projects in 2009 but an approvalfrom the Ministry of Plantation Industries was not received to commence theseprojects.

4.4.2. Services of regional offices

It is reported that those presently engaged in the coconut industry and thoseexpecting to get access to this filed daily visit the regional offices established at

35

Kurunegala and Tangalle to obtain services and information and it is expectedto expand the services provided by the regional offices in future.

At present following activities are carried out by the regional offices.

v Registration of exporters, coconut estates and manufacturersv Provision of market informationv Provision of technical assistancev Conduct of market surveys

In addition, The Marketing Development and Research Division has functioned asfollows for the usual improvement of the field

v Provision of advisory services in regard to products/ markets and variousservices.

v Preparation of production forecasts for the coconut and coconut based productsin collaboration with other institutions relating to the field.

v Distribution of coconut industry related information and publications among theentrepreneurs.

4.5 Export earnings

A sum of Rs. 29 billion has been earned for the export of coconut and coconutbased products of Sri Lanka in 2009 and it shows 4% increase when comparedwith 2008. Export of Kernel products was Rs. 11.9 billion in 2009 and it wasRs. 13.6 billion in 2008. Export of coir fibre and fibre related products was Rs.13.66 billion in 2009 and its value in 2008 was Rs. 11.615 billion. 23% increaseis shown in the export of coconut shell products. It was Rs. 2.6 billion in 2008and it amounted to a sum of Rs. 3.3 billion in 2009. Comparative statisticsrelating to the export of coconut and coconut related products in 2008 and 2009are as follows.

Export income of coconut and coconut relatedindustries 2008/2009

0

300060009000

1200015000

Kernelproducts

Value addedcoir

products

Coconutshell related

products

Coirproducts

otherproducts

Rs mill

2008 2009

36

Export of Coconut Products - 2008 /2009 Comparative Statistics

Quantity (MT) Value (Rs.Mln)Products Jan – Dec. Jan – Dec. % Jan – Dec. Jan – Dec. %

2008 2009 Change 2008 2009 Change1 Coconut Oil 1,520 1,937 27 426.13 507.57 192 Desiccated Coconut 36,264 38,651 7 7,011.12 5,324.68 -243 Copra 13,314 8,592 -35 1,485.82 850.89 -434 Fresh Coconut (‘000 Nuts) 38,224 59,199 55 1,334.72 1,839.28 385 Seed Coconut (‘000 Nuts) 22 0.028 -100 0.91 0.002 -1006 Poonac 5,046 20,007 296 112.74 395.12 2507 Coconut Cream 1,750 1,551 -11 430.93 357.28 -178 Coconut Milk 4,762 4,296 -10 662.06 617.08 -79 Instant Coconut Milk Powder 3,679 4,236 15 1,757.73 1,789.11 2

10 Defatted Coconut 2,732 2,357 -14 445.11 293.25 -34

11SUB TOTAL KERNELPRODUCTS (Mln Nut Eqvt.) 471.519 493.335 4.63 13,667.27 11,974.26 -12

12 Mattress Fibre 52,112 83,915 61 1,477.81 2,550.55 7313 Bristle Fibre 5,162 8,344 62 266.94 408.46 5314 Twisted Fibre 28,860 51,456 78 1,037.89 1,733.62 6715 SUB TOTAL FIBRE PRODUCTS 86,134 143,715 67 2,782.64 4,692.63 6916 Coconut Shell Charcoal 2,947 3,550 20 105.89 129.34 2217 Coconut Shell & Shell Flour 1,014 587 -42 35.07 25.53 -2718 Coconut Shell Activated Carbon 17,388 17,455 0.39 2,551.95 3,156.10 2419 SUB TOTAL SHELL PRODUCTS 21,349 21,592 1 2,692.91 3,310.97 2320 FINISHED PRODUCTS (FIBRE)

(a) Coir Yarn 1,761 2,042 16 134.81 185.19 37(b) Coir Twine 3,630 5,304 46 474.93 624.75 32(c) Tawashi Brushes (Pcs) 30,324,882 25,410,411 -16 422.80 406.77 -4(d) Coir Brooms & Brushes (Pcs) 21,442,713 21,713,200 1 1,825.13 1,735.67 -5 (Other than Tawashi)(e) Coir Mats & Rugs - M2 213,248 9,823 -95 608.29 414.01 -32 - Nos. 2,127,137 880,127 -59

(f) Coir Mattings (M2) 3,544 300 -92 5.09 0.09 -98(g) Rubberised Coir pads & Mattress for Bedding - M2 579,838 219,898 -62 - Nos. 329,029 755,122 130 253.91 260.22 2

(h) Coir Geo Textiles 3,249 1,988 -39 333.56 218.66 -34(i) Moulded coir products for use in Horticulture 15,531 39,719 156 941.30 1,622.33 72

(j) Coir Fibre Pith 105,108 82,774 -21 3,260.81 2,405.40 -26(k) Husk chips 12,205 21,696 78 571.71 1,099.39 92

21 SUB TOTAL FIBRE FINISHED PRODUCTS 8,832.34 8,972.48 25. OTHER PRODUCTS(a) Vinegar (Litre) 5,189 4,022 -22 2.56 1.10 -57(b) Coconut based Arrack (Litre) 29,745 34,298 15 11.11 14.51 31(c) Coconut Ekels 6,106 6,303 3 104.89 115.12 10

22 SUB TOTAL OTHER PRODUCTS 118.56 130.72 10

23TOTAL VALUE OF ALLPRODUCTS 28,093.72 29,081.07 4

Source : Sri Lanka Customs

37

5. Administration Division

The prime objective of the Administration Division is to provide support services and

facilities to the Development Divisions of the institution and direct establishment

matters relating to the existence and promotion of the institution, human resource

development and administrative matters and to assist other active Divisions in the

performance of its functions and work for the development of the entire establishment

5.1 Cadre

Entire cadre of the Authority in 2009 is as follows

Approved Presently Vacanciesavailable

1. Senior executive officer 14 10 04

2. Junior executive officer 20 08 12

3. Non executive/subordinate officers 134 96 38

4. Minor employees 46 42 04

214 156 58

The Administration Division was able to fill the vacant posts of Director General,

Director (Finance) and Director (Administration) in 2009. Accordingly the chief

executive staff of the Authority consisted of the following officers in 2009.

01. Mr. T.B. Weerakone - Director General (From 01.07.2009)

02. Mrs. S.S. Rajakaruna - Director (Administration)/ Secretary to the Board of Directors (From 23.06.2009)

03. Mrs. S.S. Purasinghe - Director (Quality Control and Quality Assurance)

04. Mr. R.J.A. Fonseka - Director (Marketing Development and Research)

05. Mrs. M.P. Sandhya Kanthi - Director (Finance) (From 16.11.2009)

06. Mr. W.L.W.K. Liyanage - Acting Director (Processing Development)

07. Mr. A.T. Ranasinghe - Engineer

08. Mr. N.M. Ariyadasa - Internal Auditor

38

5.2 Human Resource Development Programmes

During the year 2009 Administration Division involved in the identification of

abilities and skills of the members of the staff in the Authority and imparting new

knowledge to them, conduct of training courses and organization of courses

relating to the development of pessimistic attitudes and encouragement of

employees for the achievement of skills and vocational development.

During this year arrangement have been made for the staff members of the

Authority to participate in the courses and seminars / workshops covering the

following subject areas.

v Hard Fibre conference conducted in Philippine by the Fibre Industry

Development Authority.

v Awareness training programme on shroff/ cashier duties organized by the

institute of Government Accounts and Finance

v One day workshop on testing vehicle air emission and maintenance of

relevant standards conducted by the Construction Equipment Training

centre.

v Workshop on water microbes organized by the Microbiological Division of

the Medical Research Institute.

v Workshop on import and export process conducted by the Skills

Development Fund of the Vocational Training centre.

v One day workshop on SS concept for productivity organized by the

National Institute of Labour Study

v Workshop on development of quality of financial accountancy, financial

management and financial reporting.

v Training programme in regard to alternative energy resources and energy

management conducted by the Sri Lanka Institute of Chemistry.

v Workshop on determination of uncertainty of chemicals organized by the

Industrial Technology Institute.

39

v Awareness programme on development of productivity organized by the

Institute of National Plantation Management in the Ministry of Plantation

Industries

5.3 Welfare activities

The following welfare facilities and financial assistance extended to the

employees of the Authority in the previous year were continued in 2009.

v Loan facilities, railway tickets and medical insurance covering all

employees and their family members.

v Personal accident cover for all employees engaged in outdoor duties and

workmen’s compensation insurance policy cover for other employees.

v Tea Service for employees on working days.

v Annual educational trip and sports activities organized by welfare society.

v A retail sales outlet is operated by the welfare society to enable the

employees to obtain regular consumer items at reasonable prices.

v Office transport facilities from Colombo Fort / Maradana and Wellawatta

railway stations and Kohuwala junction to Narahenpita office and back on

working days.

v Making arrangements to grant annual railway warrants.

v Grant of gift vouchers for the schooling children of the members of the staff

to obtain school books

v Award of gift vouchers for Sinhala New Year festival.

40

41

6. Finance Division

Finance Division in responsible for providing financial services to various Divisions of

the CDA. Accordingly, Finance Division is responsible for providing financial facilities

for the approved programmes and projects in accordance with budget and financial

action plan. It is entrusted with the responsibility for the maintenance of financial

statements including provision of financial and progress reports. It also handles

activities in charge of the funds of the CDA including its investment management.

Finance Division maintains the reports of total income of Rs. 225.7 million and total

assets of Rs. 852 million including government grants of Rs. 62.4 million and controls

activities involved. It also provides financial facilities for the activities required for the

performance of the Operation Divisions and Administration Division.

6.1 General Board operations

v Recurrent and capital expenditures amounting to a sum of Rs. 96 million

and a sum of Rs. 21.9 million have been respectively incurred.

v Preparation of financial statements and monthly, quarterly, half yearly

and annual reports for the management requirements.

6.2 Cess Fund / Capital Development Programme

Treasury circular No. FP/06/77/07/04 dated 24th April 2007 has been issued

giving instructions to treat cess income as a component of the state revenue with

effect from 01.01.2007.

Capital Development Programme in 2009.

Total government grant/ income - Rs. 78.12 million

The Finance Division has been able to complete the following activities in 2009.

v Management of funds in regard to development and research projects and

forwarding reports.

v Transfer of money to Mill Development Fund and pending money for the grant

of subsidies to the desiccated coconut millers and relief wages.

v Proper management of the funds of E.P.F of the CDA and approval for the grant

of loans to the members of the E.P.F.

42

v Funds have been invested in treasury bills and bonds with proper management.

Funds of the CDA have been prudently managed re-investing funds of the Mill

Development Fund maintained in the National Saving Bank.

Balance of this fund is as follows at the end of the year. (Approximately)

a) Cess Fund - Rs. 26.39 million

b) Mill Development Fund - Rs. 53.03 million

c) Price stabilization scheme for coconut oil - Rs. 259.00 million

d) General operation - Rs. 13.70 million

e) N.R.I. Fund - Rs. 00.10 million

- Rs. 352.22 million

f) Employees provident Fund - Rs. 37.40 million

(As this is a private employees provident fund its accounts are separately maintained)

Finance Division has performed its responsibility having prepared annual estimates,

annual accounts, corporate plan, quarterly financial statements and other statistical

information and having submitted them to the Board of Directors, Ministry, Treasury

and other relevant institutions in the specified periods. This responsibility includes

preparation of documents in regard to cess fund/ capital development programme.

For the financial year = 69.320

Government grants = 137.605

206.923

Total expenditure:

Recurrent = 98.347

Capital

Acquisition - 21.997

Development - 110.555

Duke Street - 19.823 = 152.375 = 250.722

(43.797)

43

Statutory Report on the Financial Statements and the Annual Accounts of theCoconut Development Authority for the Financial Year ending at 31st

December 2009

The Coconut Development Authority which is established in terms of the Coconut DevelopmentAct No.46 of 1971 including subsequent legislations brought in to the same Act as amendments,is required to prepare and submit its Financial Statements and the Annual Accounts as follows.

In terms of the Section 41 of the same Act, the Board and the Authority respectively shall, inrespect of each financial year, cause proper accounts of their income and expenditure and of alltheir other transactions to be dept and shall prepare annual statements of accounts and statisticsrelating to their activities, in such form and containing such particulars as the Minister maydetermine.

In addition to the provisions made in Section 41 of the Act, the annual statements of accounts ofthe Authority are required to be prepared and submitted in terms of the provisions of the FinanceAct No. 38 of 1971 as well, and also in keeping with directives given by the General treasury.

In terms of the public Finance Circular PF/PE/21 of 24/05/2002 of the General Treasury andsubsequent directives, it is required that Draft Annual Final Statements of Accounts are preparedand submitted within 60 days after close of the financial year. Annual Accounts for the financialyear ending 31st December 2009, are required to be prepared and submitted to the Auditor Generalon or before end of February 2010.

Accordingly, the Annual Accounts & Financial Statements of the Authority, Coconut Cess Fund,P.S.S for Coconut Oil Fund & Mill Development Fund for the year ending 31st December 2009,have been prepared and submitted on 25/02/2010.

Necessary disclosures have been made in these Financial statements in respect of Assets &Liabilities and Income & Expenditure for the year 2009. Salient features of accounts also havebeen shown in notes wherever appropriate & necessary.

These Statements of Accounts for the year 2009 have been prepared in accordance with thegenerally accepted accounting principles, polices, practices, assumptions and the relevant SriLanka Accounting Standards, Which are followed in preparing Financial Statements. Theaccounting policies and methods of computation are consistent with those followed during theprevious financial year, except certain changes which are supported with separate notes. Therewere no events subsequent to the Balance Sheet date that require disclosure.

The Board of Directors and the Authority, is responsible for the preparation and presentation ofthese Financial Statements.

..................................Chairman – Approved & signed for and on behalf of the Board of Directors of the C.D.A.Coconut Development Authority25/02/2010

44

ACCOUNTING POLICIES

(1) ACCOUNTING CONVENTION

The Financial Statements were prepared on the basis of Historical cost convention, in accordance with generally accepted accounting principles andSri Lanka Accounting Standards. No adjustments have been made for inflationary factors affecting these Financial Statements.

(2) GENERAL ACCOUNTING POLICIES

i. The accounts have been prepared in accordance with the generally accepted accounting principles and policies, practices & standards which are followed hithertoin preparing Financial Statements.

ii. The accounting policies and methods of computation are consistent with those followed during the previous financial year, except certain changes which aresupported with separate notes. These have been no events subsequent to the Balance sheet date that require disclosure.

(3) ASSETS

The Depreciation of Fixed Assets is considered on cost or revalued amount, since the date of purchase of the assets and up to the date of disposal of the assets.Fixed Assets are stated at cost less accumulated depreciation which is provided on straight-line method as per following rates.

Building & Structures 2 1/2 %Vehicles 20 %Furniture & Equipment 10 %Book Periodicals 10 %Computers 20 %

3.1 INVESTMENTSAll Investments of the Coconut Cess Fund and Price Stabilization Scheme for Coconut Oil Fund are kept in the form of Treasury Bills & Bonds through the Bank ofCeylon, Treasury division in keeping with the decision of the Board of Directors.

3.2 DEBTORS

Debtors are stated at the amounts they are to be realized. Provision has been made for all doubtful debts.

3.3 STOCKS

Stocks are valued on first in first out basis (FIFO)

(4) PROVISION FOR RETIREMENT BENEFITSProvision has been made in the Accounts for Retirement Gratuities to staff in accordance with the provisions in the Gratuities Act. No.12 of 1983 and SLAS 16.

45

NOTES TO THE BALANCE SHEET OF COCONUT DEVELOPMENT AUTHORITY

Note II Lady Lohore Loan Fund Rs. 1,275,987.79

The initial deposit and the accumulated interest (4% on Loans given to staff) is shown in this A/C.

Note III Treasury Bills Rs. 13,701,416.57

(1) A sum of Rs.2,858,988.08 a part of the Government Grant kept in C/A maintained at the Bank of Ceylon Branch, Hydepark Corner in 1998 in keepingwith the Board of Directors decision 355/02 of 354th meeting has been invested in Fixed Deposits. This amount has been accumulated interest is Rs.9,819,930.50

(2) A sum of Rs. 2,202,009.36 has been received as the proceeds of disposal of old and unusable motor vehicles. The investment is kept in the form ofTreasury bills through the Bank of Ceylon with accumulated interest as Rs. 3,881,486.07

Note IV Stocks Rs. 6,637,553.82 Rs.D.C. & Fibre Mill spare parts 20,347.01Laboratory requisites 5,192,885.27Motor Spare parts 38,847.98Stationery 1,385,473.56

6,637,553.82

Note V Government Grant Rs. 46,561,000.00 (Capital)

Balance as at 01-01-2009 43,061,000.00Add : Treasury Grants received for the year 2009 3,500,000.00Balance as at 31-12-2009 46,561,000.00

Note V-A Capital Development Grant Rs. 49,690,569.26Balance as at 01-01-2009 21,211,794.57Add :Cess Grants during 2009 28,478,774.69Balance as at 31-12-2009 49,690,569.26

Note VI Accumulated Income over Expenses Rs. (108,673,055.22)

Balance as at 01-01-2009 (83,370,137.19)(Deficit) Surplus (24,862,542.73)Adjustment in respect of previous years (440,375.30)Balance as at 31-12-2009 (108,673,055.22)

46

CAPITAL DEVELOPMENT FUND /CESS FUND POSITION AS AT 31st DECEMBER 2009

2008RS. RS. RS.

1,026,507,899 Cess Fund as per last year Balance Sheet 120,392,821.20 (934,515,301) Add: Adjustment A/C (Note VII) 46,404.91

91,992,599 120,439,226.11

ADD INCOME

6,504,563 Interest on Investment 6,207,135.49 122,000,000 Treasury Grants 71,700,000.00 56,679 Rental Income on Dunkannawa Land & Building 62,347.21 750 Sundry Income 145,811.64

128,561,993 78,115,294.34

LESS (100,161,770) Expenditure (Refer Page 30) 110,336,777.41

28,400,222 Income over Expenditure (32,221,483.07)

120,392,821 Fund as at 31st December 2009 88,217,743.04

47

NOTE TO THE BALANCE SHEET OF CDA

FIXED ASSETS AS AT 31.12.2009

ITEM COST AS AT ADJUSTMENT ADDITION DISPOSALS COST AS AT ACCUMULATED ADJUSTMENT DISPOSALS DEPRECIATION ACCUMULATED W. D. VALUE

01.01.2009 31.12.2009 DEPRECIATION 2009 DEPRECIATION AT 31.12.2009

LAND 134,855,770.00 - - - 134,855,770.00 - - - - - 134,855,770.00

BUILDINGS 102,345,630.79 2,502,957.49 565,987.50 - 105,414,575.78 4,049,718.45 1,076,599.80 - 2,609,468.75 7,735,787.00 97,678,788.78

LABORATORYFITTINGS &EQUIPMENT

42,502,957.39 503,861.98 9,975,494.09 - 52,982,313.46 22,308,179.67 1,188,772.28 - 3,499,949.62 26,996,901.57 25,985,411.89

MILLEQUIPMENT 592,837.50 (592,837.50) - - - 592,835.50 (592,835.50) - - - -

OFFICEFURNITURE &EQUIPMENT

21,028,967.83 (7,598,662.75) 331,188.25 51,943.50 13,709,549.83 13,777,742.56 (7,058,864.26) 51,884.92 1,447,367.30 8,114,360.68 5,595,189.15

MACHINERY&EQUIPMENT 2,988,863.56 375,036.44 - - 3,363,900.00 2,988,790.15 (2,253,724.87) - 336,390.00 1,071,455.28 2,292,444.72

BOOKS &PERIODICALS 723,208.65 - 3,100.00 - 726,308.65 631,602.67 4,498.59 - 14,867.33 650,968.59 75,340.06

MOTORVEHICLES 55,108,000.00 - 11,120,940.00 - 66,228,940.00 9,760,789.07 - - 16,299,183.80 26,059,972.87 40,168,967.13

SAMPLINGMEASURINGEQUIPMENT

64,944.09 (64,944.09) - - - 64,931.09 (64,931.09) - - - -

TOTAL 360,211,179.81 (4,874,588.43) 21,996,709.84 51,943.50 377,281,357.72 54,174,589.16 (7,700,485.05) 51,884.92 24,207,226.80 70,629,445.99 306,651,911.73

48

NOTE TO THE BALANCE SHEET OF CDA

CAPITAL DEVELOPMENT FUND

FIXED ASSETS AS AT 31.12.2009

ITEM COST AS AT ADDITION COST AS AT ACCUMULATED DEPRECIATION ACCUMULATED W. D. VALUE

01.01.2009 31.12.2009 DEPRECIATION 2009 DEPRECIATION AT 31.12.2009

LAND - DUNKANNAWA 20,090,918.70 - 20,090,918.70 - - - 20,090,918.70

DUNKANNAWA MODEL MILLBUILDING 23,430,447.64 1,855,405.76 25,285,853.40 76,666.66 632,146.33 708,812.99 24,577,040.41

MODEL MILL MACHINERY 7,448,015.70 - 7,448,015.70 - 148,960.31 148,960.31 7,299,055.39

TOTAL 50,969,382.04 1,855,405.76 52,824,787.80 76,666.66 781,106.64 857,773.30 51,967,014.50

49

Coconut Development AuthorityIndirect Method Cash Flow Statement

Public Sector Entity - Consolidated Cash Flow Statement forYear ended 31st December 2009

2009Cash Flows from Operating ActivitiesSurplus/(deficit) from ordinary activities (26,401,706.00)

Non - Cash movementsDepreciation 24,988,333Net Increase in Mill Development Fund (3,385,300)Decrease in payables (3,961,278)Increase in provisions relating to employee costs 5,580,975Decrease in Accrued Expenses 651,368Increase in other current assets 993,165Bad and doubtful debtors 4,011,609Decrease in receivables 2,183,211Extraordinary items (P & L adjustments) (2,992,763)Increase in Stocks 880,703

28,950,023Net cash flows from operating activities 2,548,317

CASH FLOW FROM INVESTING ACTIVITIES

Gratuity Payment (1,240,060)Purchase of Fixed Assets (23,852,116)Capital work in Progress (19,823,112)

Net cash flows from investing activities (44,915,288)

CASH FLOWS FROM FINANCING ACTIVITIES

Capital Reserves (853,810)Treasury Grants for Capital 3,500,000Cess Grants For Capital 28,478,774PSS Oil Grants For Capital 10,651,884Disposal & Fixed Assets 3,733,872

Net cash flows from financing activities 45,510,720

Net increase/(decrease) in cash and cash equivalents 3,143,749Cash and cash equivalents at beginning of period 353,179,823Cash and cash equivalents at end of period 356,323,572

50

COCONUT DEVELOPMENT AUTHORITYSUMMARIZED BALANCE SHEET AS AT 31.12.2009

2008RS.

GENERALBOARD

OPERATION(CDA)

RS.

CAPITALDEVELOPMENT

FUNDRS.

P.S.S. FORCOCONUTOIL FUND

RS.

MILLDEVELOP.

FUNDRS.

TOTALRS.

FIXED ASSETS 384,944,197 Sundry Fixed Assets 377,281,358 52,824,788 21,188 - 430,127,333 (54,272,433) LESS : Accumulated Depreciation (70,629,446) (857,773) (21,178) - (71,508,397) 29,347,676 ADD : Work in Progress 22,913,236 - - 22,913,236

381,532,172CURRENT ASSETSInventories / Stocks

7,840,267 Stocks 6,637,554 322,011 - - 6,959,564 - Provision for Obsolete Stocks - - - - -

6,959,564Trade & Other Receivables

1,241,439 Lady Lochore Loan Fund 1,275,988 - - - 1,275,988 - Advance against Fixed Assets - - - - -

119,653,394 Sundry Debtors 4,137,704 3,574,488 26,870,897 1,435,381 36,018,470 (90,159,138) Provision for Doubtful Debtors - - (8,023,218) - (8,023,218) 15,550,577 Staff Debtors 14,841,847 - - 14,841,847 59,715,037 Loans - 33,000,000 26,715,037 59,715,037 25,750 Sundry Advance 15,000 - - - 15,000 651,770 Sundry Deposits 652,495 - - - 652,495

104,495,618 3,393,641 Prepayments 2,400,476 - - - 2,400,476

Cash & Cash Equivalent 48,823,980 Bank Deposits - - - 53,031,540 53,031,540 279,097,130 Treasury Bills 13,701,417 26,390,928 259,002,287 101,523 299,196,154 25,211,150 Cash at Bank 2,671,632 1,405,978 - - 4,077,610 407 Stamp postage imprest 407 - - - 407 47,157 Stamp Franking Machine 17,860 - - - 17,860

356,323,572 2,067,718 Inter Current Account Balance 2,600,768 - - 658,089 3,258,857 833,179,718 378,518,294 116,660,419 304,565,013 55,226,533 854,970,260

51

2008RS.

GENERALBOARD

OPERATION(CDA)

RS.

COCONUT CESSFUND

RS.

P.S.S. FORCOCONUTOIL FUND

RS.

MILLDEVELOP.

FUNDRS.

TOTALRS.

NON CURRENT LIABILITIES (26,281,193) Provision for Gratuities (30,622,108) - - - (30,622,108)

CURRENT LIABILITIESPayables

(7,587,641) Sundry Creditors (2,658,192) (1,292,510) - - (3,950,702) (229,611) Refundable Deposits (198,172) - - - (198,172) (398,600) Receipts in Advance (105,700) - - - (105,700)

(4,254,574) (1,818,127) Accrued Expenses (2,469,495) - - - (2,469,495) (2,067,718) Inter Current Account Balance - (3,258,857) - - (3,258,857)

794,796,828 342,464,628 112,109,052 304,565,013 55,226,533 814,365,226

FINANCED BY 7,929,637 Capital Reserves 6,970,409 - - 105,419 7,075,827 4,102,257 Foreign Aid 4,102,257 - - - 4,102,257 156,702,909 Revaluation of Land 132,811,600 23,891,309 - - 156,702,909 87,081,311 Revaluation of Building 87,081,311 - - - 87,081,311 46,049,983 Revaluation of Motor Vehicles 46,049,983 46,049,983

301,012,287 67,218,671 Grants & Contributions 77,870,555 - - - 77,870,555 43,061,000 Government Grants Capital 46,561,000 - - - 46,561,000

124,431,555 21,211,795 Grant from Capital Deve. Fund 49,690,569 - - - 49,690,569 389,939,606 Accumulated Fund - 120,439,226 272,680,768 55,121,114 448,241,108 (28,500,341) Accumulated Surplus (108,673,055) (32,221,483) 31,884,246 - (109,010,293)

794,796,826 342,464,628 112,109,052 304,565,013 55,226,533 814,365,226

………………………………………. ……………………………………….DIRECTOR (FINANCE) CHAIRMANCOCONUT DEVELOPMENT AUTHORITY COCONUT DEVELOPMENT AUTHORITY25/02/2010

52

COCONUT DEVELOPMENT AUTHORITYSUMMARIZED INCOME & EXPENDITURE ACCOUNTS FOR THE YEAR ENDED - 31ST DECEMBER 2009

GENERALBOARD

OPERATION(CDA)

RS.

CAPITALDEVELOPMENT

FUNDRS.

P.S.S. FORCOCONUTOIL FUND

RS.

MILLDEVELOP.

FUNDRS.

TOTALRS.

INCOMEGovernment Grant (Recurrent) 62,405,000.00 - - - 62,405,000.00OTHER INCOMEGrant from Cess Fund (APCC & DC Sampling & Testing Charges) 22,442,797.43 - - - 22,442,797.43Interest Income 2,616,919.38 6,207,135.49 42,536,128.92 146,190.43 51,506,374.22Rental Income - 62,347.21 - - 62,347.21Registration Fees 3,746,920.50 - - - 3,746,920.50Lot Fees 3,641,059.15 - - - 3,641,059.15Laboratory Income 2,395,734.18 - - - 2,395,734.18Miscellaneous Income 740,650.01 145,811.64 - - 886,461.65Treasury Grants - 71,700,000.00 - - 71,700,000.00Interest on B.C.C. Loan - 4,011,608.97 - 4,011,608.97Sale of Fixed Assets and Inventory items 3,733,818.77 - - - 3,733,818.77

101,722,899.42 226,532,122.08Less :- Taxes ( Economic Service Charges & NBT) (819,985.03) - - - (819,985.03)

100,902,914.39 78,115,294.34 46,547,737.89 146,190.43 225,712,137.05EXPENDITUREAdministration & Finance 34,452,845.79 - - - 34,452,845.79Marketing Development & Research 19,588,853.49 - - - 19,588,853.49Processing Development 21,135,789.63 - - - 21,135,789.63Quality Control & Quality Assurance 20,799,766.41 - - - 20,799,766.41A.P.C.C. Contribution - 3,229,403.62 - - 3,229,403.62Marketing Development - Capital Development Programme - 7,400,632.41 - - 7,400,632.41Processing Development - Capital Development Programme - 37,923,252.62 - - 37,923,252.62Quality Control & Quality Assurance- Capital Development Programme - 1,240.00 - - 1,240.00Mahaweli Coconut Plantation Ltd. - 10,000,000.00 - - 10,000,000.00Coconut Development Authority - - - - -Udapalatha Development Expenses - - - 1,000,000.00 1,000,000.00Grants to C.D.A. - 50,921,572.12 11,000,000.00 - 61,921,572.12Other Expenditure - 79,570.00 - - 79,570.00

95,977,255.32 109,555,670.77 11,000,000.00 1,000,000.00 217,532,926.09Surplus/ (Deficit) 4,925,659.07 (31,440,376.43) 35,547,737.89 (853,809.57) 8,179,210.96

LESS : PROVISIONDepreciation for Fixed Assets (24,207,226.80) (781,106.64) - - (24,988,333.44)Provision for Gratuities (5,580,975.00) - - - (5,580,975.00)Provision for doubtful Interest on loans to B.C.C. Lanka Ltd. - - (4,011,608.97) - (4,011,608.97)

(24,862,542.73) (32,221,483.07) 31,536,128.92 (853,809.57) (26,401,706.45)

53

Coconut Development Authority

Balance Sheet as at 31st December 2009

Assets 2009 2008

Non Current AssetsProperty, plant and equipment 381,532,172 360,019,440

Current AssetsInventories / Stock 6,959,564 7,840,267Trade and Other receivable 104,495,618 106,678,829Prepayments 2,400,476 3,393,641Cash and cash equivalents 356,323,572 353,179,823Total Assets 851,711,403 831,112,000

Equity and LiabilitiesCapital Reserves 301,012,287 301,866,097Government Grant 124,431,555 110,279,671Grant from Capital Development Fund 49,690,569 21,211,795Accumulated Fund 339,230,815 361,439,266

Non-Current LiabilitiesProvision for gratuity 30,622,108 26,281,193

Current LiabilitiesPayables 4,254,574 8,215,852Accrued Expenses 2,469,495 1,818,127Total equity and Liabilities 851,711,403 831,112,000

…………………………………….. ……………………………………..DIRECTOR (FINANCE) CHAIRMANCOCONUT DEVELOPMENT AUTHORITY COCONUT DEVELOPMENT AUTHORITY25/02/2010

54

COCONUT DEVELOPMENT AUTHORITYBOARD'S GENERAL ACCOUNT - BALANCE SHEET AS AT 31.12.2009

2008 COST ACCUMULATED WRITTEN DOWN DEPRECIATION VALUE

RS. RS. RS. RS.FIXED ASSETS

306,036,591 Sundry Fixed Assets (Note I) 377,281,357.72 70,629,445.99 306,651,911.73 306,036,591 377,281,357.72 70,629,445.99 306,651,911.73

3,090,124 Add : Work in Progress 22,913,235.99

CURRENT ASSETSInvestments (Short term)

1,241,439 Lady Lochore Loan Fund (Note II) 1,275,987.79 11,581,474 Treasury Bills (Note III) 13,701,416.57 14,977,404.36 12,822,913 7,509,477 Stocks (Note IV) 6,637,553.82 6,637,553.82

- Advance against Fixed Assets 3,788,340 Sundry Debtors 4,137,703.93 651,770 Sundry Deposits 652,494.76 25,750 Sundry Advance 15,000.00 3,393,641 Pre - Payments 2,400,475.57 15,550,577 Staff Debtors 14,841,846.56 479,219 Inter Current Account 2,600,768.49

CASH 47,157 Stamp in Franking Machines 17,860.00 407 Postal Imprest A/C 407.00

Cash at Bank 1,924,261.36 Recurrent A/c 148,974.51 1,761,771.92 Capital A/c 2,522,657.52 2,689,899.03 47,955,284 48,953,146.52

55

LESS : NON CURRENT LIABILITIES 26,281,193 Gratuity Provision 30,622,107.50

LESS : CURRENT LIABILITIES 3,178,771 Sundry Creditors 2,658,192.40 1,818,127 Accrued Expenses 2,469,494.80 229,611 Refundable Deposits 198,171.72 398,600 Receipts in Advance 105,700.00 38,810 Inter Current Account 36,053,666.42 12,899,480.10

(31,945,111) 325,136,888 342,464,627.82

FINANCED BY :

43,061,000 Government Grant Capital (Note V) 46,561,000.00 21,211,795 Grants from Capital Development Fund (Note V-A) 49,690,569.26 4,102,257 Foreign Aid 4,102,256.98 67,218,671 Grants & Contributions 77,870,554.61 6,970,409 Reserves Accounts 6,970,408.50 46,049,983 Revaluation of Motor Vehicles 46,049,983.00 132,811,600 Revaluation of Land 132,811,600.00 87,081,310.69 Revaluation of Building 87,081,310.69 408,507,025 451,137,683.04

(83,370,137) Accumulated Income over expenditure (Note VI) (108,673,055.22) (108,673,055.22) 325,136,888 342,464,627.82

……………………………………..DIRECTOR (FINANCE)COCONUT DEVELOPMENT AUTHORITY25/02/2010

56

Coconut Development Authority

Income and Expenditure for the year ended 31st December 2009

Revenue 2009 2008

Government Grant 62,405,000 69,000,000Other Income 163,307,137 208,800,029

225,712,137 277,800,029

Less : Expenditure

Personal Emoluments 56,631,636 56,497,442Travelling 4,173,104 4,910,669Supplies 11,560,399 15,344,721Maintenance 5,782,803 5,286,230Contractual Service 15,588,941 14,008,011Research and Deve./Training 121,555,671 111,567,888Others 2,240,372 2,443,813Depreciation 24,988,333 16,828,852

242,521,260 226,887,625

Surplus or Deficit over the incomebefore extraordinary items (16,809,122) 50,912,405Extraordinary items (Net Profit or Loss) - -Provisions (9,592,584) (7,659,061)

Net Surplus / Deficit for the period (26,401,706) 43,253,343

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COCONUT CESS FUND / CAPITAL DEVELOPMENT PROGRAMMEBALANCE SHEET AS AT 31st DECEMBER 2009

2008RS. RS. RS. RS.

FIXED ASSETS 20,090,919 Dunkannawa Land 20,090,918.70 23,430,447 Dunkannawa Building 25,285,853.40

(76,667) Less - Accumulated Depreciation (708,812.99) 24,577,040.41 7,448,016 Model Mill - Dunkannawa Machinery 7,448,015.70

- Accumulated Depreciation (148,960.31) 7,299,055.39 51,967,014.50

CURRENT ASSETS 38,662,047 Treasury Bills Note I 26,390,927.87 31,550,000 B.C.C. Lanka Ltd. Note II 31,550,000.00 330,790 Isurusala Stock 31-12-2009 322,010.57 6,052,686 Sundry Debtors Note III 3,574,487.85 1,450,000 Hiriyala Govijana Samagama Loan Note IV 1,450,000.00 21,525,116 Cash at Bank 1,405,978.29 150,463,354 64,693,404.58

LESS - CURRENT LIABILITIES 4,400,546 Sundry Creditors Note V 1,292,509.95 220,665 C/A with G.B.O 3,100,768.49 1,549,689 C/A with M.D.F. Note VI 658,088.60

- Capital Development A/C (500,000.00) 8,325 Bank Error - (4,551,367.04) 60,142,037.54 144,284,130 112,109,052.04

REPRESENTED BY : 1,026,507,899 Capital Development Fund / Cess Fund 120,392,821.20

(934,515,301) Add - Adjustment A/c Note VII 46,404.91 120,439,226.11 28,400,222 Less - Income Over Expenditure (32,221,483.07) 88,217,743.04 23,891,309 Revaluation Reserve (Land) Note VIII 23,891,309.00 144,284,130 112,109,052.04

……………………………………..DIRECTOR (FINANCE)COCONUT DEVELOPMENT AUTHORITY25/02/2010

58

PRICE STABILIZATION SCHEME FOR COCONUT OIL (FUND)

BALANCE SHEET AS AT 31ST DECEMBER 2009

2008 COST ACCUMULATED NET VALUE

RS. RS.DEPRECIATION

RS. RS.FIXED ASSETS

10 Furniture, Fittings & Equipment 21,187.50 21,177.50 10.00 21,187.50 21,177.50

CURRENT ASSETS

228,066,380 Treasury Bills (Note I) 259,002,287.17 26,715,037 Loan to B.C.C. Lanka Ltd. (Note II) 26,715,037.40 90,159,138 Interest Receivable from B.C.C. Ltd. 8,023,217.94 7,999,690 Central Bank of Sri Lanka ( T.B. Interest Receivable ) 5,992,217.67

10,158,204 Interest Receivable S.I.T.S. Fund 12,855,461.12 363,098,450 312,588,221.30

LESS :

(90,159,138.39) Provision for doubtful Interest on the B.C.C. Loan (8,023,217.94)

(258,554.06) C/A With GBO - (8,023,217.94) 304,565,003.36

272,680,758 304,565,013.36

REPRESENTED BY : 246,211,194 Price Stabilization Fund 272,680,767.77

ADD : 26,469,574 Net Profit for the year 31,536,128.92

P & L Adjustments (Note III) 348,116.67 31,884,245.59 272,680,768 304,565,013.36

……………………………………..DIRECTOR (FINANCE)COCONUT DEVELOPMENT AUTHORITY25/02/2010

59

INCOME & EXPENDITURE ACCOUNTS FOR THE YEAR ENDED 31st DECEMBER 2009

2008 RS. INCOME RS. RS.

69,000,000 Government Grant (Recurrent) 62,405,000.00 7,941,151 Recurrent from Capital Development Fund 226,965.93

- DC Sampling & Testing charges 21,197,606.50 21,057,205 Inspection Charges to Inspectors 1,018,225.00 22,215,831.50 2,347,463 Interest Income 2,616,919.38 2,547,080 Registration Fees 3,746,920.50 2,303,077 Lot Fees 3,641,059.15 2,921,298 Laboratory Income 2,395,734.18 859,582 Miscellaneous Income 740,650.01

- Sale of Fixed Assets and Inventory items 3,733,818.77 108,976,856 39,090,933.49

Less :- Taxes ( Economic Service Charges & NBT) (819,985.03) 38,270,948.46 100,902,914.39

EXPENDITURE

33,917,060 Administration & Finance 34,452,845.79 22,287,273 Marketing Development & Research 19,588,853.49

21,336,649 Processing Development 21,135,789.63 20,805,673 Quality Control & Quality Assurance 20,799,766.41 (98,346,655) (95,977,255.32)

Gross Surplus before Provisions 4,925,659.07

OTHER EXPENDITURE

16,828,852 Depreciation for Fixed Assets 24,207,226.80 144,230 Write off of Lease Hold Land Value - 3,647,453 Provision for Gratuities 5,580,975.00 (29,788,201.80) (20,620,534) (9,990,334) (Deficit) Surplus (24,862,542.73)

(75,530,694) Accumulated Income over Expenditure B/F (83,370,137.19) 2,150,891 Less : Adjustment in respect of previous years (440,375.30) (83,810,512.49) (83,370,137) (108,673,055.22)

60

COCONUT CESS FUND / CAPITAL DEVELOPMENT PROGRAMMEINCOME & EXPENDITURE ACCOUNT FOR THE YEAR 31st DECEMBER 2009

2008 RS. RS. RS. INCOME

107,000,000 Treasury Grants for Development Expenses C.D.A. 61,700,000.00 15,000,000 MCPL Ltd. 10,000,000.00 71,700,000.00 6,504,563 Interest on Treasury Bills 6,207,135.49 56,679 Rental Income on Dunkannawa 62,347.21 750 Sundry Income 145,811.64

128,561,993 78,115,294.34

EXPENDITURE 15,000,000 Mahaweli Coconut Plantation Ltd. 10,000,000.00 2,976,901 A.P.C.C. Contribution (Country) 3,229,403.62

Coconut Development Authority :- Grants to C.D.A.:-

4,580,000 Capital Grants - Lab Equipments 28,478,774.69 7,941,151 Recurrent Grants / Revenue 226,965.93 21,057,205 Sampling &Testing Charges 22,215,831.50 50,921,572.12

Processing Development 7,677,436 Cess deposited to Mill Development Fund 8,470,169.00 4,000,000 Subsidy for bio fuel fired Boiler -DC 3,500,000.00 3,680,145 Subsidy for Water Testament Plant - DC 10,656,238.00 673,430 Subsidy for Copra 100,000.00

1,604,500 Subsidy for Coconut Oil 100,000.00 8,236,810 Subsidy for Fibre Development 3,043,604.90

- Model Mill Dunkannawa 6,094,136.10 9,137,741.00 - Subsidy for Quality Assurance & Quality Certification 100,000.00

25,205 Bank Loan Interest for Copra 63,580.44 243,253 Bank Loan Interest for Coconut Oil 355,061.12 432,909 Bank Loan Interest for Fibre 249,970.00 76,667 Depreciation of Building & Machinery - Dunkannawa 781,106.64 703,849 Waharakgoda Coir Brushes Project - Income (77,830.24)

- Waharakgoda Coir Brushes Project - Expenses 287,015.55 209,185.31 567,096 Kurunegala Regional Expenses 369,039.41 191,278 Tangalle Regional Office Expenses 282,058.99

- Gampola Regional Office Expenses 500,000.00 - Gamaneguma Special Project 1,006,126.75

2,269,620 Field Officer's Salary & Expenses 1,827,751.60 1,961,934 Technology Development & training Programme 996,331.00 367,557 Bank Loan Interest for D.C. Millers -

1,233,419 Subsidy for Virgin Coconut Oil - 20,000 Subsidy for Shell Products - 106,988 Subsidy for Other value added Coconut Milk based Project - 2,920 Sap Product promotion expenses - 38,704,359.26

61

Marketing Development 129,929 Expenditure of Coconut Auctions 70,312.50 2,866,098 Advertisement & Market Promotion 3,082,857.94 2,269,620 Field Officer's Salary & Expenses 1,827,751.61 557,782 Exhibition Expenses - Deyata Kirula 457,952.29 262,040 Survey & Research Expenses 100,603.88 1,622,239 Market Facilitation Exhibition Expenses & Foreign Travel 817,618.85 2,497,757 King Coconut Promotion Programme Expenses 715,284.45 380,653 Dambadeniya Coir Brushes Project - Income (367,545.48)

- Dambadeniya Coir Brushes Project - Expenses 664,414.33 296,868.85 631,108 Nelliya Coir Brushes Project - Income (384,299.37)

- Nelliya Coir Brushes Project - Expenditure 568,947.93 184,648.56 (101,491) Narahenpita Isurusala (profit) (Note-A) (153,266.52) 222,686 Gampola Isurusala Expenses - 1,337,668 Negenahira Nawodaya Expenses - 394,911 Gamaneguma Expenses - 309,132 Local Distribution of Coconut - 7,400,632.41

Quality Control & Quality Assurance 15,819 Coconut oil testing Expenses 1,240.00 379,530.00 Laboratory Expenses on ISO Accreditation Programme - 1,240.00

Other Expenditure:- 21,150 Bank Charges 20,070.00 189,000 Legal Fees 59,500.00 39,008 Tea Board - CDA Share for the committee expenses as the Plantation Sector - 506,859 A.P.C.C. Seminar Charges 45th Annually Expenses - 79,570.00 110,336,777.41 100,161,771 28,400,222 Income over Expenditure (Note-B) (32,221,483.07)

Note-A Kapruka Isurusala - Narahenpita - Profit & Loss A/CSales (1,781,580.93)Stock as at 01-01-2009 330,789.55Purchases 1,568,374.53

1,899,164.08Less: Stock as at 31-12-2009 (322,010.57) 1,577,153.51

(204,427.42)Less: Expenses 51,160.90

Net Profit (153,266.52)

Note-B Funds utilized for the year 2009 from Treasury Grants and other Income of Rs.78,115,294/= received during the year and the balance ofRs.21,525,116/= in the beginning of the year utilization for 2009 expenses.A sum of Rs.19,823,111.80 incurred for Renovation of Duke Street Building from the Invested of Rs.38,662,047/= which was deposited for same purpose.Hence this deficit shown in the Income & Expenditure A/C because the previous year balance and utilization of Treasury Bills are not shown in this A/C.

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PRICE STABILIZATION SCHEME FOR COCONUT OIL (FUND)

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31st DECEMBER 2009

2008 INCOME 2009 2009RS. RS. RS.

13,777,368 Interest on Treasury Bills 17,219,046.14 2,779,088 Interest on Fixed Deposits - 19,319,236 Interest on S.I.T.S. Fund 25,317,082.78 4,011,609 Interest on B.C.C. loans 4,011,608.97 46,547,737.89

39,887,301LESS EXPENDITURE

9,406,118 Capital Grants - G.B.O Vehicles Purchases 11,000,000.00 Provision for doubtful Interest on Loans

4,011,609 to B.C.C. Lanka Ltd. 4,011,608.97 15,011,608.97

26,469,574 Net Profit for the year 2009 31,536,128.92

……………………………………..DIRECTOR (FINANCE)COCONUT DEVELOPMENT AUTHORITY25/02/2010

63

MILLERS FUND FOR DEVELOPMENT OF THE DESICCATED COCONUT PRODUCT

INCOME & EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31st DECEMBER 2009

2008 2009RS. INCOME RS.

373,880 Interest on Treasury Bills 146,190.43

LESS

(2,000,000) Udapalatha Development Expenses (1,000,000.00)

(1,626,120) Net Expenditure for the year (853,809.57)

……………………………………..DIRECTOR (FINANCE)COCONUT DEVELOPMENT AUTHORITY25/02/2010

64

MILLERS FUND FOR DEVELOPMENT OF THE DESICCATED COCONUT PRODUCT

BALANCE SHEET AS AT 31st DECEMBER 2009

2008 DESCRIPTION 2009RS. RS.

INVESTMENTS

787,229 Treasury Bills (Note I) 101,522.73 48,823,980 National Savings Bank (Note II) 53,031,540.49

ADD CURRENT ASSETS

1,549,689 Current Account with Cess Fund (Note III) 658,088.60 1,362,145 Amount receivable on Misappropriation (Note IV) 1,431,485.03 38,810 C/A with G.B.O. - 133,190 Central Bank of Sri Lanka ( T.B. Interest receivable ) 3,896.15

2,093,469.78 52,695,042 55,226,533.00

LESS :CAPITAL RESERVES

2,585,348 N.R.I. Project 959,228.45 1,626,120 Less : Net Expenditure for the year 2009 (Page 36) 853,809.57 105,418.88 959,228

51,735,814 55,121,114.12

REPRESENTED BY

51,735,814 D.C. Mill Development Fund 55,121,114.12

……………………………………..DIRECTOR (FINANCE)COCONUT DEVELOPMENT AUTHORITY25/02/2010

65

7. Report of Audit and Management Committee

Audit and Management Committee of the coconut Development Authority was established in

terms of Para 7:4:1 in the public enterprise circular No. PED/12 dated 02.06.2003 issued in

the name of handbook of guidelines relating to the good governance in the public institutions

and the committee is carrying out its functions in accordance with the provisions stipulated in

that circular.

This committee consists of the following members.

1. Mr. W.M.D. Navaratna - Board Member / Chairman of the committee , Treasury representative

2. Mr. J.W.K. Pemaratna - Board MemberMinistry representative

3. Mr. Felix Fernandopulle - Board Member

The internal Auditor of the CDA functions as the convener of this committee and the

superintendent of Audit in the Auditor General’s Department who is in charge of the audit in

this Authority is involved in the relevant activities as an observer.

3 audit and management committee meetings have been held on 21.05.2009, 20.08.2009 and

17.11.2009 in 2009 and it was not possible to hold committee meetings during the

preliminary months in 2009 due to changes in the management of the Authority. Minutes of

the committee meetings have been properly maintained to ascertain as to whether instructions

and recommendations of the committee are implemented and relevant minutes have been

submitted to the Board and approval has been obtained. Functions carried out at the

committee meetings in 2009 are as follows.

7.1 Review of previous committee reports

Action was taken to look into the proper implementation of instructions and

recommendations of the committee reviewing the report of semi final committee meeting.

7.2 Review of the report of the Auditor General in the CDA

v Report of the Auditor General on the accounts for the year ended 31.12.2008

in terms of Section 13(7) (a) in the Finance Act No. 38 of 1971 and

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v Report of the Auditor General on the accounts for the year ended 31.12.2008

in term of Section 14(2) (c) were discussed and steps taken to rectify errors

and shortcomings stated therein and the replies given were looked into and

necessary instructions were issued

7.3 Review of audit queries

The committee, having discussed the audit queries raised by the Auditor General’s

Department pertaining to the year 2009 issued instructions to give proper replies to

such queries and take measures to avoid shortcomings and errors pointed out.

7.4 Review of appraisal reports relating to action plan in 2009

Appraisal reports were reviewed relating to functions targeted and achievements

reached according to action plan of the CDA in 2009.

v Appraisal reports relating to development and modernization work in the field

of coconut industry were evaluated and progress as well as the target which

could not be reached were looked into and necessary instructions were issued.

v Having looked into the present position of the implementation of the

international standard organization on the Quality Control and Quality

Assurance Division, instructions were given to solve the problems prevailing

to take next step in relation to capital expenditure in particular and results

revealed in the analysis of coconut oil.

v Having looked into the problems relating to the auction of fresh coconuts and

copra which is very helpful to maintain the stability of the coconut price,

instructions were issued for the step to be taken.

7.5 Investigation into expenses

Having investigated expenses incurred for electricity, water, telephone, fuel and other

expenses relating to contract services during the periods 01.01.2009 to 30.06.2009

and 01.07.2009 to 30.09.2009 in terms of No. IAI/2000/01 dated 12.06.2000, reasons

for excess expenditure were looked into and instructions were given to take action to

minimize the expenses with strict control.

67

7.6 Appraisal reports of the Internal Audit Division

Appraisal reports relating to the audit functions of the internal Audit Division from

01.10.2008 to 31.12.2008, 01.01.2009 to 30.06.2009 and 01.07.2009 to 30.09.2009,

were discussed.

v Control Systems and procedures were reviewed in relation to the grant of

subsidies under the payment of relief loan interest for the desiccated coconut

industry, coconut industry, coconut oil, copra industry, coir industry, coir

finished product industry , production of coconut shell related fancy items and

coir industry pertaining to the development and modernization programme in

the field of coconut industry, payment from the DC Mill Fund ad accuracy

subsidy payments under the waste water treatment programme in the DC mills

and instructions were given to avoid existing shortcomings.

v Instructions were given as to how action to be taken in regard to the money

available in the inactive accounts of the Mill Development Fund for the

development of DC mill.

v Having looked into the implementation of financial control powers of the

Authority, payments relating to Cess Funds, settlement of advance,

maintenance of attendance registers and records, overtime payments, official

foreign trips and use of exchange, issue of gate permits, rectification of

shortcomings pointed out in the audit report submitted in regard to the

activities, stock control, operations and financial activities in the coconut

product sales outlet and implementation of recommendations made for that

purpose and necessary instructions were issued.

7.7 Inspection of activities in the projects

Having reviewed the projects at Damabadeniya, Nelliya, Waharakgoda, statements of

accounts in Kapruka Isurusala and production reports, problems in respect of

production cost and employees were discussed and instructions were given to run

such projects without profit or loss.

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7.8 Inspection of activities in the regional offices

Having reviewed the activities in Kurunegala and Tangalle regional offices,

instructions were issued to carry out such activities under proper and sufficient

supervision.

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