Harischandra Annual Report Inner Pages 3

To provide the public with a

variety of high quality

foods and soaps.

Our Vision

To enhance our heritage

brand status and

serve the nation.

Our Mission

NoticeofMeeting 4

CorporateInformation 5

Chairman'sReview 6

ManagingDirector'sReport 7

CorporateGovernance 11

RiskManagement 16

RemunerationCommitteeReport 17

AuditCommitteeReport 18

RelatedPartyTransactionsReviewCommitteeReport 20

BoardofDirectors 21

AnnualReportoftheBoardofDirectors

-ontheAffairsoftheCompany 22

StatementofDirectors'Responsibilityfor

-FinancialReporting 28

IndependentAuditors'Report 29

StatementofPro�itorLossandOther

-ComprehensiveIncome 33

StatementofFinancialPosition 35

StatementofChangesinEquity 36

StatementofCashFlows 38

NotestotheFinancialStatements 39

StatementofValueAdded 75

TenYearsStatisticalSummary 76

InvestorInformation 77

FormofProxy 79

-03-

NOTICEOFMEETING

thNoticeisherebygiventhatthe68 AnnualGeneralMeetingofHarischandraMillsPLC,willbeheldattheregisteredof�iceofthe

Company,No.11,C.A.HarischandraMawatha,Mataraon14November2020at11.00a.m.forthefollowingpurposes.

1. ToreceiveandconsidertheReportoftheDirectorsandAuditedStatementofAccountsfortheyearended31March,2020

alongwiththereportoftheAuditorsthereon.

2. Todeclarea�inaldividendofRupeesThirty(Rs.30/-)pershareforthe�inancialyearended31March2020asrecommended

bytheDirectors.

3. Tore-electMr.S.A.S.JayasundaraasaDirector,whoretiresintermsofArticle98oftheArticlesofAssociation.

4. Tore-appointKPMG,CharteredAccountants,asAuditorsof theCompanyuntil thenextAnnualGeneralMeetingandto

authorisetheDirectorstodeterminetheirremuneration.

5. Toapprove thedonationsandcontributionsmadeby theDirectorsduring theyearunder review,and toauthorise the

Directorstodeterminecontributionstocharitiesfortheensuingyear.

ByOrderoftheBoard

CORPORATESERVICES(PRIVATE)LIMITED.

SecretariesthDated,onthis09 DayofOctober2020

Note

1. Amemberunabletoattendtheabovemeetingisentitledtoappointaproxywhoneednotbeamember.

2. AformofProxyisattachedtothereport.

3. Thecompleted formofProxyshouldbedepositedat theRegisteredOf�iceof thecompanyatNo.11,C.A.Harischandra

Mawatha,Matara,notlessthan48hoursbeforethetime�ixedforthemeeting.

th68AnnualGeneralMeeting

-04-

LegalForm

ApublicCompanywithlimitedliabilityincorporatedinSri

Lanka,whosesharesarelistedintheColomboStockExchange.

CompanyRegistrationNumber

PQ.225

DateofIncorporationth9 January,1953

RegisteredOf�ice

No.11,C.A.HarischandraMawatha,Matara.

Secretaries

CorporateServices(Private)Limited,

216,DeSaramPlace,

Colombo10.

Auditors

KPMG

CharteredAccountants

32A,SirMohamedMacanMarkerMawatha,

Colombo3.

InternalAuditors

Ernst&Young,

CharteredAccountants

201,DeSaramPlace,

Colombo10.

LegalAdvisors

FJ&GDeSaram

Attorneys-at-Law

216,DeSaramPlace,

Colombo10.

Bankers

SampathBankPLC

CommercialBankofCeylonPLC

HattonNationalBankPLC

NDBBankPLC

DFCCBankPLC

SubsidiaryCompany

HarischandraMills(Distributors)Limited(whollyowned)incorporatedinSriLanka.

BoardofDirectors

BastianszM.A.

(Chairman)

SamarasingheS.N.

(ManagingDirector)

DeSilvaG.S.V.

DeSilvaM.P.(Mrs.)

BandaranayakeT.K.

JayasundaraS.A.S.

SamarasingheR.K.(Mrs.)

ExecutiveManagement

GajanayakeC.T.

(ChiefFinancialOf�icer)

NanayakkaraS.N.K.

(SalesManager)

GaminiLokuralageD.S.

(CommercialManager)

KodithuwakkuA.P.R.

(HumanResourcesManager)

RanasingheN.P.

(ProductionEngineer)

SanjeewaH.M.R.S.(FinanceManager)

CORPORATEINFORMATION

-05-

CHAIRMAN'SREVIEW

ItiswithgreatpleasurethatIinviteyoutothe68thAnnualGeneralMeetingofHarischandraMillsPLC,andpresenttoyouthe

AnnualReportoftheCompanyfortheyearended31stMarch2020.

Itwouldnotbeanexaggerationtosaythattheeconomy,whichwasbeginningtoshowsomesignsofrecoveryattheturnofthe

year,sufferedadisastrousblowwiththetragicterroristattacksofApril2019,leadingtoaclimateofgravepoliticalandeconomic

uncertainty.Inthisenvironmentbusinessactivitywassluggishaffectingbothproductionandconsumerdemand.

Revenueinthefoodandsoapproductsincreasedby7%and8%respectively,whilstgrosspro�itwasupmarginallyby3%.

Howeverpro�itaftertaxwasdown14%overthepreviousyear.

ThecompanyhaspaidaninterimdividendofRs20/-pershareon23rdAugust2020.IamhappytoannouncethattheBoardof

Directorshasrecommendedthepaymentofa�inaldividendofRs30/-pershare.

Ithinkitwouldberemissofmenottomentionthefreshchallengesanduncertaintythatwewouldinevitablyfaceasaresultofthe

Covid19pandemic.Atthisstagewearenotfullyawareoftheeconomicconsequencesofthepandemicandhowtheseeventsmay

affectthecompany,butwearehopefulthatwewillhavesuitableproceduresinplacetodealwiththemasandwhentheyarise.

Thecompanycontinueditstraditionofmakinggenerouscontributionstoworthwhilecommunityprojectsintheregionwhich

hasbene�ittedmanylives.

OnbehalfoftheBoardofDirectorsIwouldliketothankthemanagementandallmembersofthestafffortheirbesteffortsin

contributingtothegrowthofthecompany.

MaxwellA.BastianszChairman09October2020

-06-

MANAGINGDIRECTOR'SREPORT

MACROECONOMICENVIRONMENT

ThegrowthofSriLankaneconomyin2019sloweddownto

2.3% compared to 3.3% in 2018mainly due to the Easter

Sundayattacks.Businesscon�idencehasdeclinedduetothis

tragedyandthisledsubdueddemandintheeconomy.Further,

extremeweatherconditionsduring2019adverselyaffectthe

agriculturalsector.

The Rupee, showed marginal appreciation of 0.6% during

2019. Earnings from exports grew by 0.4% and import

expenditure declined by 10.3% compared to 2018. This

resultedgreaterstabilityofexchangeratein2019despitethe

temporarypressure on the aftermath of theEaster Sunday

attacks.

Reduction in taxesat theendof2019by thenewlyelected

government resulted higher disposable income which

positivelyaffectedtheeconomy.Howeveratthelaterpartof

the�inancialyear,theeconomywasshockedbytheCOVID19

outbreak.Domesticviruscontainmentmeasureshasaffected

thekeyeconomicsectorsofthecountry.Especially,tourism,

exports,foreignremittancesandForeignDirectInvestments.

OPERATIONALREVIEW

Despite these challenges, Harischandra Mills PLC reported

beforetaxpro�itofRs.242millionaslightdropof2%from

previousyearandthesalesdeclineof1%toRs.3.65billion.

Foodproductssalesincreasedby7%andpro�itdeclinedby

6% due to the increase in material cost. Fluctuating

performance of agricultural sector of the country mainly

affectedtheincreasedmaterialcost.

Soap sales increased by 8% during the year with 18%

reduction of operating losses compared to previous year.

Being the only soap productwhich got SLSmark,we have

givenspecialfocuscontinuouslyforthesoapmanufacturing

processwhichyieldedimprovedoperatingresults.

Fuelandlubricantsegmentreporteddeclineofsalesby13%

mainlyduetothecompetitionfromtwonew�illingstationsin

Matara.

CORPORATESOCIALRESPONSIBILITY

WerenovatedtheResidentMothers'RoomintheUniversity

Pediatric Unit of the Karapitiya Teaching hospital by

introducingmodern technology and architectural expertise

regardinghealthcareinordertoprovidethehighestcomfort

to mothers. Further, Company donated heavy duty

commercialwashingmachinetoNeonatalIntensiveCareUnit

ofKarapitiyaHospital.

During the year, Company continuously focused its CSR

activities towards enhancing the education of southern

province.With this in view, Company donated Smart class

roomwithallfacilitiestoThelijjawilaCentralCollegeandfully

equippedMediaUnit to ThalpawilaMihinduModel School.

Further,CompanyrenovatedtheEnglishActivityUnitofMR/

Kokmaduwa Primary College by providing computers,

television and other facilities to create a better learning

environmentforthem.

S.N.SamarasingheManagingDirector09October2020

-07-

Asmartclassroomisaramped-upmodeofeducationwhich

spreadthenewtechnologicalexperienceswiththestudents

other than traditional class rooms. Since we are in a

technological era, future generations should be able to

competewiththis.

Byaimingthisconceptwedonatedasmartclassroomwithan

interactive whiteboard and a multimedia projector to the

studentsofMR/TelijjawilaCentralCollegebyopeninganew

pathtothenextgenerationtostepupwiththenewtechnology.

SmartClassRoomTelijjawilaCentralCollege

Wecanchangetheworldbyidentifyingtheneedsofothersand

simplymeetingthoseneeds.Thus,wecontinue investing in

our CSR projects to build a better future for the next

generationsbyenhancinghealthcarefacilities.

WerenovatedtheResidentMothers’RoomintheUniversity

Pediatric Unit of the Karapitiya Teaching hospital by

introducingmodern technology and architectural expertise

regardinghealthcareinordertoprovidethehighestcomfort

tomothers.

TheMothers’Roomwasrenovatedby increasing thespace,

providing reclining chairs, televisions, cupboards, air

conditioners and, other required facilities to make a

comfortableenvironmentwithintheward.

Since it was a necessary requirement for the Neonatal

Intensive Care Unit of Karapitiya Hospital, the company

donatedaHeavyDutyCommercialwashingmachineinorder

tocreatehealthierconditionsforbabies.

DonationsforKarapitiyaHospital

-08-

ThisisanannualeventoftheCompanystartedbyour

founderMr.C.A.Harischandratogiveahelpinghand

to the members of Harischandra staff in their

children’sstudies.

Accordingly,thecompanyprovidesallrequiredstudy

materialstochildrenofthestaff.Further,Company

providesscholarshipstochildrenofemployeeswho

entered forhigherstudiesand this continuesuntil

theycompletetheirstudies.

Distributionofstationerytothe

childrenofstaffmembers

ServiceAppreciation

ByfollowingtheconceptofMr.C.AHarischandra,the

company treats the employees as one of themost

valuable stakeholders of the company. Thus, we

felicitated a special ceremony to appreciate the

employeeswhocontinuouslyserved25yearsandwe

provided oil lamps and other gifts, in order to

appreciatetheirvaluableservicetothecompany.

Sr i Dhammananda Dhamma school o f Sr i

AbhinawaramaViharayahaslocatedinDeraniyagala,

Kegalledistrict.Sinceitisaruralarea,therewasa

lackoftechnicalknowledgeamongthestudents.We

donateddesktopcomputersandprintersinorderto

openanewwaytothemtowardthechangingworld.

Ithasbecomeagreateropportunityforanumberof

SinhalaandTamilchildrentobuildtheirfuturewith

newtechnology.

Computers&PrintersDonation

SriAbhinawaramaViharaya,

Maliboda

-09-

The future generations should be able to preserve the

effectiveness of communication, information sharing and

buildingnewcreationsbyusingmoderntechnology.

WedonatedalltherequiredequipmentandmachinerytoMR/

ThalpavilaMihinduModelSchoolinordertoopenapathfor

themtowardsthemoderntechnologicalworld

MediaUnitThalpavilaMihinduModelSchool

Thechangingworldalwaystriestocompetewitheachother

with international languages and the sound knowledge

regardingEnglishwillbeoneofthemostpowerfulweaponsto

ourchildrentochangetheworld.

Werenovated theEnglishActivityUnitofMR/Kokmaduwa

PrimaryCollegebyprovidingcomputers,televisionandother

facilitiestocreateabetterenvironmentforthem.

EnglishActivityUnitKokmaduwaPrimaryCollege

-10-

CORPORATEGOVERNANCE

"CorporateGovernance"isagenerictermthatdescribesthewaysinwhichrightsandresponsibilitiesaredistributedamongthe

variouscorporatebodiesaccordingtotherules,processesorlawstowhichtheyaresubject.Inpractice,corporategovernance

de�inesthedecision-makingsystemsandstructurethroughwhichownersdirectlyorindirectlycontrolacompany.TheBoardof

DirectorsofHarischandraMillsPLCiscommittedtoensuringbusinessintegrityandprofessionalisminallitsactivities.Asapart

ofthiscommitment,theBoardofDirectorshasproactivelyencouragedgoodcorporategovernancepracticewithintheCompany

basedonagenerallyacceptedpolicyframework,whichemphasizestransparency,controlandaccountability.

BoardofDirectorsanditsRole

TheBoardofDirectorsasof31March2020hassevenmembers;fourexecutiveandthreenon-executive.Threenonexecutive

directors are considered as independent in termsof the listing rules laiddownby theColomboStockExchange andhave

submittedannualindependencedeclarations.Thedirectorsactonafullyinformedbasis,ingoodfaith,withduediligenceand

care,andinthebestinterestofHarischandraMillsPLC.TheyarewellawareofyourCompany'sactivitiesandgivedirectionfor

long-termstrategy,seekingandcontributingviewsandopinionsonstrategicoptionsproposedbytheseniormanagementofthe

Company.ThedirectorsalsoensurethattheCompanyiscompliantwiththeprovisionsoftheCompaniesActNo.07of2007and

otherstatutoryregulatoryrequirements.

Theboardmeetsonaquarterlybasisandhastimelyaccesstoinformationneededtoeffectivelydischargeitsduties.Directors

receiveacomprehensivepackageofrelevantandtimelyinformationonallissuespriortoeachmeeting,thusprovidingthemwith

theopportunitytomakeeffectivecontributionstothedecisionsoftheboard.

SuchmeetingsareattendedbyboththeexecutiveaswellasthenonexecutiveboardmembersandareheadedbytheChairman.At

thesemeetingstheboardreviews;

- MonthlyperformanceoftheCompanyagainstthebudget

- Formulation,monitoringandimplementationofsoundbusinessstrategies,internalcontrolsandrisk

managementproceduresthatareinplaceandmonitortheireffectivenessandinitiatechangeswhererequired

- Secureeffectiveinformation,controlandauditsystems

- Compliancewithlegal/ethicalstandards

Thedetailsofattendanceofboardmeetingsareasfollows.

Mr.M.A.Bastiansz

Mr.S.N.Samarasinghe

Mr.G.S.V.DeSilva

Mrs.M.P.DeSilva

Mr.T.K.Bandaranayake

Mr.S.A.S.Jayasundara

Mrs.R.K.Samarasinghe

24.05.2019 19.07.2019 01.11.2019 07.02.2020

A�endance of Board Mee�ngs

02.04.2019

Excused Excused

ü ü ü üü

ü ü ü üü

ü ü ü üü

ü ü ü ü

ü

ü ü

ü

ü

ü

ü

ü

ü

ü

ü

ü ü ü

-11-

CORPORATEGOVERNANCE(CONTD.)

AttheAnnualGeneralMeetingineveryyear,oneofthedirectorsretiresbyrotationonthebasisprescribedintheArticlesof

AssociationoftheCompanyandiseligibleforre-election.Theretiringdirectoreligibleforre-electionthisyearismentionedin

theNoticeoftheAGMonpage04.

CompositionoftheBoard

NonExecutive,IndependentDirectors

- Mr.M.A.Bastiansz(Chairman)

- Mr.T.K.Bandaranayake

- Mr.S.A.S.Jayasundara

ExecutiveDirectors

- Mr.S.N.Samarasinghe(ManagingDirector/CEO)

- Mr.G.S.V.DeSilva

- Mrs.M.P.DeSilva

- Mrs.R.K.Samarasinghe

Atpresent,therearesevendirectorsontheboard,whosepro�ilesaregivenonpage21inthisAnnualReport.Allthedirectorshave

thenecessaryskillsandexperiencetodirectandleadtheCompany.

TheBoardhasdeterminedthatMr.M.A.BastianszisanindependentDirectorinspiteofservingontheBoardformorethan10

yearsas it isbene�icial to theCompanyand itsshareholdersandbecauseMr.M.A.Bastiansz isnotdirectly involved in the

managementoftheCompany.

BoardCommittees

AuditCommittee

TheBoard formally constituted theAuditCommittee comprisingofMr.T.K.Bandaranayakeas theChairmanandMr. S.A.S.

Jayasundara, non-executive directors to oversee the �inancial reporting and internal control systems of the Company. This

committee is also directedwith the task of ensuring that all statutory and regulatory requirements are compliedwith in

preparationoftheFinancialStatementsoftheCompanyinorderthattheygiveatrueandfairviewoftheCompany'sstateof

affairs.

TheManagingDirector(CEO)andChiefFinancialOf�icerareinvitedtothemeetingsoftheAuditCommitteeasitisrequiredbythe

membersofthecommittee.AttendanceoftheAuditCommitteemeetingswereasfollows.

ThedetailedAuditCommittee'sreportincludingareasreviewedduringthe�inancialyear2019/2020givenonPage18and19of

theAnnualReport.

AttendanceofAuditCommitteeMeetings

Mr.T.K.Bandaranayake


17.05.2019 18.07.2019 01.11.2019 31.01.2020

ü ü ü ü

ü ü ü ü

-12-


RemunerationCommittee

The board also has a Remuneration Committee comprising of following two non executive independent directors and its

responsibilityistoestablishanddeveloptheCompany'sgeneralpolicyonremunerationpackageforexecutivedirectors.

- Mr.M.A.Bastiansz(ChairmanoftheCommittee)


TheRemunerationCommitteemetinfollowingoccasionsduringtheyear.

RelatedPartyTransactionsReviewCommittee

Themainobjectiveofthecommitteeistoensureconsistencyofthetransactionswiththecodeofbestpracticesonrelatedparty

transactionsissuedbytheSEC.Followingdirectorsservedasmembersofthecommitteeduringthe�inancialyear.

- Mr.M.A.Bastiansz(ChairmanoftheCommittee)


- Mr.S.N.Samarasinghe

DuringtheFinancialyear2019/2020,theCommitteeheldfourmeetings.

Directors'InterestandResponsibilities

ThedirectorsoftheCompanyhavemadethegeneraldisclosuresprovidedforinSection199(2)oftheCompaniesActNo.07of

2007andhavebeendulyenteredintheinterestregisteroftheCompany.

Thedirectorsarerequiredbyrelevantstatutoryprovisiontoprepare�inancialstatementsforeach�inancialyear,whichgivesa

trueand fairviewof thestateofaffairsof theCompany for thatperiod. Inpreparingthe �inancialstatements,appropriate

accountingpolicieshavebeenselectedandappliedconsistentlyandreasonablyandprudentjudgmentsandestimateshavebeen

made.TheapplicableSriLankaAccountingStandardshavebeenfollowedandexplainedinthenotestothe�inancialstatements.

ThedirectorsareresponsibleforensuringthattheCompanykeepssuf�icientaccountingrecordstodisclosewithreasonable

accuracyof the �inancialpositionof theCompanyand to ensure that theCompany's �inancial statements complywith the

provisionsoftheCompaniesAct.No.07of2007,theSriLankaAccountingStandardsandtheListingRulesoftheColomboStock

Exchange.

ThedirectorsarealsoresponsibleforensuringthatreasonablemeasuresaretakentosafeguardtheassetsoftheCompanyatall

times.Inthiscontext,theyhaveestablishedappropriatesystemsofinternalcontrolswithaviewtopreventinganddetectingof

fraudsandotherirregularities.

Mr.M.A.Bastiansz

24.05.2019 19.07.2019 01.11.2019


Mr.S.N.Samarasinghe

Director

AttendanceofRemunerationCommitteeMeetings

09.11.2019 14.02.2020

Mr.M.A.Bastiansz


ü

ü ü ü ü

ü ü ü ü

ü ü ü ü

ü

ü ü

07.02.2020

-13-


Inpreparingaccounts,thedirectorscontinuetoadoptthegoingconcernbasis.ThedirectorsafterreviewingtheCompany's

budgetandborrowing facilitiesareof theview that theCompanyhasadequate resources tocontinue inoperation for the

foreseeablefuture.

CompliancewithLegalRequirements

Theboardisconsciousofitsresponsibilitiestotheshareholders,thegovernmentandthesocietyinwhichitoperatesandis

unequivocallycommittedtoupholdingethicalbehaviorinconductingitsbusiness.TheBoardofDirectorsrequiresthatFinancial

StatementsarepreparedinaccordancewiththeSriLankaAccountingStandardsandtherequirementsoftheColomboStock

Exchange.

RelationshipwithShareholders

HarischandraMillsPLCaimstoensurethatshareholdershaveaccesstorelevant,up-to-dateandconsistent�inancialandnon-

�inancial information pertaining to the Company. The Annual Report and quarterly Financial Statements provide the

shareholdersaswellasprospectiveinvestorswiththerequiredinformationtoassesstheCompany'spastperformanceand

analyzeitsfutureprospects.

CorporateGovernanceRequirementsundertheListingRulesofColomboStockExchange

Section7oftheListingRulesoftheColomboStockExchangerequiresallListedCompaniestoincludeintheirAnnualReportsan

af�irmativestatementrelatingtocompliancewiththeCorporateGovernanceRulesspeci�iedinthatsection.Thetableinpage15

containstherequiredaf�irmativestatementinthatregard.

CompanySecretary

TheCompanysecretaryisquali�iedtoactinthisroleaspertheprovisionsoftheCompaniesActNo.07of2007.

InternalandExternalAuditors

TheCompany'sInternalAuditfunctionhasbeenoutsourcedandquarterlyreportsaresubmittedbytheInternalAuditor.The

managementdecidesontheareasthatneedtobeauditedbytheInternalAuditorforagivenquarterundertheguidanceofAudit

Committee.

TheExternalAuditorsareappointedbytheshareholdersattheAnnualGeneralMeetingandareresponsibletogivetheiropinion

ontheFinancialStatementspreparedbytheCompany.

thAtthe67 AnnualGeneralMeetingofHarischandraMillsPLCheldon21September2019,theshareholdersreappointedthe

AuditorsM/s.KPMGandauthorisedthedirectorsto�ixtheirremuneration.Theindependentauditorsconducttheannualaudit

inordertoprovideanexternalandobjectiveassuranceonthewayinwhichtheFinancialStatementshavebeenpreparedand

presented.

TheCompanybelievesthattherealvalueofcorporategovernanceliesnotinblindlysatisfyingacodeofbestpracticeprinciplebut

ratherinactuallysecuringthecon�idenceoftheinvestorsandtherebyachievingalowercostofequitybyconductingitsaffairs

withutmostintegrity&fairnesstoallstakeholders.

-14-

7.10.1Non-ExecutiveDirectors

Atleastonethirdofthetotalnumberofdirectorsshouldbenon-executivedirectors

Therearethreenonexecutivedirectorsintheboard

Allthreenon-executivedirectorsareindependent.

Pleasereferpage12

Pleasereferpage21

Pleasereferpage17

Pleasereferpage17

Pleasereferpage17&64

Pleasereferpage12

Pleasereferpage12

Pleasereferpage18



NamesofthemembersofAuditCommitteearesetoutinPages18&19

Pleasereferpage17

Complied

Complied

Complied

Complied

Complied

Complied

Complied

Complied

Complied

Twooronethirdofnon-executivedirectors,whicheverishighershouldbeindependent

Eachnon-executivedirectorshouldsubmitadeclarationofindependence/non-independenceintheprescribedformat

NamesofindependentdirectorsshouldbedisclosedintheAnnualReport

AbriefresumeofeachdirectorshouldbeincludedintheAnnualReportincludingtheareasofexpertise

AlistedCompanyshallhaveaRemunerationCommittee

TheRemunerationCommitteeshallcompriseofnon-executivedirectorsamajorityofwhomwillbeindependent

TheRemunerationCommitteeshallrecommendtheremunerationofChiefExecutiveOf�icerandExecutiveDirectors

TheCompanyshallhaveanAuditCommittee

7.10.2aIndependentDirectors

7.10.2bIndependentDirectors

7.10.3cDisclosureRelatingtoDirectors

7.10.6aCompositionofAuditCommittee

TheAuditCommittee;ShouldbeasoutlinedintheSection7.10.6bofthelistingrules

7.10.6bAuditCommitteefunctions

7.10.6cDisclosureintheAnnualReportrelatingtoAuditComittee

7.10.3cDisclosureRelatingtoDirectors

7.10.5RemunerationCommittee

7.10.5aCompositionofRemunerationCommittee

7.10.5bFunctionsofRemunerationCommittee

7.10.5cDisclosureintheAnnualReportrelatingtoRemunerationCommittee

7.10.6AuditCommittee

TheAnnualReportshouldsetout;

NamesofdirectorscomprisingtheRemunerationCommitteeStatementofRemunerationPolicyAggregatedremunerationpaidtoexecutive&non-executivedirectors

a)

b)c)

TheAnnualReportshouldsetout;

NamesofdirectorscomprisingtheAuditCommittee

TheAuditCommitteeshallmakeadeterminationoftheindependenceoftheAuditorsanddisclosethebasisforsuchdetermination

TheAnnualReportshallcontainaReportoftheAuditCommitteesettingoutthemannerofcomplianceofthefunctions

c)

b)

a)


TheAuditCommittee;•

•

•

•

Shallcompriseofnon-executivedirectorsamajorityofwhomwillbeindependent.

Onenon-executiveindependentdirectorshallbeappointedastheChairmanofthecommittee

ChiefExecutiveOf�icerandtheChiefFinancialOf�icershouldattendAuditCommitteeMeetings

TheChairmanoftheAuditCommitteeoronemembershouldbeamemberofaprofessionalaccountingbody

Complied

Complied

Complied

Complied

Complied

Complied

Complied

Submittedtheindependentdeclarationsaccordingly.

Rule Requirement CompanyStatus

Remarks

-15-

Riskmanagement

Risk Management process is implemented in order to

understand,evaluateandaddresstheinheritedrisksforthe

Companytomaximizethechanceofobjectivesbeingachieved

whileensuringitssustainability.Asitisimpossibletomitigate

these risks completely, an effective process of this

management is required toexploit theopportunitiesbring

andallowCompany tobeawareofpossibilities.Hence the

following identi�ied risks are major to Company's

performance and position and are included in the risk

managementprocedure.

SupplyChainManagement

Constant supply of high quality materials, ef�icient and

effective manufacturing and the timely distribution of

productsisamustforthesuccessoftheCompany.

Further the cost of raw materials represents the largest

portion of manufacturing cost of the Company's product;

hencethequalityoftheproductisofparamountimportance.

The Company is inevitably exposed to the risk of

contaminated raw materials accidently or maliciously

throughoutthesupplychainorproductdefectswhichoccur

duetohumanerrororanequipmentfailure.

In order to mitigate and minimize these problems, the

Companyhasdevelopedcontingencyplansofhavingstrong

relationship with its key suppliers to control quality by

periodicalreviewstoensurethattheymeetrigoroustesting

andacceptanceprocedure.

MarketRisk

Loss of market share or market leadership in relevant

segmentsduetointensecompetition,newentrants,changes

incustomerattitudeandeconomicconditionsaretreatedas

identi�iablemarketrisk.

Successfulcustomerrelationshipsarevital toourbusiness

andcontinualgrowth.Maintainingastrongrelationshipwith

ourcustomersisnecessaryforourbrandtobewellpresented

andavailableforpurchasealltime.Further,greatcustomer

satisfaction and the con�idence in our products lead to

buildingbrandloyalty.

A Well maintained quality assurance department always

worksaccordingtotheproceduresandstandardstodeliver

thebesttothecustomer,itwillalsoensurecontinuousfocus

on innovation, regular monitoring of consumer trends,

enhance productivity or ef�iciency to improve price

competitiveness,AlsoMonitormarketdata, thecompetitor

prices and always strive to give the best price to our

customersandstrengthenthemarketpositionofourbrand.

Combinationofthesestrategiesminimizesthemarketriskto

aconsiderablelevel.

RegulatoryandLegalRisks

Potentiallossesarisingduetoviolationofornonconformance

with laws, rules, regulation, prescribed practices, internal

policiesandproceduresorethicalstandardsareincludedas

regulatory and legal risks. The company is governed by

VariouslawsandregulationsincludingCompaniesAct,Inland

RevenueAct,SECregulations,andCSErules.

Failure to complywith laws and regulations could expose

Companytocivilcriminalactionleadingtodamages,�inesand

criminal sanctions against our employees with possible

consequencestoourreputation.Andalsochangestolawsand

regulationscouldhaveamaterialimpactonthecostofdoing

business.

Therefore we have implemented strong risk management

processes to monitor and comply with all laws and

regulations applicable to the company.Managementof the

Company always coordinates with Company lawyers and

secretariestoensurecompliance.

Internalauditsalsocarriedouteveryquartertomitigatethe

possiblerisksofnotcomplyingwithrelevantstandards.

FinancialandLiquidityRisks

Theresponsibilityofthemanagementofthe�inancialrisks

throughcontinuousmonitoringalongwith�inancialriskhas

reducedexposuretocreditriskandexternal�inancingisvery

low.Alsotheliquidityrisks,theriskofbeingunabletofund

thebusinessbymaintainingadequatecash�lows.Cash�lows

arereviewedcontinuouslyandstrongrelationshiparebeing

maintained with �inancial institutions. The �inancial

indicators and the regular items on the board agenda and

emerging trendsofboth local andglobal are also takenas

waysofmanaging�inancialrisk.

HumanResources

TheCompanyplacesstrongemphasisonretainingkeytalent

throughitsemployeeengagementsandtalentmanagement

strategies including performance evaluation, career

guidance,traininganddevelopment.TheCompanyisaware

thatthelackofskillsandcompetenceinstaffcouldresultin

the ability of the Company to grow and sustain its

performanceinthefacecompetitioninthemarketandmay

also lead to lower productivity and increased costs. The

structuredandrelevanttraininganddevelopmentprograms

aredesignedtomitigateallrisksrelatedtoHumanResources.

RISKMANAGEMENT

-16-

REMUNERATIONCOMMITTEEREPORT

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

S.A.S.Jayasundara.

TheroleoftheRemunerationCommitteeincludesthereviewandrecommendationtotheboardtotalremunerationforexecutive

andnonexecutivedirectorsaswellasseniormanagementfortheyear.Thecommitteeevaluatestheremunerationbyconsidering

theexistingmarketratesandcompensationpackagesofferedbyothersimilarcompanies.

Apartfromrecommendingremunerationofexecutivedirectors,thecommitteereviewstheremunerationpolicyoftheCompany.

TheremunerationpolicyoftheCompanytakesintoaccount;marketrates,experienceandskillsoftheemployees,employee

gradeandperformancewhendeterminingtheremunerationpackageofemployees.Thiswillhelpnotonlytoretaintheexisting

staffbutalsotoattracthighcalibreemployees.

Aggregateremunerationpaidtoexecutivedirectorsandnonexecutivedirectorsaredisclosedatpage64.

M.A.BastianszChairman-RemunerationCommittee09October2020

-17-

AUDITCOMMITTEEREPORT

RoleoftheCommittee

Theboardhasdelegated to the committee responsibility foroverseeing the �inancial reportingand internal controlof the

companyaswellas the internalauditprocessand theexternalaudit.Themainroleof theCommittee is toencourageand

safeguardthehigheststandardsofintegrity,�inancialreporting,riskmanagementandinternalcontrol.Indoingthistheprincipal

responsibilitiesofthecommitteeinclude:

- Reviewing the form and content and monitoring the integrity of the Company's and the Group's Financial

Statements.

- Monitoringandreviewingthearrangementsforensuringtheobjectivityandeffectivenessoftheexternaland

internalauditfunctionsandinparticular,theindependenceoftheExternalAuditors.

- RecommendingtotheBoard,theappointment,re-appointmentorremovaloftheExternalAuditorsandthefees

payabletothem.

- ReviewingtheadequacyandeffectivenessoftheCompany'sinternalcontrolsandriskmanagementsystems;and

ReviewingandmonitoringtheCompany'sethicalstandards,proceduresforensuringcompliancewithstatutory

andregulatoryrequirementsanditsrelationshipwiththerelevantregulatoryauthorities.

Composition

The Audit Committee consists of independent non-executive directors and presently comprises, Mr. T.K. Bandaranayake

(Chairman),aseniorCharteredAccountantwithextensiveauditexperience,particularlyaretiredseniorpartnerofErnst&

YoungSriLankaafter27yearsofservice,andMr.S.A.S.Jayasundara,anattorneyatlawwithmanyyearsofcommercialsector

experienceasanindependentdirectorofseveralothercompaniestoo.

MeetingsoftheCommittee

TheAuditcommitteemetfourtimesinthe�inancialyear.TheManagingDirector(ChiefExecutiveOf�icer)andChiefFinancial

Of�icerattendedbyinvitationandbriefedthecommitteeonspeci�icissues.Theexternalandinternalauditorswerealsorequired

toattendmeetingswhereconsiderednecessary.

Activities

Duringtheyearunderreviewthecommitteehascarriedoutthefollowingactivities.

FinancialReporting

Duringtheyear,thecommitteereviewed�inancialreportingandrelatedmattersincludingthequarterlyandannualFinancial

Statements,otherrelatedannualreport information,andannouncementspriortosubmissiontotheboard.Thecommittee

focusedinparticularonkeyaccountingpoliciesandpracticesadoptedbytheCompanyandanysigni�icantareasofjudgmentthat

materiallyimpactedonreportedresults.

WiththeintroductionofthenewAuditReportPreviousyear,theauditcommitteehasintroducedaprocesstodiscusstheareas

whichareidenti�iedasKeyAuditMattersbyMessrsKPMGforreportingintheAuditReportattheAuditplanningandcompletion

stage.

InternalAuditandControlIssues

Atitsmeetingsduringtheyear,thecommitteereviewedtheresultsoftheauditsundertakenbytheInternalAuditors,Messrs,

Ernst&Young,andconsideredtheadequacyofmanagement'sresponsetothemattersraised,includingtheimplementationof

recommendationsmadebytheauditors.Itreviewedandapprovedtheinternalauditplanforthecomingyearandthelevelof

resourcesallocatedtotheinternalauditfunction.

-18-

AUDITCOMMITTEEREPORT(CONTD.)

ExternalAudit

ThecommitteemetwiththeExternalAuditors,MessrsKPMGpriortocommencementoftheannualauditandapprovedtheaudit

planpresentedbythem.Attheconclusionoftheannualaudit,thecommitteemettheauditorstodiscussthe�indingsoftheaudit.

Non-executivedirectorshadseparatemeetingswithauditorstodiscussanysensitiveissuesandensuretheyhadnocauseto

compromiseontheirindependence.Auditors'ManagementLettertogetherwiththeManagement'sresponsetheretoandthe

AuditedFinancialStatementswerereviewedwiththeauditors.Havingsatis�iedthemselveswiththequalityandindependenceof

theauditorstheAuditCommitteehasrecommendedtotheBoardofDirectorsthatMessrs.KPMGbereappointedasAuditorsfor

the�inancialyearending31March2021subjecttotheapprovalofshareholdersatthenextAnnualGeneralMeetingatafeetobe

determinedbytheBoard.

T.K.Bandaranayake

Chairman-AuditCommittee

09October2020

-19-

RELATEDPARTYTRANSACTIONSREVIEWCOMMITTEEREPORT

TheRelatedPartyTransactionsReviewCommittee("TheCommittee")wasformedon01January2016intermsoftheCodeof

bestpracticeonRelatedPartytransactions("code")issuedbytheSecurities&ExchangeCommissionofSriLankaandSection9of

theListingRulesoftheColomboStockExchange("ListingRules").TheCommitteecomprisesthreeDirectorsincludingtwoNon

ExecutiveDirectors.ThecompositionoftheCommitteeasat31March2020is;

- MrM.A.Bastiansz(Chairman,NonExecutiveIndependentDirector)

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

- MrS.N.Samarasinghe(ExecutiveDirector)

ObjectiveoftheCommittee

TheobjectiveoftheCommitteeistoensurethattheinterestsofshareholdersasawholearetakenintoaccountbytheCompany

whenenteringintoRelatedPartyTransactions,incompliancewiththeprovisionsoftheCodeandListingRules.

RoleandResponsibilities

ThemandateoftheCommitteeisderivedfromtheCodeandtheListingRulesandincludesmainlythefollowing:

- DevelopingandmaintainingarelatedpartytransactionspolicyconsistentwiththeprovisionsoftheCodeandthe

ListingRules.

- ReviewingallproposedRelatedPartyTransactions("RPT")toensurecompliancewiththeprovisionsoftheCode

andtheListingRules.

- AdvisingtheBoardofDirectorsonmakingimmediatemarketdisclosuresanddisclosuresintheAnnualReport

wherenecessary,inrelationtonon-recurrentandrecurrentrelatedpartytransactions.

- Settingguidelinesforseniormanagementtofollowinsuchcircumstances.

ReportingtotheBoard

TheCommitteeheldmeetingseveryquarterandreviewedallrelatedpartytransactionsoftheCompanyinordertoensurethat

thosetransactionshavetakenplaceinaccordancewiththeguidelinesestablishedbytheCommitteeincompliancewiththeCode

andListingrules.TheCommitteewassatis�iedthatallrelatedpartytransactionswereincompliancewiththeCodeandListing

Rules.TheminutesofthemeetingsaretabledatBoardmeetings.

Declaration

TheBoardofDirectorscon�irmthattheCompanyhascompliedwiththerequirementsoftheListingRules(asrequiredbysection

9.3.2(d))oftheColomboStockExchangeonRelatedPartyTransactions.

OnbehalfoftheBoardRelatedPartyTransactionsReviewCommittee.

M.A.Bastiansz

Chairman-RelatedPartyTransactionsReviewCommittee

09October2020

-20-

Mr.M.A.Bastiansz

IndependentNonExecutiveChairman

Mr.BastianszwasappointedtotheBoardastheChairmanof

HarischandraMillsPLCinNovember2005.HeistheChairman

of the Remuneration Committee and Related Party

TransactionsReviewCommitteeoftheBoard.HeholdsaLLB

DegreefromtheUniversityofCeylonandisanAttorney-at-

Lawbyprofession.

Mr.S.N.Samarasinghe

ManagingDirector/ExecutiveDirector

Mr.SamarasinghejoinedtheCompanyin1990asCommercial

ManagerandwasappointedtotheBoardofDirectorsin1993.

InOctober2000hewasappointedastheManagingDirector.

He has overall responsibility for the production, �inance,

marketingandhumanresourcefunctionsoftheCompany.

He has a BSc.(Hons) from theUniversity of LeedsUK, Post

GraduateDiplomainBusinessandFinancialAdministration

awardedbytheInstituteofCharteredAccountantsofSriLanka

andaPostGraduateCerti�icateinCorporateBusinessFinance

fromthePostGraduateInstituteofManagement,Universityof

SriJayawardenapura.

Mr.G.S.V.DeSilva

ExecutiveDirector

Mr.DeSilvajoinedHarischandraMillsPLCasanNonexecutive

director in July 1978. He has gained wide and varied

experience in all aspects of the Company. Prior to joining

HarischandraMills PLC heworked as an Accountant at Sri

LankaTransportBoard.

Mrs.M.P.DeSilva

ExecutiveDirector

Mrs.DeSilvajoinedHarischandraMillsPLCasaNonexecutive

directorinJanuary1993,andwasappointedasanexecutive

director in February 1999. She currently heads the bakery

division of the Company. She has been responsible for the

innovation of a wide range of bottled and packeted Food

Productswhicharemadeunderhersupervision.

Mr.TissaK.Bandaranayake

IndependentNonExecutiveDirector

AFellowmemberoftheInstituteofCharteredAccountantsof

SriLanka.HoldsaBSc.degreefromtheUniversityofCeylon.

RetiredfromErnst&Youngasaseniorpartnerin2009after27

yearofservice.

A former Chairman of the Audit Faculty and the current

Chairman of the Quality Assurance Board of Sri Lanka

establishedbytheInstituteofCharteredAccountantsofSri

Lankacomprisingseniorprofessionalrepresentatives from

boththeprivatesectorandstateregulatorybodies.

Serves as an independent director of Overseas Realty

(Ceylon)PLC,NawalokaHospitalsPLC,SamsonInternational

PLC, Laugfs Gas PLC, Renuka Foods PLC, RenukaHoldings

PLC,MicroHoldingsLtdandBrown&CompanyPLC.

Alsoservesasaconsultant totheBoardofNoritakeLanka

Porcelain(Pvt)Ltd.


IndependentNonExecutiveDirector

Mr.JayasundarajoinedtheBoardinJune2007.HeholdsaLLB

degreefromtheUniversityofColomboandisanAttorney-at-

Lawbyprofession.HeisamemberofAudit,Remuneration

and Related Party Transactions Review Committees of the

Board.

HeisthechairmanofLankaTransformersHoldings,Lanka

TransformersLtd,LankaTransformersGalvanizing(Pvt)Ltd.

BlueDiamondJewelleryLtd,ShraddhaMediaNetworkand

LakviruRadio(Pvt)Ltd.Heservesastheactingchairmanof

Bimputh Finance PLC. and a non executive director of

Bogawanthalawa Tea Estates PLC. Metropolitan Resource

Holdings(Pvt)Ltd.andSitharaLimited

Mrs.R.K.Samarasinghe

ExecutiveDirector

HoldsMasterofArtsfromUniversityofSussexandMasterof

Social Science from University of Birmingham, and a Post

GraduateDiplomainCounsellingPsychotherapy.Servedasa

CounsellorattheUniversityofFineArts,ColomboandMIND,

En�ield,London.

Mrs.SamarasinghealsoservedasalecturerinSocialScience

SuttonCold�ieldCollegeofFurtherEducation,Birmingham

EnglandandKingswayCollege,London.

BOARDOFDIRECTORS

-21-

ANNUALREPORTOFTHEBOARDOFDIRECTORSONTHEAFFAIRSOFTHECOMPANY

ThedirectorsoftheHarischandraMillsPLChavepleasureinpresentingtheirreportandtheauditedFinancialStatementsforthe

yearended31March2020.

PRINCIPALACTIVITIES

TheprincipalactivitiesofHarischandraMillsPLCandtheGrouparemanufacturinganddistributionofFoodProducts,Soapsand

FuelandLubricantswhicharedescribedunderNote1tothe�inancialStatementsonpage39.

GroupFinancialResults; 2019/2020 2018/2019

Rs.000 Rs.000

Pro�itbeforetaxation 242,372 247,644

Taxation (94,079) (74,848)

Aftertaxpro�itattributabletoshareholders 148,293 172,796

Capitalizationofreserves - -

Othercomprehensiveincome - -

Unappropriatedpro�itbroughtforwardfrompreviousyear 1,208,422 1,122,009

Pro�itavailableforappropriation 1,356,715 1,294,805

DistributionofPro�it:

Interimdividendpaidfor�inancialyear2018/2019 38,392 38,392

Finaldividendpaidfor�inancialyear2018/2019 57,588 47,991

Forfeitureofunclaimeddividend (297) -

95,683 86,383

1,261,032 1,208,422

AUDITORS'REPORT

Theauditors'reportonthe�inancialstatementsisgivenonpage29.

ACCOUNTINGPOLICIES

TheGroupandtheCompanypreparedtheirFinancialStatementsforallperiodsuptoandincludingtheyearended31March

2020,inaccordancewithSriLankaAccountingStandards(SLFRS/LKAS)whichhavemateriallyconvergedwiththeInternational

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

signi�icantAccountingPoliciesadoptedinthepreparationoftheFinancialStatementsoftheGroupandtheCompanyaregivenon

pages39to53ofAnnualReport.

REVIEWOFBUSINESS

TheChairman'sReview,theManagingDirector'sReportandtheCorporateGovernanceReportwhichformanintegralpartofthe

Director'sReportonthestateofaffairsoftheCompany,containadetaileddescriptionoftheoperationsofHarischandraMillsPLC

duringtheyearended31March2020andcontainafairreviewoftheaffairsofHarischandraMillsPLCandtheGroup.

-22-

ANNUALREPORTOFTHEBOARDOFDIRECTORSONTHEAFFAIRSOFTHECOMPANY(CONTD.)

DIRECTORS'RESPONSIBILITYFORFINANCIALREPORTING

ThedirectorsareresponsibleforthepreparationoftheFinancialstatementsofHarischandraMillsPLCtore�lectatrueandfair

viewofthestateofitsaffairs.Thedirectorscon�irmedthattheseFinancialStatementshavebeenpreparedinconformitywiththe

requirementsoftheSriLankaAccountingStandards,theCompaniesActNo.7of2007andtheListingRulesoftheColomboStock

Exchange.

Thedirectorsaresatis�iedthatFinancialStatementsgiveatrueandfairviewofthestateofaffairsofHarischandraMillsPLCand

theGroupasat31March2020aswellasthepro�itfortheyearthenended.

Thedirectorsconsiderthat,inpreparingtheseFinancialStatements,appropriateaccountingpolicieshavebeenusedwhichare

appliedconsistentlyandthatallapplicableaccountingstandardshavebeenfollowed.TheFinancialStatementsarepreparedona

goingconcernbasis.

CORPORATEGOVERNANCE

DetailreportoncorporategovernancepracticesandprinciplesoftheCompanyaresetoutonpages11to15ofthisreport.The

directorsareresponsibleforthegovernanceofHarischandraMillsPLCincludingtheestablishmentandmaintenanceofthe

systemsofinternal�inancialcontroloftheCompany.

Thedirectorsaresatis�iedthatastrongcontrolenvironmentisestablishedwithinHarischandraMillsPLCandthoseinternal

controlsystemsareoperatingeffectively.

CORPORATESOCIALRESPONSIBILITY

DetailsofsocialworkcarriedoutareincludedintheManagingDirector'sreportsetoutonPage07.

DONATIONS

DonationswereRs.6,010,267/-comparedtoRs.4,646,607/- donatedinthelastyear.Nodonationstopoliticalorganizations

weremadebythegroupduringtheyear.

GROUPTURNOVER

Theturnoverof theCompanyand itssubsidiarytogetherwiththesegmentalperformancearesetoutonthe"Notestothe

FinancialStatements".

FINALDIVIDEND

ThedirectorspaidaninterimdividendofRs.20/-pershareamountingtoRs.38,392,000/- on23August2020,andproposea

�inaldividendofRs.30/-pershare,tobepaidoutofthepro�itsofHarischandraMillsPLCanddividendreceivedforthe�inancial

yearended2019/2020.Inrecommendingthepaymentofthisdividend,thedirectorsunanimouslydeclarethat,intheiropinion,

theCompanywillsatisfythesolvencyteststipulatedinsection57oftheCompaniesActNo.07of2007immediatelyafterthe

distributionismadeandhaveobtainedacerti�icateofsolvencyfromtheAuditorstothiseffect.HarischandraMillsPLCpaidan

interimdividendofRs.20/=and�inaldividendofRs.30/=pershareforthepreviousyear.

-23-


PROVISIONFORTAXATION

Provisionmade for taxation considering the relevant tax rates laid down by the Inland Revenue Act No. 24 of 2017 and

subsequentamendmentsthereto,thedetailsarestatedinNote08totheFinancialStatements.

PROPERTY,PLANT&EQUIPMENTANDDEPRECIATION

Detailsoftheproperty,plant&equipmentofHarischandraMillsPLC,additionsmadeduringtheyearandthedepreciation

chargesfortheyearareshowninNote11totheFinancialStatementsonpage58.

STATEDCAPITAL&RESERVES

ThestatedcapitalofHarischandraMillsPLCatthebeginningoftheyearunderreviewwasRs.105,578,000/-,consistingof

1,919,600OrdinaryShares.

The total reserves of the Company as at 31 March 2020 amounted to Rs.1,297,887,471/- (as at 31 March 2019 -

Rs.1,242,966,929/-) where as the Group total reserve amounted to Rs.1,301,249,837/- (as at 31 March 2019 -

Rs.1,250,619,156/-)ThecompositionofthereservesisshownintheStatementofChangesinEquityanddetailsofreservesare

setoutinNote20and21totheFinancialStatements.

POSTBALANCESHEETEVENTS

InterimdividendofRs.20/-persharewerepaidon23August2020.

Otherthantheabove,therehavebeennosigni�icanteventssubsequenttothebalancesheetdatethatrequiresadjustmentsor

discloseinthe�inancialstatements.

GOINGCONCERN

Theboardissatis�iedthattheCompanyhasadequateresourcestocontinueitsoperationsintheforeseeablefutureandthe

directorshaveadoptedthegoingconcernbasisinpreparingtheFinancialStatements.

CAPITALCOMMITMENTSANDCONTINGENCIES

Therewerenosigni�icantcapitalcommitmentsandcontingenciesasat31March2020.

RELATEDPARTYTRANSACTIONS

ThecompanydidnotcarryoutanyNon-recurrentrelatedpartytransactionsduringtheyearunderreviewandallrecurrent

relatedpartytransactionswerelessthan10%ofthenetrevenue.

-24-


HUMANRESOURCES

Asat31March2020Companyemployed589employeeswhereasitwas589inthelastyearend.Aggregatetotalremunerationin

respectoftheyearwasRs.465MncomparedtoRs.416.1Mnforthelastyear.

ISSUESPERTAININGTOEMPLOYEESANDINDUSTRYRELATIONS

Therewerenomaterial issuespertaining toemployeesand industryrelationsduring theyearunderreviewtodiscloseas

requiredunderrule7.6(vii)oftheCSEListingrules.

SHAREHOLDERS'INFORMATION

Distributionoftheissuedsharesamongtheshareholdersandclassi�icationofshareholdersareindicatedinpage77oftheAnnual

Report.Therewere517(2018/19-527)registeredshareholdersasat31March2020.

DIRECTORATE

ThedirectorsofHarischandraMillsPLCduringtheyearended31.03.2020areasfollows.

Mr.M.A.Bastiansz(Chairman) -NonExecutive,IndependentDirector

Mr.S.N.Samarasinghe(ManagingDirector) -Executive,NonIndependentDirector

Mr.G.S.V.DeSilva -Executive,NonIndependentDirector

Mrs.M.P.DeSilva -Executive,NonIndependentDirector

Mrs.R.K.Samarasinghe -Executive,NonIndependentDirector

Mr.T.K.Bandaranayake -NonExecutive,IndependentDirector

Mr.S.A.S.Jayasundara -NonExecutive,IndependentDirector

Directorspro�ilesaresetoutonpage21intheAnnualReport.

MAJORSHAREHOLDERS

The20largestshareholdersofHarischandraMillsPLCasat31March2020aregivenonpage77togetherwithananalysisofthe

shareholdings.AsatthatdateHarischandraMillsPLChad517shareholders.

SUB-COMITTEESOFTHEBOARD

Therearethreepermanentsub-committeesoftheBoardwhichareasfollows:

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


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


03. RelatedPartyTransactions

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


Mr.S.N.Samarasinghe

-25-


INTERESTREGISTER

TheCompanyhasmaintainedinterestregisterasrequiredbyCompaniesActNo.07of2007.

Alldirectorshavemadedeclarationsasprovidedforinsection192(2)oftheCompaniesActaforesaid.Therelatedentrieswere

madeintheinterestregisterduringtheyearunderreview.

DIRECTORS'INTERESTINCONTRACTS

Details of directors' interests in contracts of the Company are disclosed below and provided in note 27 of the Financial

Statements.Thedirectorshavenodirectorindirectinterestorproposedcontractotherthanthosedisclosed.

FollowingdirectorsoftheCompanyarealsodirectorsoftheHarischandraMills(Distributors)Limited,whichisafullyowned

subsidiary.

NameofDirector Position Shareholding

Mr.M.A.Bastiansz Director(Non-Executive) Non

Mr.S.N.Samarasinghe ManagingDirector 1Share

Mr.G.S.V.DeSilva Director(Executive) 1Share

Mrs.M.P.DeSilva Director(Executive) 1Share

DIRECTORS'REMUNERATION

TheaggregateremunerationpaidtoexecutiveandnonexecutivedirectorsinrespectoftheGroupandtheCompanyforthe

�inancialyearended31March2020wererecordedasRs.46,685,668/-(2018/2019Rs.41,779,072/-).

DIRECTORSSHAREHOLDING

NameofDirector 31March2020 01April2019

NoofShares % NoofShares %

Mrs.R.K.Samarasinghe 270,120 14.07 270,120 14.07

Mr.S.N.Samarasinghe 76,670 3.99 76,670 3.99

Mr.G.S.V.DeSilva 2,000 0.10 2,000 0.10

Mrs.M.P.DeSilva 5,000 0.26 5,000 0.26

Mr.M.A.Bastiansz - - - -

Mr.T.K.Bandaranayake - - - -

Mr.S.A.S.Jayasundara - - - -

Total 353,790 18.42 353,790 18.42

APPLICATIONOFTHECORPORATEGOVERNANCERULESOFTHECOLOMBOSTOCKEXCHANGE

Asperthesection7oftheListingRulesoftheColomboStockExchangeonCorporateGovernance,thedetailsoncomplianceare

setoutonpage15inthisannualreport.

-26-


AUDITORS

TheFinancialStatements fortheyearended31March2020havebeenauditedbyM/s.KPMGCharteredAccountants.The

auditorsdonothaveanyrelationshipwithoranyinterestintheCompanyoritssubsidiaryotherthanauditors.

FeestoAuditors

ThefeesoftheAuditorsduringtheyearwereRs.1,072,500/-(2018/19-Rs.1,050,000/-)forauditwork,taxserviceRs.280,030

(2018/19-Rs.205,000)andRs.120,000/-(2018/19-Rs.110,000/-)forauditrelatedservices.

Re-AppointmentofAuditors

TheAuditorshaveindicatedtheirwillingnesstoofferthemselvesforre-appointment.AresolutionappointingM/s.KPMGas

Auditorsandauthorizingthedirectorsto�ixtheirremunerationwillbeproposedattheAnnualGeneralMeeting.

ANNUALGENERALMEETING

TheSixtyEighthAnnualGeneralMeetingoftheCompanywillbeheldattheregisteredof�iceoftheCompany,No.11,

C.A.HarischandraMawatha,Matara,onthe14November2020at11.00a.m.TheNoticeoftheSixtyEighthAnnualGeneral

Meetingisonpage04oftheAnnualReport.

ForandonbehalfoftheBoard

HarischandraMillsPLC

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

ManagingDirector Director

CorporateServices(Private)Limited

Secretaries

09October2020

-27-

STATEMENTOFDIRECTORS'RESPONSIBILITYFORFINANCIALREPORTING

Thedirectorsareresponsible,UndertheCompaniesAct.No.07of2007,toensurecompliancewiththerequirementssetout

thereintoprepareFinancialStatementsforeach�inancialyeargivingatrueandfairviewofthestateofaffairsoftheCompanyand

theGroupasattheendofthe�inancialyearandofthepro�itorlossoftheCompanyandtheGroupforthe�inancialyear.The

directorsarealsoresponsibleforensuringthatproperaccountingrecordsarekepttodisclose,withreasonableaccuracy,the

�inancialpositionandtoenablethepreparationoftheFinancialStatements.

Thedirectorscon�irmthattheyhavecompliedwiththeserequirements.

TheBoardacceptsresponsibility for the integrityandobjectivityof theFinancialStatementspresented.Thedirectorsalso

con�irmthatinpreparingtheFinancialStatements,appropriateaccountingpolicieshavebeenselectedandappliedconsistently

andreasonableandprudentjudgmentshavebeenmadesothattheformandsubstanceoftransactionsareproperlyre�lected.

Theyalsocon�irmthattheFinancialStatementshavebeenpreparedandpresentedinaccordancewiththeSriLankaAccounting

Standards.TheFinancialStatementsprovidetheinformationrequiredbytheCompaniesAct,theListingRulesoftheColombo

StockExchangeandtheSriLankaAccountingStandards.

The directors have taken reasonable measures to safeguard the assets of the Group and, in that context, have instituted

appropriatesystemsofinternalcontrolwithaviewtopreventanddetectfraudandotherirregularities.

TheExternalAuditors,MessrsKPMGappointedinaccordancewiththeresolutionpassedatthelastAnnualGeneralMeetingwere

providedwitheveryopportunitytoundertakewhateverinspectionstheyconsiderappropriatetoenablethemtoformtheir

opinionontheFinancialStatements.ThereportoftheAuditors,shownonpage29to32setsouttheirresponsibilitiesinrelation

totheFinancialStatements

ByorderoftheBoard

CorporateServices(Private)Limited

Secretaries

09October2020

-28-

evidencewehaveobtainedissuf�icientandappropriatetoprovideabasisfor

ouropinion.

KeyAuditMatters

Keyauditmattersarethosemattersthat,inourprofessionaljudgment,were

ofmostsigni�icanceinourauditoftheCompany�inancialstatementsandthe

consolidated�inancialstatementsofthecurrentperiod.Thesematterswere

addressedinthecontextofourauditoftheCompany�inancialstatementsand

theconsolidated�inancialstatementsasawhole,andinformingouropinion

thereon,andwedonotprovideaseparateopiniononthesematters.

Revenuerecognition

Refer to theaccountingpolicies in “Note3.17 to the �inancial statements:

Revenuerecognition”and“Note4tothe�inancialstatements:Revenue”.

INDEPENDENTAUDITOR'SREPORT

TOTHESHAREHOLDERSOF

HARISCHANDRAMILLSPLC

ReportontheAuditoftheFinancial

Statements

Opinion

We have audited the �inancial statements of

HarischandraMillsPLC ("theCompany") and

the consolidated �inancial statements of the

Company and its subsidiary ("the Group"),

whichcomprisethestatementofpro�itorloss

andothercomprehensiveincome,statementof

�inancial position as at 31 March 2020,

statement of changes in equity, statement of

cash�lowsfortheyearthenended,andnotesto

the�inancialstatements,includingasummary

ofsigni�icantaccountingpoliciesassetouton

pages39to74ofthisAnnualReport.

In our opinion, the accompanying �inancial

statementsoftheCompanyandtheGroupgive

atrueandfairviewofthe�inancialpositionof

the Company and the Group as at 31 March

2020,andoftheir�inancialperformanceandits

cash �lows for the year then ended in

accordance with Sri Lanka Accounting

Standards.

BasisforOpinion

WeconductedourauditinaccordancewithSri

Lanka Auditing Standards (SLAuSs). Our

responsibilities under those standards are

f u r t h e r d e s c r i b e d i n t h e Aud i t o r ' s

Responsibilities for theAuditof theFinancial

Statements section of our report. We are

independentoftheGroupinaccordancewith

theCodeofEthicsissuedbyCASriLanka(Code

of Ethics), and we have ful�illed our other

ethicalresponsibilitiesinaccordancewiththe

Code of Ethics. We believe that the audit

KPMG , a Sri Lankan partnership and a member firm

of the KPMG network of independent member firms

affiliated with KPMG Interna�onal Coopera�ve

("KPMG Interna�onal"), a Swiss en�ty.

M.R. Mihular FCA

T.J.S. Rajakarier FCA

Ms. S.M.B. Jayasekara ACA

G.A.U. Karunaratne FCA

R.H. Rajan FCA

A.M.R.P. Alahakoon ACA

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

Ms. P.M.K. Sumanasekara FCA

P.Y.S. Perera FCA

W.W.J.C. Perera FCA

W.K.D.C. Abeyrathne FCA

R.M.D.B. Rajapakse FCA

M.N.M. Shameel ACA

C.P. Jaya�lake FCA

Ms. S. Joseph FCA

S.T.D.L. Perera FCA

Ms. B.K.D.T.N. Rodrigo FCA

Ms. C.T.K.N. Perera ACA

.

KPMG (Chartered Accountants)32A, Sir Mohamed Macan Markar Mawatha, P.O. Box 186, Colombo 00300, Sri Lanka.

Tel Fax

Internet

::

:

+94 - 11 542 6426 +94 - 11 244 5872 +94 - 11 244 6058 www.kpmg.com/lk

Revenuefromsaleofgoods(Rs.3,652,268,411/-)isrecognizedwhencontrolhasbeentransferredtothebuyer;andismeasuredatnetoftradediscountsandvolumerebates(tradespend)forwhichjudgementisrequiredbymanagementtoestimateaccruals.

Inaddition,theGroupconsidersrevenueasanimportantelementinmeasuring,managementperformanceandhowmanagementareincentivised.Thesefactorscouldcreateanincentiveforrevenuetoberecognisedpriortocontrolbeingtransferred.

Weidenti�iedtherecognitionofrevenueasakeyauditmatterbecauserevenueisasigni�icantauditriskandoneofthekeyperformanceindicatorsoftheGroupandthereforethereisaninherentriskofmanipulationofthetimingofrevenuerecognitionbymanagementtomeetspeci�ictargetsorexpectations.

Ourauditproceduresincluded;

• Assessingtheeffectivenessofkeyinternalcontrolsregardingtherecognitionofrevenuesuchasmatchingasampleofsalesinvoicesrecognisedtosalesordersanddispatchnotes.

• Testing,onasamplebasis,whetherspeci�icrevenuetransactionsaroundtheyearendhadbeenrecognisedintheappropriateperiodonthebasisofthetermsofsalewithintheassociatedcontracts,suchaswhethershippingtermshadbeenmet,goodsreceivednotescompletedand,or,customeracceptanceoftheproductreceived.

• Testingasampleofcreditnotesissuedaftertheyearendandchallengedthosethatwerenotrecordedbyobtainingevidenceandrationaleforsigni�icantreversals.

• Testthequanti�icationofadjustmentsarisingfrommanagement'srevenuerecognitionassessmentforcompliancewithSLFRS15duringtheyearanddisclosuresforthesame.

RiskDescription Ourresponse

-29-

CarryingvalueofInventories

Refertotheaccountingpoliciesin“Note3.10tothe�inancialstatements:Inventories”and“Note16tothe�inancialstatements:

Inventories”.


Asatthereportingdate,theGrouphasrecognizedatotalprovisionofRs.6,887,199/-inrelationtothetotalinventoryvaluedatRs.317,072,545/-asat31March2020.AsdiscussedinNote3.10,managementjudgmentisappliedtothecostofinventoriesinordertoaccuratelyre�lectthemanufacturingcostsincurredinbringingthemtotheircurrentconditionandphysicallocation.Thisprimarilyrelatestotheassessmentofdirectlabourcostsincurred,manufacturingoverheadstobeabsorbedandotherrelevantproductioncosts.

Arisksurroundingthecarryingvalueofinventorywhencomparedtothenetrealizablevalueasaresultofinadequateprovisioninghasalsobeenidenti�ied.Establishingaprovisionforslow-moving,obsoleteanddamagedinventoryinvolvesestimatesandjudgments,takingintoaccountforecastsalesandhistoricalusageinformation.Further,COVID19outbreakresultedininterruptioninbusinessactivitiesandresultedinlossofincomeforsomeoftheindividuals/industrieswhichwouldadverselyaffecttheabilitytosellitsinventorieswithareasonablemarginwhichwouldpotentialimpactonthenetrealizablevalueadjustments.

Weidenti�iedassessingthecarryingvalueofinventoriesasakeyauditmatterbecauseoftheinherentriskthattheGroup'sinventoriesmaybecomeobsoleteormaybesoldatpricesbelowtheircarryingvaluesandbecausethejudgmentexercisedbymanagementindeterminingtheappropriateprovisionforinventoriesinvolvesmanagement'sbias.

Ourresponsesincluded,

• TestingthedesignandimplementationoftheGroup'skeycontrolsrelatingtotheassessmentofinventoryvaluationandinventoryprovisioning.

• Agreeingthecostofrawmaterialstothirdpartysupplierinvoices;

• Checkedtheparametersandsystemaccuracyof�irstin�irstout(FIFO)calculatedwiththeassistanceofinformationriskmanagementspecialist;

• Assessingthenetrealisablevalue(NRV)onasamplebasisofstockitemsbyagreeingtheirsubsequentsalespricetocustomerinvoicestoensurethattheitemswerebeingheldatthelowerofcostandNRV;

• Gaininganunderstandingofthemovementsintheinventoryfortheyearandassessthescaleoftheprovisionfornon-movingandslow-movinginventory;

• Wheremanualadjustmentshavebeenmadetotheprovision,wehaveunderstoodthesebygainingsupportingdocumentation;

• AssessingwhethertheGroup'spolicieshadbeenconsistentlyappliedandtheadequacyoftheGroup'sdisclosuresinrespectofthejudgmentandestimationmadeinrespectofinventoryprovisioning;

-30-

OtherInformation

Managementisresponsiblefortheotherinformation.Theother

informationcomprisestheinformationincludedintheannual

report but doesnot include the �inancial statements andour

auditor'sreportthereon.

Ouropiniononthe�inancialstatementsdoesnotcovertheother

information and we do not express any form of assurance

conclusionthereon.

In connectionwith our audit of the �inancial statements, our

responsibilityistoreadtheotherinformationand,indoingso,

consider whether the other information is materially

inconsistent with the �inancial statements or our knowledge

obtained in the audit or otherwise appears to be materially

misstated.

If,basedontheworkwehaveperformed,weconcludethatthere

isamaterialmisstatementofotherinformation,wearerequired

toreportthatfact.

Wehavenothingtoreportinthisregard.

ResponsibilitiesofManagementandThoseChargedwith

GovernancefortheFinancialStatements

Management is responsible for the preparation of �inancial

statementsthatgiveatrueandfairviewinaccordancewithSri

LankaAccountingStandards,andforsuchinternalcontrolas

management determines is necessary to enable the

preparationof�inancialstatementsthatarefreefrommaterial

misstatement,whetherduetofraudorerror.

In preparing the �inancial statements, management is

responsibleforassessingtheGroup'sabilitytocontinueasa

going concern, disclosing, as applicable, matters related to

goingconcernandusingthegoingconcernbasisofaccounting

unlessmanagementeitherintendstoliquidatetheGrouporto

ceaseoperations,orhasnorealisticalternativebuttodoso.

Thosechargedwithgovernanceareresponsibleforoverseeing

theCompany'sandGroup's�inancialreportingprocess.

Auditor's Responsibilities for the Audit of the Financial

Statements

Our objectives are to obtain reasonable assurance about

whether the �inancial statements as a whole are free from

materialmisstatement,whetherduetofraudorerror,andto

issueanauditor'sreportthatincludesouropinion.Reasonable


AsdisclosedinNote17tothe�inancialstatements,theGrouphasrecognisedtradereceivablesbalanceofRs.303,634,441/-asat31March2020,afterprovisionforimpairmentofRs.4,258,479/-.

TheGroup'scustomersoperateinanumberofsectors,havingdifferentcreditpro�iles.SLFRS9–“FinancialInstruments”ECLModeltakesintoaccountjudgmentinsettingtheassumptionssuchasforward-lookingprobabilityofdefault(PD),lossgivendefault(LGD),macroeconomicscenariosincludingtheirweightingandjudgmentsovertheuseofdatainputsrequired.

Provisionforimpairmentoftradereceivablesremainsoneofthemostsigni�icantjudgmentmadebythemanagementparticularlyinlightoftheuncertaineconomicoutlookinSriLankaasatthereportingdateduetothepotentialimpactoftheCOVID19outbreak.

Weidenti�iedimpairmentoftradereceivablesasakeyauditmatterforouraudit,asitrequiresmanagementtoexercisesubjectivejudgmentinmakingassumptionsandestimatesfortheassessmentofprovisionforimpairmentoftradereceivables.

Ourresponsesincluded,

• EvaluatingtheappropriatenessoftheimpairmentmethodologyusedbytheGroupinaccordancewithSLFRS9andchallengingthekeyassumptionsandevaluatingthereasonablenessofthekeyjudgmentsandmethodologyusedbythemanagement.

• Evaluatingthecompleteness,accuracyandrelevanceofdatausedinpreparationoftheimpairmentprovision.

• Comparingtheeconomicfactorsusedinthemodelstomarketinformationtoassesswhethertheyarealignedwiththemarketandeconomicdevelopment.

• ChallenginghowmanagementhadassessedtheimpactofCOVID19withintheECLmodeltoassesswhetherthatitwasappropriatelyconsideredinthemeasurementofECLsatyearend.

• EvaluatingtheadequacyoftheGroup'sdisclosuresregardingthedegreeofjudgmentsandestimationinvolvedinarrivingattheprovisionforimpairmentoftradereceivables.

Recoverabilityoftradereceivables

Refertotheaccountingpoliciesin“Note3.4tothe�inancialstatements:Impairment”and“Note17tothe�inancialstatements:Trade

andotherreceivables”.

-31-

assuranceisahighlevelofassurance,butisnotaguarantee

thatanauditconductedinaccordancewithSLAuSswillalways

detectamaterialmisstatementwhenitexists.Misstatements

canarisefromfraudorerrorandareconsideredmaterialif,

individually or in the aggregate, they could reasonably be

expectedtoin�luencetheeconomicdecisionsofuserstakenon

thebasisofthese�inancialstatements.

Aspart of an audit in accordancewith SLAuSs,we exercise

professionaljudgmentandmaintainprofessionalskepticism

throughouttheaudit.

Wealso:

• Identifyandassesstherisksofmaterialmisstatementof

the �inancial statements,whether due to fraud or error,

designandperformauditproceduresresponsivetothose

risks, and obtain audit evidence that is suf�icient and

appropriatetoprovideabasisforouropinion.Theriskof

notdetectingamaterialmisstatementresultingfromfraud

ishigherthanforoneresultingfromerror,asfraudmay

involve collusion, forgery, intentional omissions,

misrepresentations,ortheoverrideofinternalcontrol.

• Obtainanunderstandingofinternalcontrolrelevanttothe

audit in order to design audit procedures that are

appropriateinthecircumstances,butnotforthepurpose

of expressing an opinion on the effectiveness of the

CompanyandGroup'sinternalcontrol.

• Evaluatetheappropriatenessofaccountingpoliciesused

and the reasonableness of accounting estimates and

relateddisclosuresmadebymanagement.

• Concludeontheappropriatenessofmanagement'suseof

thegoingconcernbasisofaccountingand,basedon the

auditevidenceobtained,whetheramaterialuncertainty

exists related to events or conditions that may cast

signi�icantdoubt on theGroup's ability to continue as a

goingconcern.Ifweconcludethatamaterialuncertainty

exists,wearerequiredtodrawattentioninourauditor's

reporttotherelateddisclosuresinthe�inancialstatements

or, if such disclosures are inadequate, to modify our

opinion.Ourconclusionsarebasedontheauditevidence

obtaineduptothedateofourauditor'sreport.However,

futureeventsorconditionsmaycausetheGrouptoceaseto

continueasagoingconcern.

• Evaluatetheoverallpresentation,structureandcontentof

the �inancial statements, including the disclosures, and

whetherthe�inancialstatementsrepresenttheunderlying

transactions and events in a manner that achieves fair

presentation.

• Obtainsuf�icientappropriateauditevidenceregardingthe

�inancialinformationoftheentitiesorbusinessactivities

withintheGrouptoexpressanopinionontheconsolidated

�inancialstatements.Weareresponsibleforthedirection,

supervision and performance of the group audit. We

remainsolelyresponsibleforourauditopinion.

We communicate with those charged with governance

regarding,amongothermatters,theplannedscopeandtiming

of the audit and signi�icant audit �indings, including any

signi�icant de�iciencies in internal control that we identify

duringouraudit.

We also provide those charged with governance with a

statementthatwehavecompliedwithethicalrequirementsin

accordancewiththeCodeofEthicsregardingindependence,

and to communicate with them all relationships and other

matters that may reasonably be thought to bear on our

independence,andwhereapplicable,relatedsafeguards.

From the matters communicated with those charged with

governance,wedetermine thosematters thatwereofmost

signi�icance in the audit of the �inancial statements of the

current period and are therefore the key auditmatters.We

describethesemattersinourauditor'sreportunlesslawor

regulation precludes public disclosure about the matter or

when, inextremelyrarecircumstances,wedeterminethata

mattershouldnotbecommunicatedinourreportbecausethe

adverse consequences of doing so would reasonably be

expected to outweigh the public interest bene�its of such

communication.

ReportonOtherLegalandRegulatoryRequirements

Asrequiredbysection163(2)oftheCompaniesActNo.07of

2007,wehaveobtainedalltheinformationandexplanations

thatwererequiredfortheauditand,asfarasappearsfromour

examination,properaccountingrecordshavebeenkeptbythe

Company.

CASriLankamembershipnumberoftheengagementpartner

responsible for signing this independent auditor's report is

3707.

CHARTEREDACCOUNTANTS

Colombo,SriLanka

25September2020

-32-

STATEMENTOFPROFITORLOSSANDOTHERCOMPREHENSIVEINCOME

GROUP COMPANY

FORTHEYEARENDED31MARCH, 2020 2019 2020 2019

Note Rs. Rs. Rs. Rs.

Revenue 4 3,652,268,411 3,626,418,3603,652,268,411 3,626,418,360

Costofsales (2,928,452,487) (2,926,008,650)(2,928,452,487) (2,926,008,645)

Grosspro�it 723,815,924 700,409,710 723,815,924 700,409,715

Otherincome 5 43,497,065 35,756,807 46,657,542 101,976,334

Distributionexpenses (240,669,403) (244,763,588)(240,669,403) (244,763,588)

Administrativeexpenses (315,814,096) (271,924,151) (315,199,238) (271,522,157)

Operatingpro�it 6210,829,490 219,478,778 214,604,825 286,100,304

Financeincome 7.132,990,439 30,902,251 32,990,439 30,902,251

Financeexpenses 7.2 (1,447,979) (2,736,889) (1,447,979) (7,234,115)

Pro�itbeforetax 242,371,950 247,644,140 246,147,285 309,768,440

Incometaxexpense 8(94,079,038) (74,847,887)(93,564,538) (59,838,063)

Pro�itfortheyear 148,292,912 172,796,253 152,582,747 249,930,377

Pro�itattributabletoequityholders 148,292,912 172,796,253 152,582,747 249,930,377

-oftheCompany

Pro�itfortheyear 148,292,912 172,796,253152,582,747 249,930,377

Earningspershare 9 77.25 90.02 79.49 130.19

Figuresinbracketindicatedeductions.

Thenotestothe�inancialstatementsfrompage39to74formanintegralpartoftheseconsolidated�inancialstatements.

-33-

STATEMENTOFPROFITORLOSSANDOTHERCOMPREHENSIVEINCOME

GROUP COMPANY



Pro�itfortheyear 148,292,912 172,796,253 152,582,747 249,930,377

OthercomprehensiveIncome

Itemsthatwillnotbereclassi�ied

subsequentlytopro�itorloss

Re-measurementof

de�inedbene�itobligation 23.1 (2,749,174) 3,504,501 (2,749,174) 3,504,501

Relatedtax 8.2 769,769 (981,260) 769,769 (981,260)

Totalothercomprehensive

incomenetoftax (1,979,405) 2,523,241 (1,979,405) 2,523,241

Totalcomprehensiveincomeattributable

toownersoftheCompany 146,313,507 175,319,494 150,603,342 252,453,618



-34-

STATEMENTOFFINANCIALPOSITION

GROUP COMPANYASAT31MARCH, 2020 2019 2020 2019 Note Rs. Rs. Rs. Rs. AssetsNon-currentassetsProperty,plantandequipment 11921,502,755 810,219,979 921,502,755 810,219,979Intangibleassets 12 1,387,376 1,532,058 1,387,376 1,532,058 Rightofuseasset 13 6,466,727 - 6,466,727 -Investmentinsubsidiary 14 - - 70 70Totalnon-currentassets 929,356,858 811,752,037 929,356,928 811,752,107

CurrentassetsInventories 16 310,185,346 188,847,495 310,185,346 188,847,495Tradeandotherreceivables 17 371,438,404 418,463,281 371,438,404 418,463,281Investmentinunittrusts 155,751,000 5,379,000 5,751,000 5,379,000Investmentin�ixeddeposits 239,565,685 221,143,528 239,565,685 221,143,528Cashandcashequivalents 1874,111,035 80,128,815 73,159,225 74,841,630 Totalcurrentassets 1,001,051,470 913,962,119 1,000,099,660 908,674,934Totalassets 1,930,408,328 1,725,714,156 1,929,456,588 1,720,427,041

EquityStatedcapital 19 105,578,000 105,578,000 105,578,000 105,578,000Othercapitalreserves 20 7,010,944 7,010,944 11,014 11,014Generalreserve 21 12,841,000 12,841,000 12,841,000 12,841,000Retainedearnings 1,281,397,893 1,230,767,212 1,285,035,457 1,230,114,915Totalequityattributabletoowners oftheCompany 1,406,827,837 1,356,197,156 1,403,465,471 1,348,544,929

LiabilitiesNon-currentliabilitiesDeferredtaxliabilities 22 41,818,461 41,250,53341,818,461 41,250,533Employeebene�itobligation 23 109,246,500 95,384,457 109,246,500 95,384,457Leasecreditor 25 440,479 - 440,479 -Totalnon-currentliabilities 151,505,440 136,634,990 151,505,440 136,634,990

CurrentliabilitiesTradeandotherpayables 24 239,091,211 190,806,556 238,918,415 190,588,247Leasecreditor 25 155,027 - 155,027 -Currenttaxliabilities 26 4,288,529 13,542,676 6,871,951 16,126,097Bankoverdraft 18 128,540,284 28,532,778 128,540,284 28,532,778Totalcurrentliabilities 372,075,051 232,882,010 374,485,677 235,247,122Totalliabilities 523,580,491 369,517,000 525,991,117 371,882,112Totalequityandliabilities 1,930,408,328 1,725,714,156 1,929,456,588 1,720,427,041


Icertifythatthese�inancialstatementscomplywiththerequirementsofCompaniesAct.No.07of2007.

C.T.GajanayakeChiefFinancialOf�icer

TheBoardofDirectorsisresponsibleforthepreparationandpresentationoftheseconsolidated�inancialstatements.Approved&SignedonbehalfoftheBoard.

S.N.Samarasinghe G.S.V.DeSilvaManagingDirector Director25September2020

-35-

STATEMENTOFCHANGESINEQUITY

GROUP

StatedAvailablefo

rsale/

OtherCapital

General

Retained

Total

Capital

FVOCIR

eserve

Reserve

Reserve

Earn

ings

Equity

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Balanceasat0

1April2

018

105,578,000

19,820,705

7,010,944

12,841,000

1,122,009,5631,267,260,212

Impacto

fadoptingSL

FRS09on1April2018

-(19,820,705)

--

19,820,705

-

Adjusted

Balan

ceasat0

1April2018

105,578,000

-7,010,944

12,841,0001,141,830,2681,267,260,212

Totalcomprehensivein

come

Pro�itfortheyear

--

--

172,796,253

172,796,253

Otherco

mprehensivein

come

Re-measuremen

tofde�ined

ben

e�itsobligation

--

--

3,504,5013,504,501

Related

taxes

--

--

(981,260)

(981,260)

Totalo

therco

mprehensivein

comefo

rtheyear

--

--

2,523,241

2,523,241


comefo

rtheyear

-

--

-

175,319,494

175,319,494

TransactionswithownersoftheGro

up,reco

gnizeddirectlyin

equity

Interimdividen

d

--

--

(38,392,000)

(38,392,000)

Finaldividen

d

--

--

(47,990,550)

(47,990,550)

TotaltransactionswithownersoftheGro

up

--

--

(86,382,550)

(86,382,550)

Balanceasat3

1March2019

105,578,000

-7,010,944

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

Balanceasat0

1April2

019

105,578,000

-7,010,944

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


come

Pro�itfortheyear

--

--148,292,912148,292,912

Otherco

mprehensivein

come

Re-measuremen

tofemployeeben

e�itsobligation

--

--(2,749,174)(2,749,174)

Related

taxes

----769,769769,769

Totalo

therco

mprehensivein

comefo

rtheyear

--

--(1,979,405)(1,979,405)


comefo

rtheyear

--

--146,313,507146,313,507

TransactionswithownersoftheGro

up,reco

gnizeddirectlyin

equity

Interimdividen

d

--

--(38,392,000)(38,392,000)

Finaldividen

d

--

--

(57,588,026)

(57,588,026)

Forfeitureofunclaimed

divided

-Note(a)

--

--297,200297,200

TotaltransactionswithownersoftheGro

up

--

--

(95,682,826)(95,682,826)

Balan

ceasat31March2020

105,578,000

-7,010,944

12,841,0001,281,397,8931,406,827,837

Note(a)-TheGrouppolicyistoforfeitthedividen

dswhichareoutstandingformorethan

sixyearsin

whichthedividen

dshavebeenin

itiallydeclared.

Figurein

bracketin

dicateded

uctions.

Thenotestoth

e�inan

cialstatemen

tsfrompage39to74form

anintegralparto

ftheseconsolidated

�inan

cialstatemen

ts.

-36-

STATEMENTOFCHANGESINEQUITY

COMPANY

StatedAvailablefo

rsale/

OtherCapital

General

Retained

Total

Capital

FVOCIR

eserve

Reserve

Reserve

Earn

ings

Equity

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Balanceasat0

1April2

018

105,578,00019,820,705

11,014

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

Impacto

fadoptingSL

FRS09on1April2018

-(19,820,705)

-

-19,820,705

-

Adjusted

Balan

ceasat0

1April2018

105,578,000

-11,01412,841,0001,064,043,2971,182,473,311


come

Pro�itfortheyear

--

--249,930,377249,930,377

Otherco

mprehensivein

come

Re-measuremen

tofde�ined

ben

e�itsobligation

--

--3,504,5013,504,501

Related

taxes

--

--(981,260)(981,260)

Totalo

therco

mprehensivein

comefo

rtheyear

-

--2,523,2412,523,241


comefo

rtheyear

-

--

-252,453,618252,453,618

TransactionswithownersoftheCompany,reco

gnizeddirectlyin

equity

Interimdividen

d

--

--

(38,392,000)

(38,392,000)

Finaldividen

d

--

--

(47,990,000)

(47,990,000)

TotaltransactionswithownersoftheCompany

--

--

(86,382,000)

(86,382,000)

Balanceasat3

1March2019

105,578,000

-11,014

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

Balanceasat0

1April2

019

105,578,000

-11,014

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


come

Pro�itfortheyear

--

--

152,582,747152,582,747

Otherco

mprehensivein

come

Re-measuremen

tofemployeeben

e�itsobligation

--

--(2,749,174)(2,749,174)

Related

taxes

--

--769,769769,769

Totalo

therco

mprehensivein

comefo

rtheyear

--

--(1,979,405)(1,979,405)


comefo

rtheyear

--

--150,603,342150,603,342

TransactionswithownersoftheCompany,reco

gnizeddirectlyin

equity

Interimdividen

d

--

--(38,392,000)(38,392,000)

Finaldividen

d

--

--

(57,588,000)

(57,588,000)

Forfeitureofunclaimed

divided

-Note(a)

--

--297,200297,200

TotaltransactionswithownersoftheCompany

--

--

(95,682,800)(95,682,800)

Balanceasat3

1March2020

105,578,000

-

11,014

12,841,0001,285,035,4571,403,465,471

Note(a)-TheGrouppolicyistoforfeitthedividen

dswhichareoutstandingformorethan

sixyearsin

whichthedividen

dshavebeenin

itiallydeclared.

Figurein

bracketin

dicateded

uctions.

Thenotestoth

e�inan

cialstatemen

tsfrompage39to74form

anintegralparto

ftheseconsolidated

�inan

cialstatemen

ts.

-37-

STATEMENTOFCASHFLOWS

GROUP COMPANY



Cash�lowsfromoperatingactivities

Pro�itbeforeincometaxexpense 242,371,950 247,644,140246,147,285 309,768,440

Adjustmentfor

Provisionforemployeebene�it 23 18,990,514 16,897,069 18,990,514 16,897,069

Depreciation/amortization 11,12&13 106,728,320 88,989,772106,728,320 88,989,773

Interestexpenses 71,447,979 2,736,8891,447,979 7,234,115

Provisionofslowmovinginventories 16 - 4,250,058 - 4,250,058

Changeinfairvalueofunittruts 5(372,000) (346,500) (372,000) (346,500)

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

Pro�itondisposalofproperty,plant&equipment5(29,429,730) (23,626,059) (29,429,730) (23,626,059)

Dividendincome 5 - -(3,160,477) (66,219,527)

Interestincomefrominvestmentin�ixeddeposits (23,569,962) (26,346,982) (23,569,962) (26,346,983)

Operatingpro�itbeforeworkingcapitalchanges 316,167,071 313,374,138 316,781,929 313,776,137

Changeininventories (121,337,851) (2,643,826) (121,337,851) (2,643,826)

Changeintradeandotherreceivables 35,640,877 10,852,246 35,640,877 10,852,246

Changeinrelatedpartypayables - - - (15,037,761)

Changeintradeandotherpayables 47,958,885 (48,325,218) 48,004,424 (48,370,831)

Cashgeneratedfromoperations 278,428,982 273,257,340 279,089,379 258,575,965

Gratuitypaid 23(7,877,645) (6,007,833)(7,877,645) (6,007,833)

Interestpaid (913,692) (2,736,889) (913,692) (7,234,115)

Incometaxpaid 26(101,995,487) (96,559,683) (101,480,986) (82,492,767)

Netcash�lowsgeneratedfromoperatingactivities 167,642,158 167,952,935 168,817,056 162,841,250

Cash�lowsfrominvestingactivities

Interestreceived 5,147,651 20,188,960 5,147,651 20,188,960

Dividendreceived - - 3,160,477 -

Investmentin�ixeddeposits - (97,226,168) - (97,226,168)

Proceedsfromdisposalofinvestmentinunittrust - 31,668,049 - 31,668,049

Proceedsfromdisposalofproperty,

plantandequipment 30,592,818 23,731,839 30,592,818 23,731,838

Acquisitionofproperty,plantandequipmentand

intangibleassets (207,987,257) (111,280,024)(207,987,257) (111,280,024)

Cash�lowsusedininvestingactivities (172,246,788) (132,917,344) (169,086,311) (132,917,345)

Cash�lowsfrom�inancingactivities

Dividendspaid (95,357,056) (86,382,550) (95,357,056) (86,382,000)

Leaserentalpaid (6,063,600) - (6,063,600) -

Cash�lowsusedin�inancingactivities (101,420,656) (86,382,550)(101,420,656) (86,382,000)

Netchangeincashandcashequivalents (106,025,286)(51,346,959)(101,689,911) (56,458,095)

Cashandcashequivalentsatthebeginning 18 51,596,037 102,942,996 46,308,852 102,766,947

Cashandcashequivalentsattheend (54,429,249) 51,596,037 (55,381,059) 46,308,852



-38-

1.ReportingEntity

1.1DomicileandLegalForm

HarischandraMillsPLC(“theCompany”)isapubliclimited

liability company incorporated anddomiciled in Sri Lanka

since09January1953.

Theregisteredof�iceandtheprincipalplaceofbusinessofthe

CompanyaresituatedatNo.11,C.A.HarischandraMawatha,

Matara.

TheConsolidatedFinancialStatementsoftheGroupforthe

year ended31March2020 comprise theCompanyand its

subsidiary (together referred to as the “Group” and

individuallyas“Groupentities”).

1.2Subsidiary

The Company has a fully owned subsidiary, Harischandra

Mills (Distributors) Limited which is incorporated on 03

February1993.

FinancialstatementsoftheCompanyandthesubsidiaryare

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

March.

1.3PrincipalActivitiesandNatureofOperations

TheprincipalactivitiesoftheGrouparemanufacturingand

distributingfood,soapitemsandsalesoffuelandlubricants.

Intheyear2014,directorsoftheCompanydecidedtotransfer

the distributorship of Harischandra Mills (Distributors)

LimitedtoHarischandraMillsPLC.Accordingly,theprincipal

commercial operation of HarischandraMills (Distributors)

LimitedisnowbeentransferredtotheparentCompany.

There were no signi�icant changes in the nature of the

principal activities of the Group during the �inancial year

underreview.

1.4ParentEnterpriseandUltimateParentEnterprise

IntheopinionoftheDirectors,theCompanydoesnothave

anyidenti�iableparententityofitsown.

1.5NumberofEmployees

ThenumbersofemployeesoftheGroupandCompanyasat31

March2020areasfollows:

Group 589(2019-589)

Company 589(2019-589)

NOTESTOTHEFINANCIALSTATEMENTS

1.6 Responsibilities for �inancial statements and

approvalof�inancialstatements

The board of directors is responsible for preparation and

presentation of the �inancial statements of the Group &

Company as per theprovisionof CompaniesActNo. 07of

2007 and Sri Lanka Accounting Standards. The directors'

responsibilityover�inancialstatementsissetoutindetailin

thestatementofdirectors'responsibility.

The�inancialstatementsoftheGroupfortheyearended31

March 2020were authorized for issue in accordancewith

resolutionoftheBoardofDirectorson25September2020.

2.BasisofPreparation

2.1StatementofCompliance

The onsolidated inancial tatements of the Group andC F S

CompanywhichcompriseoftheStatementofpro�itorloss

and other comprehensive income, Statement of Financial

Position, StatementofChanges inEquity andStatementof

CashFlowshavebeenpreparedinaccordancewithSriLanka

Accounting Standards (hereinafter referred to as SLFRS /

LKASs)asissuedbytheInstituteofCharteredAccountantsof

SriLanka, and in compliancewith the requirementsof the

Compan sActNo.07of2007.ie

These �inancial statements except for information on cash

�lows have been prepared following the accrual basis of

accounting. This is the �irst set of �inancial statements in

which SLFRS-16 Leases has been applied. The related

changes to signi�icant accounting policies are described in

Note3.

2.2BasisofMeasurement

TheConsolidatedFinancialStatementshavebeenprepared

on the historical cost basis except for the following items,

whicharemeasuredonalternativebasisoneachreporting

date.

· De�inedbene�it obligations are actuarially valued and

recognizedatthepresentvalue.

· Financial assets classi�ied as FVTPL / FVOCI are

measuredatfairvalue.

Noadjustmentshavebeenmadeforin�lationaryfactorsinthe

�inancialstatements.

2.3FunctionalandPresentationCurrency

TheConsolidatedFinancialStatementsarepresentedinSri

Lankan Rupees, which is the Group's functional and

presentation currencyof allGroupentities. Therewasno

changeintheGroup'spresentationandfunctionalcurrency

-39-

level in the fair value hierarchy in which such valuations

shouldbeclassi�ied.

Signi�icantvaluationissuesarereportedtotheGroup'sAudit

Committee.

Whenmeasuringthefairvalueofanassetoraliability,the

Groupusesobservablemarketdataas faraspossible.Fair

values are categorized into different levels in a fair value

hierarchy based on the inputs used in the valuation

techniquesasfollows.

Level 1: Quoted prices (unadjusted) in active markets for

identicalassetsorliabilities.

Level2:InputsotherthanquotedpricesincludedinLevel1

thatareobservablefortheassetorliability,eitherdirectly(i.e.

asprices)orindirectly(i.e.derivedfromprices).

Level3:Inputsfortheassetorliabilitythatarenotbasedon

observablemarketdata.(Unobservableinputs).

Iftheinputsusedtomeasurethefairvalueofanassetora

liability fall intodifferent levelsof the fair valuehierarchy,

thenthefairvaluemeasurementiscategorizedinitsentirety

inthesamelevelofthefairvaluehierarchyasthelowestlevel

inputthatissigni�icanttotheentiremeasurement.

The Group recognizes transfers between levels of the fair

value hierarchy at the end of the reporting period during

whichthechangehasoccurred.

Further information about the assumption made in

measuringfairvalueisincludedinNote36.2.

2.6MaterialityandAggregation

Eachmaterialclassofsimilaritemsispresentedseparately.

Items of dissimilar nature or function are presented

separatelyunlesstheyareimmaterial.

2.7GoingConcern

TheDirectorshavemadeanassessmentoftheGroup'sability

tocontinueasagoingconcernintheforeseeablefuture,and

theydonotintendeithertoliquidateorceasetrading.

Further information about the impact of COVID-19 is

includedinNote33.

2.8RelatedPartyTransactions

Disclosurehasbeenmade inrespectof the transactions in

which one party has the ability to control or exercise

during the year under review. All �inancial information

presentedinSriLankanRupees,unlessstatedotherwise.

2.4UseofEstimatesandJudgments

Thepreparationof �inancialstatements inconformitywith

Sri Lanka Accounting Standards requires management to

makejudgments,estimatesandassumptionsthataffectthe

applicationofaccountingpoliciesandthereportedamounts

ofassets,liabilities,incomeandexpenses.Actualresultsmay

differfromtheseestimates.

Estimatesandunderlyingassumptionsare reviewedonan

ongoing basis. Revisions to accounting estimates are

recognizedintheperiodinwhichtheestimatesarerevised

andinanyfutureperiodsaffected.

Informationaboutcriticaljudgmentsinapplyingaccounting

policiesthathavethemostsigni�icanteffectontheamounts

recognized in the consolidated �inancial statements are

includedinthefollowingnotes;

Note3.4-Impairmentofassets

Note3.11.1-Provisions

Note3.13-Employeebene�its

Note3.15-Capitalcommitmentsandcontingencies

Coronavirus(COVID-19)pandemic

The ongoing COVID-19 pandemic has increased the

estimationuncertaintyinthepreparationoftheseCondensed

Consolidated Financial Statements. The estimation

uncertaintyisassociatedwiththeextentanddurationofthe

expected economic downturn (and forecasts for key

economic factors including GDP, employment and house

prices). This includes the disruption to capital markets,

deteriorating credit , liquidity concerns, increasing

unemployment, declines in consumer discretionary

spending, reductions in production because of decreased

demand,andotherrestructuringactivities.

2.5.MeasurementofFairvalue

AnumberoftheGroup'sandCompany'saccountingpolicies

anddisclosuresrequirethemeasurementoffairvalues,for

both�inancialandnon-�inancialassetsandliabilities.

Groupregularlyreviewssigni�icantunobservableinputsand

valuationadjustments.Ifthirdpartyinformationisusedto

measure fairvalues,Groupassesses theevidenceobtained

from the third parties to support the conclusion that such

valuations meet the requirements of SLFRS, including the

NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)

-40-

continues to recognize the investment in the subsidiary at

cost.

3.1.3.Non-ControllingInterest

Non-controllinginterestsaremeasuredattheirappropriate

share of acquired identi�iable net assets at the date of

acquisition.

Changes in theGroup's interest inasubsidiary thatdonot

result in a loss of control are accounted for as equity

transactions.

However, the Company owned 100% of the equity of its

subsidiary and hence no non-controlling interest is

applicable.

3.1.4.LossofControl

WhentheGrouplossesitscontroloveritssubsidiaries,itde-

recognizestheassetsandliabilitiesofthesubsidiaries,any

related Non-Controlling Interest and other components of

equity.Anyresultinggainorlossisrecognizedinpro�itorloss.

Anyinterestretainedinformersubsidiariesismeasuredat

fairvaluewhencontrolislost.

3.1.5.Intra-GroupTransactions

Intra-groupbalances,intra-grouptransactionsandresulting

unrealizedpro�itsareeliminatedinfullintheConsolidated

FinancialStatements.Unrealizedlossesresultingfromintra-

grouptransactionsareeliminatedunlessthecostcannotbe

recovered.

3.2.ForeignCurrencyTransactions

Transactions in foreign currencies are translated to the

respectivefunctionalcurrenciesofGroupentitiesatexchange

ratesasatthedatesofthetransactions.

Monetary assets and liabilities denominated in foreign

currencies at the reporting date are translated to the

functionalcurrencyattheexchangerateasatthatdate.Non-

monetaryassetsandliabilitiesthataremeasuredatfairvalue

in a foreign currency are translated into the functional

currency at the exchange rate when the fair value was

determined.Non-monetaryitemsthataremeasuredbasedon

historical cost in a foreign currency are translated at the

exchangerateatthedateofthetransaction.

Foreign currency differences arising on translation are

generallyrecognizedinpro�itorloss.


signi�icant in�luence over the �inancial and operating

policies/decisionsoftheother,irrespectiveofwhetheraprice

ischarged.

2.9ComparativeInformation

Thecomparativeinformationhasbeenreclassi�ied/restated

where necessary to conform to the current year's

classi�icationinordertoprovideabetterpresentation.

3.SummarySigni�icantAccountingPolices

Theaccountingpoliciessetoutthebelowhavebeenapplied

consistently toallperiodspresented in theseConsolidated

FinancialStatementsandhavebeenappliedconsistentlyby

GroupentitiesexceptforSLFRS16relatedpolicies.

3.1BasisofConsolidation

3.1.1.Businesscombinations

The Group accounts for business combinations using the

acquisitionmethodwhencontrolistransferredtotheGroup.

theconsiderationtransferredintheacquisitionisgenerally

measured at fair value, as are the identi�iable net assets

acquired.

Anygoodwill thatarises is testedannually for impairment.

Anygainonabargainpurchaseisrecognizedinpro�itorloss

immediately. Transaction costs are expensed as incurred,

exceptifrelatedtotheissueofdebtorequitysecurities.

The consideration transferred does not include amounts

relatedtothesettlementofpre-existingrelationships.Such

amountsaregenerallyrecognizedinthepro�itorloss.

3.1.2.Subsidiaries

SubsidiariesareentitiescontrolledbytheGroup.TheGroup

controls an entity when it is exposed to, or has right to,

variablereturnsfromitsinvolvementwiththeentityandhas

theabilitytoaffectthosereturnsthroughitspoweroverthe

entity.The�inancialstatementsofsubsidiariesareincludedin

the Consolidated Financial Statements from the date on

which control commences until the date onwhich control

ceases.

Adjustmentsrequiredtotheaccountingpoliciesofsubsidiary

hasbeenchangedwherevernecessarytoalignthemwiththe

policiesadoptedbytheGroup.

Thecostofanacquisitionismeasuredatthefairvalueofthe

consideration, including contingent consideration. The

acquired identi�iable assets, liabilities and contingent

liabilities are measured at their fair value at the date of

acquisition. Subsequent to the acquisition, the Company

-41-

Group's�inancialassetsclassi�iedandmeasuredatamortized

costarelimitedtorelatedpartyreceivablesandcash&cash

equivalents.

AdebtinvestmentismeasuredatFVOCIifitmeetsbothofthe

followingconditionsandisnotdesignatedasatFVTPL:

- it is heldwithin a businessmodelwhose objective is

achievedbybothcollectingcontractualcash�lowsand

selling�inancialassets;and

- itscontractualtermsgiveriseonspeci�ieddatestocash

�lowsthataresolelypaymentsofprincipalandinterest

ontheprincipalamountoutstanding.

Oninitialrecognitionofanequityinvestmentthatisnotheld

for trading, the Group may elect to present subsequent

changesintheinvestment'sfairvalueinOCI.Thiselectionis

madeonaninvestment-by-investmentbasis.

All �inancialassetsnotclassi�iedasmeasuredatamortised

costorFVOCIasdescribedabovearemeasuredatFVTPL.This

includesallderivative�inancialassets.Oninitialrecognition,

theGroupmay irrevocably designate a �inancial asset that

otherwise meets the requirements to be measured at

amortisedcostoratFVOCIasatFVTPLifdoingsoeliminates

orsigni�icantlyreducesanaccountingmismatchthatwould

otherwisearise.

TheCompanyhasclassi�iedits investmentsinunittrustas

FVTPL.

Thecompanyhasclassi�ieditsinvestmentsinFixeddeposits

atamotisedcost.

a)Financialassets-Businessmodelassessment

The Group makes an assessment of the objective of the

businessmodelinwhicha�inancialassetisheldataportfolio

level because this best re�lects the way the business is

managedandinformation isprovidedtomanagement.The

informationconsideredincludes:

- Thestatedpoliciesandobjectivesfortheportfolioandthe

operation of those policies in practice. These include

whether management's strategy focuses on earning

contractual interest income, maintaining a particular

interestratepro�ile,matchingthedurationofthe�inancial

assetstothedurationofanyrelatedliabilitiesorexpected

cashout�lowsorrealisingcash�lowsthroughthesaleof

theassets;

- How the performance of the portfolio is evaluated and

reportedtotheGroup'smanagement;


3.3FinancialInstruments

(i)RecognitionandInitialMeasurement

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

�inancialassetofoneentityand�inancialliabilityorequity

instrumentofanotherentity.

Receivablesanddebtsecuritiesissuedareinitiallyrecognized

when they are originated. All other �inancial assets and

liabilitiesareinitiallyrecognizedwhentheGroupbecomesa

partytothecontractualprovisionsoftheinstrument.

A �inancial asset (unless it is a trade receivablewithout a

signi�icant �inancing component) or �inancial liability is

initiallymeasuredat fairvalueplus, foran itemnotat fair

valuethroughpro�itorloss(FVTPL),transactioncoststhat

aredirectlyattributabletoitsacquisitionorissue.

Atradereceivablewithoutasigni�icant�inancingcomponent

isinitiallymeasuredatthetransactionvalue.

FinancialAssets

(ii)Classi�icationandsubsequentmeasurement

On the initial recognition, a �inancial asset is classi�ied as

measured at: amortised cost; fair value through other

comprehensiveincome(FVOCI)–debtinvestment;fairvalue

through other comprehensive income (FVOCI) – equity

investment;orfairvaluethroughpro�itorloss(FVTPL).

Financialassetsarenotreclassi�iedsubsequenttotheirinitial

recognitionunlesstheGroupchangesitsbusinessmodelfor

managing�inancialassets,inwhichcaseallaffected�inancial

assetsarereclassi�iedonthe�irstdayofthe�irstreporting

periodfollowingthechangeinthebusinessmodel.

A�inancialassetismeasuredatamortisedcostifitmeetsboth

ofthefollowingconditionsandisnotdesignatedasatFVTPL:

- itisheldwithinabusinessmodelwhoseobjectiveistohold

assetstocollectcontractualcash�lows;and

- itscontractualtermsgiveriseonspeci�ieddatestocash

�lowsthataresolelypaymentsofprincipalandintereston

theprincipalamountoutstanding.

Financialassetsarenotreclassi�iedsubsequenttotheirinitial

recognitionunlesstheGroupchangesitsbusinessmodelfor

managing�inancialassets,inwhichcaseallaffected�inancial

assetsarereclassi�iedonthe�irstdayofthe�irstreporting

periodfollowingthechangeinthebusinessmodel.

-42-

prepaymentfeatureisinsigni�icantatinitialrecognition.

(iii) Financial assets - Subsequent measurement and

gainsandlosses

FinancialLiabilities

Classi�ication, subsequent measurement and gain and

losses

Financialliabilitiesareclassi�iedasmeasuredatamortized

costorFVTPL.A�inancialliabilityisclassi�iedasatFVTPLifit

is classi�ied as held-for-trading, it is a derivative or it is

designatedassuchoninitialrecognition.Financialliabilities

at FVTPL aremeasured at fair value and gains and losses,

including any interest expense, are recognised in pro�it or

loss.Other�inancialliabilitiesaresubsequentlymeasuredat

amortizedcostusingtheeffectiveinterestmethod.Interest

expenseandforeignexchangegainsandlossesarerecognised

inpro�itor loss.Anygainor lossonde-recognition is also

recognisedinpro�itorloss.


- The risks that affect the performance of the business

model(andthe�inancialassetsheldwithinthatbusiness

model)andhowthoserisksaremanaged;

- How managers of the business are compensated - e.g.

whethercompensation isbasedon the fairvalueof the

assetsmanagedor thecontractualcash �lowscollected;

and

- The frequency, volume and timing of sales of �inancial

assets in prior periods, the reasons for such sales and

expectationsaboutfuturesalesactivity.

Transfersof�inancialassetstothirdpartiesintransactions

thatdonotqualifyforderecognitionarenotconsideredsales

for this purpose, consistent with the Group's continuing

recognitionoftheassets.

Financialassetsthatareheldfortradingoraremanagedand

whose performance is evaluated on a fair value basis are

measuredatFVTPL.

b) Financial assets -Assessment whether contractual

cash �lows are solely payments of principal and

interest

Forthepurposesofthisassessment,'principal'isde�inedas

the fair value of the �inancial asset on initial recognition.

'Interest' is de�ined as consideration for the time value of

moneyandforthecreditriskassociatedwiththeprincipal

amountoutstandingduringaparticularperiodoftimeandfor

other basic lending risks and costs (e.g. liquidity risk and

administrativecosts),aswellasapro�itmargin.

In assessingwhether the contractual cash �lows are solely

paymentsofprincipalandinterest,theGroupconsidersthe

contractualtermsoftheinstrument.Thisincludesassessing

whetherthe�inancialassetcontainsacontractualtermthat

couldchangethetimingoramountofcontractualcash�lows

such that itwould notmeet this condition. Inmaking this

assessment,theGroupconsiders:

- Contingenteventsthatwouldchangetheamountortiming

ofcash�lows

- Terms that may adjust the contractual coupon rate,

includingvariable-ratefeatures

- Terms that limit the Group's claim to cash �lows from

Speci�iedassets(e.g.non-recoursefeatures).

Additionally, fora �inancial asset acquiredat adiscountor

premiumtoitscontractualparamount,afeaturethatpermits

or requires prepayment at an amount that substantially

represents the contractual par amount plus accrued (but

unpaid) contractual interest (which may also include

reasonableadditionalcompensationforearlytermination)is

treatedasconsistentwiththiscriterionifthefairvalueofthe

Financialassetsat

amortisedcost

Financialassetsat

FVTPL

These assets are subsequentlymeasuredat amortised costusingthe effective interestmethod. Theamortised cost is reduced byimpairment losses . Interestincome,foreignexchangegainsandl o s se s and impa i rmen t a rerecognised in pro�it or loss. Anygain or loss on derecognition isrecognisedinpro�itorloss.

These assets are subsequentlymeasured at fair value. Net gainsandlosses,includinganyinterestordividendincome,arerecognizedinpro�itorloss.

Debtinvestmentsat

FVOCI

Equityinvestmentat

FVOCI

These assets are subsequentlymeasured at fair value, Interestincome calculated using effectiveinterestmethod ,foreignexchangegains and losses and impairmentare recognized in pro�it or loss.Other net gains and losses arerecognizedinOCI.

On de-recognition ,gains andlosses accumulated in OCI are re-classi�iedtopro�itorloss.

These assets are subsequentlymeasured at fair value .Dividendsarerecognizedasincomeinpro�itorlossunlessthedividendclearlyrepresentsarecoveryofpartofthecost of the investment .Other netgainsandlossesarerecognizedinOCI and are never re-classi�ied topro�itorloss.

-43-

Group's historical experience and informed credit

assessmentandincludingforward-lookinginformation.

TheGroupconsidersa�inancialassettobeindefaultwhen:

- theborrowerisunlikelytopayitscreditobligationstothe

Group in full,without recourse by the Group to actions

suchasrealisingsecurity(ifanyisheld)

LifetimeECLsaretheECLsthatresultfromallpossibledefault

eventsovertheexpectedlifeofa�inancialinstrument.

12-month ECLs are the portion of ECLs that result from

defaulteventsthatarepossiblewithinthe12monthsafterthe

reportingdate(orashorterperiodiftheexpectedlifeofthe

instrumentislessthan12months).

ThemaximumperiodconsideredwhenestimatingECLsisthe

maximum contractual period over which the Group is

exposedtocreditrisk.

MeasurementofECL

ECL are a probability-weighted estimate of credit losses.

Credit lossesaremeasuredas thepresentvalueofallcash

shortfalls(i.ethedifferencebetweenthecash�lowsduetothe

entityinaccordancewiththecontractandthecash�lowsthat

the Group expects to receive). ECLs are discounted at the

effectiveinterestrateofthe�inancialasset.

Credit-impaired�inancialassets

Ateachreportingdate,theGroupassesseswhether�inancial

assets carriedat amortisedcost andequity investmentsat

FVOCI are credit-impaired. A �inancial asset is 'credit-

impaired'whenoneormoreeventsthathaveadetrimental

impact on the estimated future cash �lows of the �inancial

assethaveoccurred.

Evidencethata�inancialassetiscredit-impairedincludesthe

followingobservabledata:

- Signi�icant�inancialdif�icultyoftheborrowerorissuer;

- Abreachofcontractsuchasadefaultinpayments

- The restructuringofa loanoradvanceby theGroupon

termsthattheGroupwouldnotconsiderotherwise;

- Itisprobablethattheborrowerwillenterbankruptcyor

other�inancialreorganisation;or

- The disappearance of an active market for a security

becauseof�inancialdif�iculties.


De-recognition

The Group derecognises a �inancial asset when the

contractualrightstothecash�lowsfromthe�inancialasset

expire,orittransferstherightstoreceivethecontractualcash

�lowsinatransactioninwhichsubstantiallyalloftherisks

and rewards of ownership of the �inancial asset are

transferred or in which the Group neither transfers nor

retainssubstantiallyalloftherisksandrewardsofownership

anditdoesnotretaincontroloverthetransferredasset.Any

interestinsuchderecognized�inancialassetsthatiscreated

orretainedbytheGroupisrecognizedasaseparateassetor

liability.

The Group derecognises a �inancial liability when its

contractualobligationsaredischargedorcancelled,orexpire.

The Group also derecognises a �inancial liability when its

termsaremodi�iedandthecash�lowsofthemodi�iedliability

are substantially different, in which case a new �inancial

liability based on themodi�ied terms is recognised at fair

value.

On de-recognition of a �inancial liability, the difference

between the carrying amount extinguished and the

consideration paid (including any non-cash assets

transferredorliabilitiesassumed)isrecognisedinpro�itor

loss.

Offsetting

Financialassetsand�inancialliabilitiesareoffsetandthenet

amount presented in the statement of �inancial position

when, and only when, the Group currently has a legally

enforceablerighttosetofftheamountsanditintendseither

tosettlethemonanetbasisortorealizetheassetandsettle

theliabilitysimultaneously.

3.4Impairment

(a)FinancialAssets

TheGrouprecogniseslossallowancesforECLson�inancial

assetsmeasuredatamortisedcost.TheGroupmeasuresloss

allowancesatanamountequaltolifetimeECLs,otherdebt

securities and bank balances. Loss allowances for trade

receivableisalwaysmeasuredatanamountequaltolifetime

ECLs.

Whendeterminingwhetherthecreditriskofa�inancialasset

hasincreasedsigni�icantlysinceinitialrecognitionandwhen

estimating ECLs, the Group considers reasonable and

supportable information that is relevant and available

withoutunduecostoreffort.Thisincludesbothquantitative

and qualitative information and analysis, based on the

-44-

Animpairmentlossisrecognisedifthecarryingamountofan

assetexceedsitsrecoverableamount.

3.5Statedcapital

Ordinaryshares

Ordinary shares are classi�ied as equity. Incremental costs

attributabletotheissueofordinarysharesarerecognizedasa

deductionfromequity,netofanytaxeffect.

3.6Property,PlantandEquipment

3.6.1Recognition&Measurement

Itemsofproperty,plant&equipmentaremeasuredatcost

lessaccumulateddepreciationandaccumulatedimpairment

losses.

Costincludesexpenditurethatisdirectlyattributabletothe

acquisitionof theasset.Thecostofself-constructedassets

includes the cost ofmaterials and direct labour, any other

costsdirectlyattributabletobringingtheassetstoaworking

conditionfortheirintendeduse.

Purchasedsoftwarethatisintegraltothefunctionalityofthe

relatedequipmentiscapitalizedaspartofthatasset.

When parts of an item of property, plant and equipment

(major components) have different useful lives, they are

accounted for as separate items of property, plant and

equipment.

3.6.2SubsequentCosts

Subsequentexpenditureiscapitalizedonlyifisprobablethat

thefutureeconomicbene�itsassociatedwiththeexpenditure

will �lowtotheGroup.Thecostsofday-to-dayservicingof

property,plantandequipmentisrecognizedinpro�itorloss

asincurred.

3.6.3.Depreciation

Depreciation is calculated towrite off the cost of items of

property,plantandequipmentlesstheirestimatedresidual

values using the straight-line basis over their estimated

useful lives, and is generally recognized in pro�it or loss,

unless the amount is included in the carrying amount of

anotherasset.Leasedassetsaredepreciatedovertheshorter

oftheleasetermandtheirusefullivesunlessitisreasonably

certainthattheGroupwillobtainownershipbytheendofthe

leaseterm.Landisnotdepreciated.

Theestimateduseful lives for thecurrentandcomparative

yearsofsigni�icant itemsofproperty,plantandequipment

areasfollows;


Presentation of allowance for ECL in the statement of

�inancialposition

Lossallowancesfor�inancialassetsmeasuredatamortised

cost are deducted from the gross carrying amount of the

assets.

Write-off

Thegrosscarryingamountofa�inancialassetiswrittenoff

whentheGrouphasnoreasonableexpectationsofrecovering

a �inancial asset in its entirety or a portion thereof. For

individualcustomers,theGrouphasapolicyofwritingoffthe

gross carrying amount based on historical experience of

recoveries of similar assets. For corporate customers, the

Groupindividuallymakesanassessmentwithrespecttothe

timingandamountofwrite-offbasedonwhetherthereisa

reasonable expectation of recovery. The Group expects no

signi�icantrecovery fromtheamountwrittenoff.However,

�inancialassetsthatarewrittenoffcouldstillbesubjectto

enforcementactivities inordertocomplywiththeGroup's

procedurestorecoveryofamountsdue.

Financialassetsmeasuredatamortisedcost

The Group considered evidence of impairment for these

assetsatanindividualassetlevel.Allassetswereindividually

assessedforimpairment.Animpairmentlosswascalculated

asthedifferencebetweenanasset'scarryingamountandthe

presentvalueoftheestimatedfuturecash�lowsdiscountedat

the asset's original effective interest rate. Losses were

recognised in pro�it or loss and re�lected in an allowance

account. When the Group considered that there were no

realistic prospects of recovery of the asset, the relevant

amountswerewrittenoff.Iftheamountofimpairmentloss

subsequently decreased and the decrease was related

objectivelytoaneventoccurringafterthe impairmentwas

recognised,thenthepreviouslyrecognisedimpairmentloss

wasreversedthroughpro�itorloss.

(b)Non-�inancialAssets

At each reporting date, the Group reviews the carrying

amountsof itsnon-�inancialassets (other than inventories

anddeferredtaxassets)todeterminewhetherthereisany

indicationofimpairment.Ifanysuchexists,thentheassets

recoverableamountisestimated.

Therecoverableamountofanassetisthegreaterofitsvalue

inuseanditsfairvaluelesscosttosell.Valueinuseisbasedon

theestimatedfuturecash�lows,discountedtotheirpresent

value using a pre-tax discount rate that re�lects current

marketassessmentsofthetimevalueofmoneyandtherisks

speci�ictotheasset.

-45-

b.SubsequentExpenditure

Subsequentexpenditureiscapitalizedonlywhenitincrease

thefutureeconomicbene�itsembodiedinthespeci�icassetto

whichitrelate.Allotherexpenditure,includingexpenditure

oninternallygeneratedgoodwillandbrands,arerecognized

inpro�itorlossasincurred.

c.Amortization

Amortizationiscalculatedtowriteoffthecostofintangible

assetslesstheirestimatedresidualvaluesusingthestraight-

linemethodovertheirestimatedusefullives,andisgenerally

recognizedinpro�itorloss.Goodwillisnotamortized.

Theestimateduseful lives for thecurrentandcomparative

yearsareasfollows;

Computersoftware-5years

Amortizationmethods,useful livesand residualvaluesare

reviewedateachreportingdateandadjustedifappropriate.

d.De-recognition

Gainsor lossesarising fromderecognitionofan intangible

assets are measured as the difference between the net

disposalproceedsandthecarryingamountoftheassetsand

are recognized in pro�it or loss when the asset is

derecognized.

3.8LeasedAssets

TheGrouphasappliedSLFRS16usingmodi�iesretrospective

approachandthereforethecomparativeinformationhasnot

beenrestatedandcontinuetobereportedunder17andIFRIC

4.

Policyapplicablefrom1April2019

At inception of a contract ,the Group assesses whether a

contractis,orcontains,alease.Acontract is,orcontains,a

leaseofthecontractconveystherighttocontroltheuseofan

Identi�ied assets for a period of time in exchange for

consideration.Toassesswhetheracontractconveystheright

to control theuseof a identi�iedasset, theGroupuses the

de�initionofaleaseinSLFRS16.

Thispolicyappliedtocontractenteredinto,onorafter1April

2019.


Depreciationofanassetbeginswhenitisavailableforuseor,

inrespectofself-constructedassets,fromthedatethatthe

assetiscompletedandreadyforuse.

Depreciationofanassetceasesattheearlierofthedatethat

theasset isclassi�iedasheldforsaleandthedatethat the

assetisderecognized.

Depreciationmethods, useful lives and residual values are

reviewedateachreportingdateandadjustedifappropriate.

3.6.4.De-recognition

An item of property, plant and equipment is derecognized

upondisposal of orwhenno future economicbene�its are

expectedfromitsuseordisposal.Thegainsorlossesarising

on derecognition (disposal or retirement) of an item of

property,plantandequipmentaredeterminedbycomparing

theproceedsfromdisposalwiththecarryingamountofthe

property,plantandequipmentandarerecognizednetwithin

'otherincome'intheStatementofpro�itorloss.

3.6.5CapitalWork-in-Progress

Capitalwork-in-progressrepresentstheaccumulatedcostof

materialsandothercostsdirectlyrelatedtotheconstruction

of an asset. Capitalwork-inprogress is transferred to the

respective asset accounts at the time it is substantially

completedandreadyforitsintendeduse.

3.7IntangibleAssets

a.RecognitionandMeasurement

Allcomputersoftwarecostsincurred,licensedforusebythe

Group,whicharenotintegrallyrelatedtoassociatehardware,

and can be clearly identi�ied, reliably measured and it is

probablethattheywillleadtofutureeconomicbene�itsare

included in the statement of �inancial position under the

category intangible assets and carried at cost less

accumulated amortization and accumulated impairment

lossesifany.

CategoryofAsset UsefulEconomiclifetime(Years)

Buildings

Plantandmachinery

Of�ice,factory&laboratoryequipment

Furnitureand�ittings

Motorvehicles

50

13.33

10

20

4

-46-

² Amounts expected to be payable under residual value

guaranteedand

²TheexercisepriceunderapurchaseoptionthattheGroupis

reasonably certain to exercise, lease payments in an

optionalrenewalperiodiftheGroupisreasonablycertain

toexerciseandextensionoption, andpenalties forearly

termination of a lease unless the Group is reasonably

certainnottoterminateearly.

The lease liability is measured at amortized cost using

effective interestmethod.it is remeasuredwhen there is a

changeinfutureleasepaymentsarisingfromachangeinan

indexorrate,ifthereisachangeintheGroup'sestimateofthe

amount expected to be payable under a residual value

guarantee,iftheGroupchangesitsassessmentofwhetherit

willexerciseapurchase,extensionorterminationoptionorif

thereisarevisedinsubstance�ixedleasepayment.

When the lease liability is remeasured in this way, a

correspondingadjustmentismadetothecarryingamountof

theright-of-useassetsorisrecordedispro�itorlossifthe

carringamountoftherightofuseassethasbeenreducedto

zero

TheGrouppresentsright-of-use-assetsthatdonotmeetthe

de�initionofinvestmentpropertyinright-of-use-assetsand

leasecreditorinthestatementof�inancialposition.

Shorttermleasesandleasesoflowvalueassets

TheGrouphaselectednottorecognizerightofuseassetsand

leaseliabilitiesofleasesoflow-valueassetsandshortterm

leases.TheGrouprecognize the leasepaymentsassociated

withtheseleasesasanexpenseonastraight-linebasisover

theleaseterm.

Policyapplicablebefore1April2019

ForcontractsenteredintotheGroupdeterminedwhetherthe

arrangement was or contained a lease based on the

assessmentofwhether

² Ful�ilmentofthearrangementwasdependentontheuseof

speci�icassetorassetsand

² Thearrangementhadconveyedarighttousetheasset.An

arrangementconveyedtherighttousetheassetifoneof

thefollowingwasmet

-Thepurchaserhastheabilityorrighttooperatetheasset

whileobtainingorcontrollingmorethananinsigni�icant

amountoftheoutput

a.AsaLessee

At commencement or on modi�ication of a contract that

contains a lease component ,the Group allocate the

considerationinthecontracttoeachleasecomponentonthe

basisofItsrelativestand-aloneprices.However,foethelease

ofpropertytheGrouphaselectednottoseparatenon-lease

components and account for the lease and non-lease

componentsasasingleleasecomponent.

TheGrouprecognizedarightofuseassetandaleaseliability

attheleasecommencementdate .Therightofuseassetsis

initiallymeasuredatcostwhichcomprisestheamountofthe

lease liability adjusted for any lease paymentsmade at or

beforethecommencementdate ,plusany initialdirectcost

incurred and remove the underline asset or to restore the

underlineassetorthesiteonwhichitislocated,lessanylease

incentivereceived.

Therightofuseassetissubsequently depreciatedstraight-

linemethodfromthecommencementdatetotheendofthe

lease term ,unless the lease transfers ownership of the

underlyingassettotheGroupbytheendofleasetermorthe

costoftherightofuseassetre�lectthatGroupwillexerciseA

purchaseoption .In that case the rightofuseassetwillbe

depreciatedovertheusefullifeoftheunderlyingasset,which

is determined on the same basis as those of property and

equipment.Inaddition,therightifuseassetisperiodically

reduced by impairment losses ,if any and adjusted lease

liability.

Theleaseliabilityisinitiallymeasuredatthepresentvaluesof

theleasepaymentsthatarenotpaidatthecommencement

date,discountedusingtheinterestrateimplicitintheleaseor

,if rate cannot be readily determined, the Group's

incremental borrowing rate .Generally ,the Group uses Its

incrementalborrowingrateasthediscountrate.

The Group determines its incremental borrowing rate by

obtaining interest rates from various external �inancing

sourcesandmakescertainadjustmentstore�lectthetermsof

theleaseandtypeoftheassetsleased.

Lease payments included in themeasurement of the lease

liabilitycomprisethefollowing:

²Fixedpayments,includingin-substance�ixedpayments:

² Variableleasepaymentsthatdependonanindexorrate

initially measured using the index or rate as at

commencementdate;


-47-

Net realizable value is the estimated selling price in the

ordinary course of business, less the estimated costs

necessarytomakethesale.

3.11LiabilitiesandProvisions

Liabilitiesclassi�iedascurrentliabilitiesintheStatementof

FinancialPositionarethose,whichfalldueforpaymenton

demandorwithinoneyearfromthedateoftheStatementof

FinancialPosition.

Non-current liabilities are those balances that fall due for

paymentafteroneyearfromtheendofthereportingdate.All

known liabilitieshavebeenaccounted for inpreparing the

�inancialstatement.

3.11.1Provisions

Aprovision isrecognized if,asaresultofapastevent, the

Grouphasapresentlegalorconstructiveobligationthatcan

beestimated reliably, and it isprobable that anout�lowof

economicbene�itswillberequiredtosettletheobligation.

3.12CashandCashEquivalents

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

deposits held at callwithbanksnet of bankoverdraft and

shortterm�ixeddeposits.

3.13EmployeeBene�its

a. De�inedContributionPlans - (EmployeesProvident

FundandEmployeesTrustFund)

Ade�inedcontributionplanisapost-employmentplanunder

whichanentitypays�ixedcontributionintoaseparateentity

and will have no legal or constructive obligation to pay a

further amount. Obligations for contributions to de�ined

contributionplansarerecognizedasexpenseinthepro�itand

lossintheperiodduringwhichrelatedservicesarerendered

byemployees.

Employees'ProvidentFund-ManagedbyHarischandra

MillsPLCProvidentFundAssociation

BoththeGroupandemployeeswhoarepaidonmonthlypay

basis (Payroll Expenses), contribute 15% on the salary of

eachemployeetotheapprovedprivateprovidentFund.

-Thepurchaserhadtheabilityofrighttocontrolphysical

accesstotheassetwhileobtainingorcontrollingmore

thanasinsigni�icantamountoftheoutput

-Factsandcircumstanceindicatedthatitwasremotethat

other parties would take more than an insigni�icant

amountoftheoutput,andthepriceperunitwasneither

�ixedperunitofoutputnorequaltothecurrentmarket

priceperunitofoutput.

Asalessee

In the comparativeperiod, as a lessee theGroupclassi�ied

leases that transferred substantially all of the risk and

rewardsofthe ownershipas�inanceleases.Whenthiswas

the case, the leased assets were measured initially at an

amountequaltotheloweroftheirfairvalueandthepresent

value of the minimum lease payments. Minimum lease

payments were the payment over the lease term that the

lesseewasrequiredtomake,excludinganycontingentrest.

Subsequenttoinitialrecognition,theassetswereaccounted

forinaccordancewiththeaccountingpolicyapplicabletothe

asset.

Assetsheldunderotherleaseswereclassi�iedasoperating

leasesandwerenotrecognisedintheGroup'sstatementof

�inancial position. Payment made under operating leases

wererecognisedinpro�itorlossinstraight–linebasisover

thetermoflease.Leaseincentivesreceivedwererecognised

asanintegralpartofthetotalleaseexpensesoverthetermof

lease.

3.9InvestmentsinSubsidiary

InvestmentsinsubsidiaryoftheGroupareclassi�iedasnon-

current investments, which are stated in the statement of

�inancialpositionatcostlessaccumulatedimpairmentlosses,

ifany.

3.10Inventories

Inventories are measured at the lower of cost and net

realizable value. The cost of raw material and packing

material inventories are accounted at purchased cost on a

�irstin�irstoutbasis.Thecostof�inishedgoodsinventoriesis

based on the weighted average principle, and includes

expenditure incurred in acquiring the inventories,

production or conversion cost and other cost incurred in

bringing them to their existing location and condition. In

relation towork in progress, cost includes an appropriate

share of production overheadsbased onnormal operating

capacity.


-48-

3.15CapitalCommitmentsandContingencies

Contingentliabilitiesaredisclosedifthereisapossiblefuture

obligationasaresultofpasteventbuteitherapaymentisnot

probableortheamountcannotbereliablyestimated.

Contingencies are possible assets or obligations that arise

frompasteventsandwhoseexistencewillbecon�irmedonly

byoccurrenceornon-occurrenceofuncertainfutureevents

notwhollywithinthecontroloftheGroup

CapitalcommitmentsandcontingentliabilitiesoftheGroup

aredisclosed inNote28&29 respectively to the �inancial

statements.

3.16EventsaftertheendoftheReportingPeriod

All material and important events which occur after the

reportingdatehavebeenconsideredanddisclosedinnotesto

the�inancialstatements.

Statement of Pro�it or Loss and Other Comprehensive

Income

3.17RevenueRecognition

RevenuefromContractswithCustomers

SLFRS15“RevenuefromContractswithCustomers”outlines

a single comprehensive model of accounting for revenue

arising from contracts with customers and supersedes

current revenue recognitionguidance foundacross several

standardsandinterpretationswithinSLFRS.Itestablishesa

new�ive-stepmodelthatwillapplytorevenuearisingfrom

contractswithcustomers.

Step1:Identifythecontract(s)withacustomer:Acontractis

de�inedasanagreementbetweentwoormorepartiesthat

create enforceable rights and obligations and sets out the

criteriaforeachofthoserightsandobligations.

Step2:Identifytheperformanceobligationsinthecontract:A

performanceobligationinacontractisapromisetotransfera

goodorservicetothecustomerthatisdistinct.

Step3:Determinethetransactionprice:Transactionpriceis

theamountofconsiderationtowhichtheentityexpectstobe

entitledtoinexchangefortransferringthepromisedgoods

andservicestoacustomer,excludingamountscollectedfrom

thirdparties.

EmployeeTrustFund

TheGroupcontributes3%ofthesalaryofeachemployeeto

the Employees' Trust Fund. Contributions to de�ined

contribution plans are recognized as an expense in the

StatementofComprehensiveIncomeasincurred.

b.De�inedBene�itPlan

De�inedbene�itplanisapost-employmentbene�itplanother

thanDe�inedcontributionplan.Theliabilityrecognizedinthe

statementof�inancialpositioninrespectofde�inedbene�it

planisthepresentvalueofthede�inedbene�itobligationat

theStatementofFinancialPositiondate.Thede�inedbene�it

obligation is calculatedannuallyby independent actuaries,

usingprojectedunitcreditmethod,asrecommendedbyLKAS

19,“EmployeeBene�its”.

The present value of the de�ined bene�it obligation is

determined by discounting the estimated future cash

out�lows using interest rates that apply to the currency in

which the bene�its will be paid, and that have terms to

maturityapproximatingtothetermsoftherelatedliability.

Theassumptionsbasedonwhichtheresultsoftheactuarial

valuationweredeterminedareincludedintheNote23.3to

the�inancialstatements.Thisliabilityisnotexternallyfunded

andtheitemisgroupedundernon-currentliabilitiesinthe

StatementofFinancialPosition.

However,underthePaymentofGratuityActNo.12of1983

theliabilitytoanemployeearisesonlyoncompletionof�ive

yearsofcontinuedservice.

TheGrouprecognizesallactuarialgainsand lossesarising

fromde�inedbene�itplansinOtherComprehensiveIncome

and expenses related to de�ined bene�it plans in staff

expenses in Statement of Pro�it or Loss and Other

ComprehensiveIncome.

Currentservicecostandtheinterestcostrelatedtode�ined

bene�itplaninemployeebene�itsareexpensedintheincome

statement.

3.14TradeandOtherPayables

Tradeandotherpayablesarestatedatcost.


-49-

Step 4: Allocate the transaction price to the performance

obligationsinthecontract:Foracontractthathasmorethan

one performance obligation, the entity will allocate the

transaction price to each performance obligation in an

amount that depicts the consideration towhich the entity

expects to be entitled in exchange for satisfying each

performanceobligation.

Step5:Recognizerevenuewhen(oras)theentitysatis�iesa

performanceobligation.

Revenueismeasuredbasedontheconsolidationspeci�iedin

a contact with a customer. The Group recognises revenue

whenittransferscontroloveragoodorservicetoacustomer.

Determiningthetimingofthetransferofcontrolatapointin

timeorovertimerequirejudgment.

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

recognitionofrevenue.

a.Saleofgoods

Revenueisrecognisedwhenthecontrolhasbeentransferred

tothecustomer,recoveryoftheconsiderationisprobablethe

associated costs and possible return of goods can be

estimated reliably there is no continuing management

involvementofrevenuecanbemeasuredrettaoly.

Revenue is measured net of returns trade Discounts and

volumerebatestheGroupexpectstherevenuerecognitionto

occuratappointintimewhencontroloftheistransferredto

thecustomergenerallyondeliveryofthegoods.

b.Dividendincome

Dividendincomeisrecognizedwhentheshareholders'right

toreceivethepaymentisestablished.

c.Otherincome

Pro�itorlossofarevenuenatureonthedisposalofproperty,

plantandequipmentandothernon-currentassetshavebeen

accountedintheStatementofPro�itorLosshavingdeducted

fromtheproceedsondisposal, thecarryingamountof the

assetandtherelatedsellingexpenses.

Rentalincomeisrecognizedonanaccrualbasis.

3.18Expenditure

i.OperatingExpenditure

Allexpenditure incurred in runningof thebusinessand in

maintaining the property, plant & equipment in a state of

ef�iciencyhasbeenchargedtoincomestatementinarrivingat

the pro�it for the year. For the purpose of presentation of

Statements of Pro�it or Loss and Other Comprehensive

Income, the Directors are of the opinion that function of

expense method present fairly the elements of the

enterprise'sperformance,hencesuchpresentationmethodis

adopted.

Expenditureincurredforthepurposeofacquiring,expanding

orimprovingassetsofapermanentnaturebymeansofwhich

tocarryonthebusinessorforthepurposeofincreasingthe

earningcapacityofthebusinesshasbeentreatedascapital

expenditure.

RepairsandrenewalsarechargedtotheStatementofPro�itor

Lossintheyearinwhichtheexpenditureisincurred.

ii.FinanceIncomeandFinanceExpenses

Financeincomecomprisesinterestincomeonfundsinvested

andforeignexchangegains.Interestincomeisrecognizedasit

accrues in Statement of Pro�it or Loss, using the effective

interestmethod.

Financecostscompriseinterestexpenseonborrowingand

leasesrecognizedinpro�itorlossusingtheeffectiveinterest

method.

Foreign currency gains and losses on �inancial assets and

�inancial liabilities are reported on a net basis as either

�inanceincomeor�inancecostdependingonwhetherforeign

currencymovements.

3.19IncomeTaxExpenses

Incometaxexpensecomprisescurrentanddeferredtax.Itis

recognizedinStatementofPro�itorLossexcepttotheextent

thatitrelatestoitemsrecognizeddirectlyinequityorinOther

ComprehensiveIncome.

a.CurrentTaxation

Currenttaxcomprisestheexpectedtaxpayableorreceivable

onthetaxableincomeorlossfortheyearandanyadjustment

tothetaxpayableorreceivableinrespectofpreviousyears.


-50-

The measurement of deferred tax re�lects the tax

consequencesthatwouldfollowfromthemannerinwhich

theGroupexpects,atthereportingdate,torecoverorsettle

thecarryingamountofitsassetsandliabilities.

Deferredtaxassetsandliabilitiesareoffsetifthereisalegally

enforceablerighttooffsetcurrenttax liabilitiesandassets,

and they relate to income taxes levied by the same tax

authority on the same taxable entity, or on different tax

entities,but they intendtosettlecurrent tax liabilitiesand

assetsonanetbasisortheirtaxassetsandliabilitieswillbe

realisedsimultaneously.

3.20BasicEarningsperShare

TheGrouppresentsbasicearningspershare(EPS)dataforits

ordinaryshares.BasicEPSiscalculatedbydividingthepro�it

orlossattributabletoordinaryshareholdersoftheGroupby

theweightedaveragenumberofordinarysharesoutstanding

duringtheperiodoftheGroup.

3.21DividendDistribution

Dividendsonordinarysharesarerecognizedasaliabilityand

deductedfromequitywhentheyareapprovedbytheGroup's

shareholders. Interim dividends are deducted from equity

whentheyaredeclaredandarenolongeratthediscretionof

theGroup.

3.22StatementofCashFlow

ForthepurposeoftheStatementofCashFlow,cashandcash

equivalentsconsistofcashinhandanddepositsinbanksnet

of outstanding bank overdrafts. Investments with short

maturities i.e. three months or less from the date of

acquisitionarealsotreatedascashequivalents.

The Statement of Cash Flow has been prepared using the

“indirectmethod”.Interestpaidisclassi�iedasoperatingcash

�lows, interest and dividend received are classi�ied as

investing cash �lowswhile dividends paid are classi�ied as

�inancing cash �lows for the purpose of presenting of the

StatementofCashFlow.

3.23SegmentReporting

An operating segment is a component of the Group that

engages in business activities from which it may earn

revenues and incur expenses, including revenues and

expensesthatrelatetotransactionswithanyoftheGroup's

Theamountofcurrenttaxpayableorreceivableisthebest

estimateofthetaxamountexpectedtobepaidorreceived

thatre�lectsuncertaintyrelatedtoincometaxes,ifany.Itis

measuredusingtaxratesenactedorsubstantivelyenactedat

thereportingdate.Currenttaxpayablealsoincludesanytax

liabilityarisingfromthedeclarationofdividends.

b.Deferredtaxation

Deferredtaxisrecognizedinrespectoftemporarydifferences

between the carrying amount of assets and liabilities for

�inancial reporting purposes and the amounts used for

taxationpurposes.Differedtaxisnotrecognizedfor:

- temporarydifferencesontheinitialrecognitionofassets

or liabilities in a transaction that is not a business

combination and that affects neither accounting nor

taxablepro�itorloss;

- temporary differences related to investments in

subsidiarytotheextentthattheGroupisabletocontrol

thetimingofthereversalofthetemporarydifferencesand

itisprobablethattheywillnotreverseintheforeseeable

future;

- taxable temporary differences arising on the initial

recognitionofgoodwill.

Deferred tax assets are recognized for unused tax losses,

unusedtaxcreditsanddeductibletemporarydifferencesto

theextentthatitisprobablethatfuturetaxablepro�itswillbe

available against which they can be used. Future taxable

pro�its are determined based on the reversal of relevant

taxable temporary differences. If the amount of taxable

temporarydifferencesisinsuf�icienttorecognizeadeferred

tax asset in full, then future taxable pro�its, adjusted for

reversalsofexistingtemporarydifferences,areconsidered,

basedonthebusinessplansforindividualsubsidiariesinthe

Group. Deferred tax assets are reviewed at each reporting

dateandarereducedtotheextentthatitisnolongerprobable

thattherelatedtaxbene�itwillberealized;suchreductions

are reversedwhen theprobabilityof future taxablepro�its

improves.

Unrecognized deferred tax assets are reassessed at each

reportingdateandrecognizedtotheextentthatithasbecome

probablethatfuturetaxablepro�itswillbeavailableagainst

whichtheycanbeused.

Deferredtaxismeasuredatthetaxratesthatareexpectedto

beappliedtotemporarydifferenceswhentheyreverse,using

taxratesenactedorsubstantivelyenactedat thereporting

date.


-51-

transactionsareleases.TheGroupappliedSLFRS16onlyto

contractsthatwerepreviouslyidenti�iedasleases.Contracts

thatwerenotidenti�iedasleasesunderLKAS17andIFRIC4

werenotreassessedforwhetherthereisaleaseunderSLFRS

16.Therefore,thede�initionofaleaseunderSLFRS16was

appliedonly to contractsenteredor changedonorafter1

April2019.

3.24.1.2AsaLessee

Asa lessee, theGroup leases right-of-useofbuildings.The

Grouppreviouslyclassi�iedleasesasoperatinglease.Under

SLFRS16,theGrouprecognisesright-of-useassetsandlease

liabilities for the leases (– i.e. these leases are on-balance

sheet.)

Leaseclassi�iedasoperatingleaseunderLKAS17

Attransition,leaseliabilitiesweremeasuredatthepresent

value of the remaining lease payments, discounted at the

Group'sincrementalborrowingrateasat1April2019.

Right-of-useassetsaremeasuredat:

- an amount equal to the lease liability, adjustedby the

amount of any prepayments. The Group applied this

approachtoalltheleases.

TheGroupusedthefollowingpracticalexpedientswhen

applying SLFRS 16 to leases previously classi�ied as

operatingleasesunderLKAS17:

- Appliedasinglediscountratetoaportfolioofleaseswith

similarcharacteristics.

- Adjustedtheright-of-useassetsbytheamountofLKAS

37onerous contractprovision immediatelybefore the

date of initial application, as an alternative to an

impairmentreview.

- Excludedinitialdirectcostsfrommeasuringtheright-of-

useassetatthedateofinitialapplication.

- Usedhindsightwhendeterminingtheleasetermifthe

contract contains options to extend or terminate the

lease.

3.24.1.3Impactontransition

OntransitiontoIFRS16,theGroupandCompanyrecognized

anadditionalofrightofuseofassetsandleaseliabilities,asat

1 April 2019 as follows and theweighted average lessee's

incrementalborrowingrateappliedtotheleaseliabilitieson

1April2019was10%.

othercomponents.Segmenthasbeendeterminedbasedon

theGroup'smanagementandinternalreportingstructure.

All operating segments' operating results are reviewed

regularly by the Group's management to make decisions

aboutresourcestobeallocatedtothesegmentandassessits

performance,andforwhichdiscrete�inancialinformationis

available.

Segment information is based on the primary format

representingtheindustrysegmentoftheGroupisinNote34

&35tothe�inancialstatements.

BasedonthenatureoftheGroup,segmentinformationhas

notbeenprovidedonasecondary formatrepresentingthe

geographicalarea.Intersegmentpricingisdeterminedonan

arm'slengthbasis.

Segmentresults,assetsandliabilitiesincludeitemsdirectly

attributabletoasegmentaswellasthosethatcanbeallocated

onareasonablebasis.

3.24ChangesinAccountingPolicies

3.24.1Newandamendedstandardsandinterpretations

The Group initially applied SLFRS 16 Leases from 1 April

2019. A number of other new standards are also effective

from1April2019,buttheydonothaveamaterialeffectonthe

Group's�inancialstatements.

TheGroupappliedSLFRS16usingthemodi�iedretrospective

approach, (option B), underwhich no cumulative effect of

initialrecognitionisrecognisedinretainedearningsat1April

2019. Accordingly, the comparative information presented

for 2018/19 is not restated, as previously reported, under

LKAS 17 and related interpretations. The details of the

changes in accounting policies are disclosed below.

Additionally,thedisclosurerequirementsinSLFRS16have

notgenerallybeenappliedtocomparativeinformation.

3.24.1.1De�initionofalease

Previously, the Group determined at contract inception

whether an arrangement was or contained a lease under

IFRIC 4 “Determiningwhether anArrangement contains a

Lease”. The Group now assesses whether a contract is or

contains a lease based on the de�inition of a lease, as

explained.

On transition to SLFRS 16, the Group elected to apply the

practicalexpedienttograndfathertheassessmentofwhich


-52-

Group/Company

Rs.

Rightofuseofassets 17,508,819

Prepaymentintheleaserentals 11,384,000

Leaseliabilities 6,124,819

Currentleaseliabilities 5,529,313

Noncurrentleaseliabilities 595,506

Thechangeinaccountingpolicyaffectedthefollowingitems

inStatementofFinancialPositionasat1April2019:

ImpactGroup/Company

Rs.

Rightofuseofassets Increase 17,508,819

Tradeandotherreceivables Decrease (11,384,000)

Leaseliabilities Increase 6,124,819

Currentleaseliabilities 5,529,313

Noncurrentleaseliabilities 595,506

3.25NewStandardandinterpretationnotyetAdoptedas

atReportingDate

Anumberofnewstandardsareeffectiveforannualperiod

beginning after 1 April 2019 and earlier application is

permittedhowevertheGrouphasnotearlyadoptednewor

amendedstandardsinpreparingthese�inancialstatements.

Thefollowingamendedstandardsandinterpretationsarenot

expectedtohaveasigni�icantimpactontheGroup's�inancial

statement.

² AmendmentstoReferencestoConceptualFrameworkin

SLFRSStandard

²De�initionofaBusiness(AmendmentstoSLRS3)

²De�initionofMaterial(AmendmentstoLKAS01andLKAS

08)


-53-


4. REVENUE

RevenueStreams

a) TheGroupgeneratesrevenueprimaryfromfood,soap,fuelandlubricantsegments(Note34)

GROUP COMPANY

FORTHEYEARENDED31MARCH

2020 2019 2020 2019

Rs. Rs. Rs. Rs.

RevenueAnalysis

GrossRevenue 3,686,440,071 3,676,070,725 3,686,440,071 3,676,070,725

TaxestothegovernmentofSriLanka (34,171,660) (49,652,365) (34,171,660) (49,652,365)

Netrevenue 3,652,268,411 3,626,418,3603,652,268,4113,626,418,360

Revenuefromcontractwithcustomers.

Salesofgoods,netoftaxes 3,652,268,411 3,626,418,3603,652,268,411 3,626,418,360

TaxestothegovernmentofSriLankaincludeNationBuildingTax(NBT)

b) Disaggregationofrevenuefromcontractwithcustomers.

Inthefollowingtable,revenuefromcontractswithcustomersisdisaggregatedbymajorproducts.Thetimingofrevenuerecognitionisthepointintimeofproducttransferredtothecustomers.

GROUP COMPANY


2020 2019 2020 2019

Rs. Rs. Rs. Rs.

MajorProducts

Foodproducts 2,348,627,427 2,193,624,009 2,348,627,427 2,193,624,009

Soapproducts 327,015,354 303,874,465 327,015,354 303,874,465

Fuelandlubricants 976,625,630 1,128,919,886 976,625,630 1,128,919,886

3,652,268,411 3,626,418,360 3,652,268,411 3,626,418,360

Operatingsegments

SegmentinformationispresentedinrespectoftheGroup'sbusinesssegments.BusinesssegmentsarebasedontheGroup'smanagementandinternalreportingstructure.

Segmentresults,assetsandliabilitiesincludeitemsdirectlyattributabletoasegmentaswellasthosethatcanbeallocatedonareasonablebasis.

TheGroupcomprisesthefollowingmainbusinesssegments:

-Foodproducts

Foodproductssegmentfocusonmanufacturingawiderangeofproductsincludingcoffee,noodles,papadamandrangeof�lourbasedproducts

-Soapproducts

Soapproductssegmentincludeslaundryandtoiletsoaps.

-FuelandLubricants

Thissegmentfocusesonbuyingandsellingofpetrol,diesel,kerosineoilandotherlubricantsthroughoperatingof�illingstation.

-54-


c) ContractBalances

Followingtableprovidesinformationaboutreceivables,contractliabilitiesfromcontractswithcustomers

GROUP COMPANY


2020 2019 2020 2019

Rs. Rs. Rs. Rs.

Receivableswhichareincludedin

tradeandotherreceivables307,892,920 349,628,180 307,892,920 349,628,180

307,892,920 349,628,180307,892,920 349,628,180

GROUP COMPANY


2020 2019 2020 2019

Rs. Rs. Rs. Rs.

5. OTHERINCOME

Dividendincome - - 3,160,477 66,219,527

Rentalincome 493,680 1,161,600493,680 1,161,600

Pro�itondisposalofproperty,

plant&equipment 29,429,730 23,626,05929,429,730 23,626,059

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

Changeinfairvalueofunittrusts 372,000 346,500372,000 346,500

Staffloaninterestincome 2,458,477 2,653,935 2,458,477 2,653,935

Sundryincome(Note5.1) 10,743,178 11,144,464 10,743,178 11,144,464

43,497,065 35,756,807 46,657,542 101,976,334

5.1 Sundryincome

Saleofdisposablematerial 9,268,300 9,085,765 9,268,300 9,085,765

Sundryreceipts 1,474,878 2,058,699 1,474,878 2,058,699

10,743,178 11,144,464 10,743,178 11,144,464

6. RESULTSFROMOPERATINGACTIVITIES

Resultsfromoperatingactivitiesarestatedafterchargingallexpensesincludingfollowing;

Directors'emoluments(Note27) 46,685,668 41,779,072 46,685,668 41,779,072

Auditors'remuneration

Audit 1,072,500 1,050,000 900,000 900,000

Auditrelated 400,030 315,000 355,750 315,000

Depreciationandamortization 106,728,320 88,989,787 106,728,320 88,989,787

Donations 6,010,267 4,646,607 6,010,267 4,646,607

Staffrelatedexpenses(Note6.1) 465,017,484 416,148,183 465,017,484 416,148,183

Provisionforimpairmentoftrade

receivable(Note17.1) 4,258,479 3,186,614 4,258,479 3,186,614

-55-


GROUP COMPANY


Rs. Rs. Rs. Rs.

6.1 Staffrelatedexpenses

Salariesandwages 312,633,322 278,627,046312,633,322 278,627,046

De�inedcontributionplan 44,704,883 39,774,12944,704,883 39,774,129

Bonus 57,079,523 49,212,202 57,079,523 49,212,202

Staffwelfare 31,609,242 31,637,737 31,609,242 31,637,737

De�inedbene�itplan-Retiringgratuity 18,990,514 16,897,069 18,990,514 16,897,069

465,017,484 416,148,183465,017,484 416,148,183

7. NETFINANCEINCOME

7.1 Financeincome

Interestincomeon�ixeddeposits 31,419,142 26,346,98331,419,142 26,346,983

Pro�itfromtranslationof

foreigncurrencies 1,571,297 4,555,2681,571,297 4,555,268

32,990,439 30,902,25132,990,439 30,902,251

7.2 Financeexpenses

Interestexpensesonoverdraftfacilities (913,692) (2,736,889) (913,692) (2,728,404)

Interestexpensesonleasepayable (534,287) -(534,287) -

Interestexpenseforrelatedpartypayable - - - (4,505,711)

(1,447,979) (2,736,889)(1,447,979) (7,234,115)

Net�inanceincome 31,542,460 28,165,36231,542,460 23,668,136

8. INCOMETAXEXPENSE

8.1 Amountsrecognizedinpro�itorloss

Currenttaxexpense

Oncurrentyearpro�its(Note8.3) 81,547,954 71,118,91381,547,954 69,972,247

Adjustmentsinrespectofprioryears 10,678,886 3,083,23410,678,886 -

Taxesonintercompanydividend 514,500 10,779,924 - -

Deferredtaxexpense

Originationoftemporarydifferences(Note22)1,337,698 (10,134,184)1,337,698 (10,134,184)

Taxexpenseoncontinuingoperations94,079,038 74,847,887 93,564,538 59,838,063

8.2 Amountsrecognisedinothercomprehensiveincome

Deferredtaxreversalonactuarial

(loss)/gain(Note22) (769,769) 981,260 (769,769) 981,260

(769,769) 981,260(769,769) 981,260

-56-


GROUP COMPANY


Rs. Rs. Rs. Rs.

8.3 Taxreconciliationstatement

Pro�itbeforeincometaxexpense 242,371,950 247,644,140246,147,285 309,768,440

Incomenotliabletotax (21,213,650)(17,081,948)(24,374,127) (83,301,475)

Aggregatenondeductibleexpensesfortax 212,294,990 198,753,683212,294,990 198,753,683

Aggregatedeductibleexpensesfortax(138,904,168) (173,086,057)(139,519,026) (173,086,057)

Adjustedpro�it 294,549,122 256,229,818294,549,122 252,134,591

Qualifyingpayments (3,306,603) (2,233,706)(3,306,603) (2,233,706)

Taxablepro�it 291,242,519 253,996,112 291,242,519 249,900,885

Incometaxat28% 81,547,954 71,118,91381,547,954 69,972,247

Oncurrentyearpro�its 81,547,954 71,118,91381,547,954 69,972,247

Effectivetaxrate 33.65% 28.72% 33.13% 22.59%

Applicabletaxrates

AspertheInlandRevenueActNo.24of2017theCompanyandsubsidiaryareliabletopayincometaxat28%

9. EARNINGSPERSHARE

9.1Basicearningspershare

Basicearningspershareiscalculatedbydividingthepro�itfortheyearattributabletotheordinaryshareholdersbytheweightedaveragenumberofordinarysharesoutstandingduringtheyearaspertherequirementoftheSriLankaAccountingStandards(LKAS33)-"EarningsperShare"

Pro�itattributableto

ordinaryshareholders 148,292,912 172,796,253152,582,747 249,930,377

Weightedaveragenumberofordinaryshares 1,919,600 1,919,6001,919,600 1,919,600

Basicearningspershare(Rs.) 77.25 90.02 79.49 130.19

9.2Dilutedearningspershare

Dilutedearningspershareiscalculatedbydividingpro�itfortheyearattributabletotheordinaryshareholdersbytheweightedaveragenumberofordinarysharesafteradjustmentfortheeffectsofalldilutivepotentialordinaryshares.

Atpresent,theGrouphasnodilutivepotentialordinarysharesassuchcalculationofdilutedearningspersharewillnotapply.

10. DIVIDENDPERSHARE

Equitydividendonordinarysharesdeclaredandpaidduringtheyear.

Interimdividend 38,392,000 38,392,00038,392,000 38,392,000

Finaldividend 57,588,026 47,990,55057,588,000 47,990,000

95,980,026 86,382,55095,980,000 86,382,000

Weightedaveragenumberofordinaryshares 1,919,600 1,919,6001,919,600 1,919,600

Dividendpershare(Rs.) 50.00 45.00 50.00 45.00

-57-

NOTESTOTHEFIN

ANCIA

LSTATEMENTS(CONTD.)

11.

PROPERTY,PLANTANDEQUIPMENT

GROUP/COMPANY

Freehold

Buildings

Plant&

Of�ice

Motor

Furn

iture

Total

Total

land

mach

inery

factory&

vehicle

&�ittings

2020

2019

laboratory

equipment

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Cost

Asat01April

299,062,500110,332,420346,263,05560,889,122462,636,565

31,727,2571,310,910,9191,221,257,338

Additions

--

23,341

1,343,253

-

513,9051,880,4993,816,093

TransfersfromCWIP(Note11.1)

-9,918,72117,024,27015,393,09470,290,510

2,589,077115,215,672110,319,706

Disposals

--(1,856,036)

(105,166)(43,223,137)

(57,441)(45,241,780)(24,482,218)

Asat3

1March

299,062,500120,251,141361,454,630

77,520,303489,703,938

34,772,7981,382,765,3101,310,910,919

Accumulateddepreciation

Asat01April

-27,433,941100,534,33430,449,305356,460,830

7,318,193522,196,603458,792,194

Chargefortheyear

-4,476,85825,212,317

6,379,68855,290,084

3,448,19994,807,14687,780,848

Ondisposals

--

(773,828)(63,899)(43,223,137)

(17,981)(44,078,845)(24,376,439)

Asat3

1March

-31,910,799124,972,823

36,765,094368,527,777

10,748,411572,924,904522,196,603

Carryingamountsasat3

1March2020

299,062,500

88,340,342236,481,807

40,755,209121,176,161

24,024,387809,840,406

Carryingamountsasat3

1March2019

299,062,50082,898,479245,728,72130,439,817106,175,735

24,409,064

-788,714,316

Cap

italworkinprogress(N

ote11.1)

111,662,34921,505,663

Netcarryingamounta

sat3

1March

921,502,755810,219,979

11.1Capitalw

ork

inpro

gress(CWIP)

Asat01April

21,505,66324,840,158

Incurred

duringtheyear

206,059,858107,315,931

Cap

italized

duringtheyear

Tan

gibleassets

(115,215,672)(110,319,706)

Intangibleassets

(687,500)

(330,720)

Asat31March

111,662,34921,505,663

11.2Thecostoffullydep

reciated

property,plantandequipmen

tasatrep

ortingdateam

ountedtoRs.281,486,924/-(2019,Rs.260,527,496/-)

11.3N

oproperty,plant&

equipmen

tpledgedassecurityforliab

ilities.

11.4Cap

italisationofborrowingcosts

Duringtheyearunderreview,theGrouphasnotcap

italised

anyborrowingcosts.

11.5Signi�ican

tchan

gesinth

eCompan

y'soritssubsidiary's�ixedassetsan

dth

emarketvalueoflan

d

Therearenosigni�ican

tchan

gesinth

eCompan

y'soritssubsidiary's�ixedassetsan

dth

emarketvalueoflan

dwhen

compared

toth

ebookvalueasat3

1March2020.

11.6Cap

italwork-inprogress

Thecapitalwork-inprogressbalan

cerep

resentthecostincurred

byth

eCompan

yon�ixedassetswhichisstillunderconstructionatthebalan

cesheetd

ate.

-58-

NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)11.7 Companyproperties

Assettype Location Extent Value

A R P

Land 11,C.A.Harischandra 04 02 20 138,750,000

Mawatha,Matara.

455,Bauddhaloka

Mawatha,Colombo08 00 01 2.75 160,312,500

299,062,500

Noofbuildings Value

Buildings 11,C.A.Harischandra 23 107,728,174

Mawatha,Matara.

455,Bauddhaloka

Mawatha,Colombo08 02 12,522,967

25 120,251,141

GROUP COMPANY

ASAT31MARCH, 2020 2019 2020 2019

Rs. Rs. Rs. Rs.

12. INTANGIBLEASSETS

ComputerSoftware

Cost

Asat01April 8,550,750 8,072,030 8,550,750 8,072,030

Additions 46,900 148,000 46,900 148,000

TransferredfromCWIP 687,500 330,720 687,500 330,720

Disposals - - - -

Asat31March 9,285,150 8,550,750 9,285,150 8,550,750

Amortization

Asat01April 7,018,692 5,809,753 7,018,692 5,809,753

Amortizationduringtheyear 879,082 1,208,939 879,082 1,208,939

Disposals - - - -

Asat31March 7,897,774 7,018,692 7,897,774 7,018,692

Carryingvaluesasat31March 1,387,376 1,532,058 1,387,376 1,532,058

13. RIGHTOFUSEASSET

Cost

Balanceasat01April - - - -

Recognitionofright-of-use-assetsoninitial

applicationofSLFRS16 17,508,819 - 17,508,819 -

Adjustedbalanceasat01April 17,508,819 - 17,508,819 -

Additions - - - -

Balanceasat31March 17,508,819 - 17,508,819 -

Less:Accumulatedamortization


Chargedfortheyear 11,042,092 - 11,042,092 -

Balanceasat31March - - - -

11,042,092 - 11,042,092 -

Netbookvalueasat31March 6,466,727 - 6,466,727 -

COMPANY

2020 2019

14. INVESTMENTINSUBSIDIARY

Ordinaryshares 70 70

(Fullyownedsubsidiary) 70 70

Totalnumberofshares700,000

-59-

GROUP COMPANY

ASAT31MARCH, 2020 2019 2020 2019 Rs. Rs. Rs. Rs.16. INVENTORIES Rawmaterialsandconsumables 206,514,898 96,549,721 206,514,898 96,549,721 Workinprogress 26,946,405 26,285,143 26,946,405 26,285,143 Finishedgoods 61,107,735 47,810,398 61,107,735 47,810,398 Machineryspares 22,503,507 25,089,432 22,503,507 25,089,432 317,072,545 195,734,694 317,072,545 195,734,694 Less: Provisionforslowmovingmachineryspares (6,887,199) (6,887,199) (6,887,199) (6,887,199) (Note16.1) 310,185,346 188,847,495 310,185,346 188,847,495

16.1Provisionforslowmovingmachineryspares Asat01April 6,887,199 2,637,141 6,887,199 2,637,141 Provisionmadeduringtheyear - 4,250,058 - 4,250,058 Asat31March 6,887,199 6,887,199 6,887,199 6,887,199

NoneoftheinventoriesarepledgedassecurityforfacilitiesobtainedbytheGrouportheCompanyfrombanksasat31March2020Inventoriesarestatedatthelowerofcostandnetrealizablevalue.

17. TRADEANDOTHERRECEIVABLES Tradereceivables 307,892,920 349,628,180 307,892,920 349,628,180 Provisionofimpairment(Note17.1) (4,258,479) (3,186,614) (4,258,479) (3,186,614) 303,634,441 346,441,566 303,634,441 346,441,566 Otherreceivables(Note17.2) ` 67,803,963 72,021,71567,803,963 72,021,715 371,438,404 418,463,281371,438,404 418,463,281 17.1Provisionofimpairment Asat01April 3,186,614 - 3,186,614 - Provisionmadeduringtheyear 1,071,865 3,186,614 1,071,865 3,186,614 Asat31March 4,258,479 3,186,614 4,258,479 3,186,614

17.2Otherreceivables Loanstoemployees 58,507,391 52,972,290 58,507,391 52,972,290 Advances&prepayments 2,494,923 15,156,814 2,494,923 15,156,814 Tradedeposits 2,584,122 2,535,566 2,584,122 2,535,566 Sundrydebtors 4,217,527 1,357,045 4,217,527 1,357,045 67,803,963 72,021,71567,803,963 72,021,715 18. CASH&CASHEQUIVALENTS Cashinhand 2,330,877 1,865,340 2,330,877 1,865,340 Cashatbank 23,150,701 17,154,565 22,198,891 11,867,380 Shorttermdeposits(Note18.2) 48,629,457 61,108,910 48,629,457 61,108,910 Cashandcashequivalentsinthe statementof�inancialposition 74,111,035 80,128,815 73,159,225 74,841,630 Bankoverdrafts(secured)(Note18.1) (128,540,284) (28,532,778) (128,540,284) (28,532,778) Cashandcashequivalentsforthepurpose ofstatementofcash�lows (54,429,249) 51,596,037(55,381,059) 46,308,852

18.1 Bankoverdraftisfullysecuredonshorttermdepositsheldwithbanks. 18.2 Shorttermdepositsaremeasuredatamortizedcostsandareexpectedtorecoveredthroughcontractualcash�lows.


GROUP/COMPANY

ASAT31MARCH, 2020 2019

No.ofunit FairValue No.ofunit FairValue

Rs. Rs.

15. INVESTMENTINUNITTRUST

NDBGrowth&IncomeFund 150,000 5,751,000 150,000 5,379,000

150,000 5,751,000 150,000 5,379,000

-60-


GROUP COMPANY

ASAT31MARCH, 2020 2019 2020 2019

Rs. Rs. Rs. Rs.

19. STATEDCAPITAL

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

19.1 Theholdersofordinarysharesareentitledtoreceivedividendsasdeclaredfromtimetotimeandareentitledto

onevotepershareattheshareholdersmeetingsoftheCompany.

20. OTHERCAPITALRESERVES

20.1 Othercapitalreserves

Reserveonscriptissue(Note20.1.1) 6,999,930 6,999,930 - -

Reserveonshareissue(Note20.1.2) 11,014 11,014 11,014 11,014

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

20.1.1 ReserveonscriptissueinConsolidatedFinancialStatementshasarisenonscriptissueof699,993sharesofRs.10/-

eachbythefullyownedsubsidiary,HarischandraMills(Distributors)Limitedintheyear1995/96.

20.1.2 Reserveonshareissuecompriseunclaimedfundsofshareapplicationandallotmentaccounttransferredtocapital

reserves.Thisreservecannotbedirectlydistributedtoshareholders.

21. GENERALRESERVES

Generalreserve 12,841,000 12,841,000 12,841,000 12,841,000

12,841,000 12,841,000 12,841,000 12,841,000

General reservecanbeutilized tosettleanyunknownfuturecontingenciesandstrengthen the �inancialpositionand

workingcapitalneedsofthecompanyifrequired

22. DEFERREDTAXATION

Balanceatthebeginningoftheyear 41,250,53350,403,45741,250,533 50,403,457

Origination/(Reversal)oftemporary

differencesrecognisedinpro�itfortheyear 1,337,697(10,134,184) 1,337,697 (10,134,184)

(Reversal)/Originationoftemporary

differencesrecognisedinthestatementofOther

ComprehensiveIncome (769,769)981,260(769,769)981,260

Balanceattheendoftheyear 41,818,461 41,250,53341,818,46141,250,533

22.1 Deferredtaxasset (50,116,553)(41,267,648)(50,116,553)(41,267,648)

Deferredtaxliability 91,935,01482,518,18191,935,014 82,518,181

41,818,461 41,250,53341,818,461 41,250,533

22.2 The effective taxes of 28% (2019-28%), was applied for calculation of deferred tax asset/liability as at the

reportingdate.

22.3 Thedeferredtaxasset/liabilityrecognisedontemporarydifferencesareasfollows:

2020 2019

Group/Company Temporary Temporary

differences TaxEffect differences TaxEffect

Onproperty,plantandequipment 328,339,33791,935,014294,707,789 82,518,181

Onretirementgratuity (109,246,500)(30,589,020)(95,384,457)(26,707,648)

Onleasecreditor (595,506)(166,743) - -

onotherprovisions (69,145,678)(19,360,790)(52,000,000) (14,560,000)

149,351,65341,818,461 147,323,332 41,250,533

-61-


GROUP COMPANY

ASAT31MARCH, 2020 2019 2020 2019

Rs. Rs. Rs. Rs.

23. EMPLOYEEBENEFITOBLIGATION

Retiringgratuity

Asat01April 95,384,457 87,999,722 95,384,457 87,999,722

Chargefortheyear(Note23.1) 21,739,688 13,392,568 21,739,688 13,392,568

117,124,145 101,392,290 117,124,145 101,392,290

Gratuitypaid (7,877,645) (6,007,833) (7,877,645) (6,007,833)

Balanceasat31March 109,246,500 95,384,457 109,246,500 95,384,457

23.1Chargefortheyear

Interestcost 10,969,213 9,679,969 10,969,213 9,679,969

Currentservicecost 8,021,301 7,217,100 8,021,301 7,217,100

Acturialloss/(gain) 2,749,174 (3,504,501) 2,749,174 (3,504,501)

21,739,688 13,392,568 21,739,688 13,392,568

AmountchargedtoIncomeStatement 18,990,514 16,897,069 18,990,514 16,897,069

AmountchargedtoOtherComprehensive

Income 2,749,174 (3,504,501) 2,749,174 (3,504,501)

21,739,688 13,392,568 21,739,688 13,392,568

23.2 Anactuarialvaluationontheretiringgratuitieswascarriedoutasat31March2020byMr.M.Poopalanathan,AIA,

M/sActuarialandManagementConsultants(Pvt)Limited,a�irmofprofessionalactuaries.Thevaluationmethod

usedbytheactuariestovaluetheliabilityisthe"ProjectedUnitCreditMethod",themethodrecommendedbythe

SriLankaAccountingStandard(LKAS19)"EmployeeBene�its."

23.3Actuarialassumptions

2020 2019

a. Financialassumptions

Discountrateasat31March 10% 11.5%

Futuresalaryincreases 8% 10%

b. Demographicassumptions

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

servicesanddeathbeforeandafterretirement.Assumptionregardingthefuturemortalityarebasedonthe1967-70

mortalitytableissuedbytheInstituteofActuaries,London.

23.4Sensitivityofassumptionsused

Possiblechangesatthereportingdatetooneoftheactuarialassumptions,holdingotherassumptionsconstantwouldhave

affectedthede�inedbene�itobligationsasfollows;

Discountrate1%

Discountrate1%

Salaryincrement1%

Salaryincrement1%

EffectonchargedtoStatementofPro�itorLossandOthercomprehensiveIncome

31March2020

31March2019 EffectonchargedtoStatementofPro�itorLossandOthercomprehensiveIncome

1% Increase

1% Increase

5,296,554

4,656,222 4,656,222

(5,860,551)

(5,188,717) (5,188,717)

(5,296,554) 5,860,551

(5,801,874)6,324,0015,801,874

5,073,222 5,073,222

(6,324,001)

(5,565,704) (5,565,704)

1% Decrease

1% Decrease

1% Increase

1% Increase

EffectonEmployeeBene�itObligationsIntheStatementofFinancialPosition

EffectonEmployeeBene�itObligationsIntheStatementofFinancialPosition

1%Decrease

1%Decrease

-62-


GROUP COMPANY

ASAT31MARCH, 2020 2019 2020 2019

Rs. Rs. Rs. Rs.

24. TRADE&OTHERPAYABLES

Tradepayables 120,018,237 55,191,085 120,018,237 55,191,085

Otherpayables(Note24.1) 119,072,974 135,615,471 118,900,178 135,397,162

239,091,211 190,806,556 238,918,415 190,588,247

24.1 Otherpayables

Accruedexpenses 26,217,668 32,395,362 26,044,872 32,177,058

VATpayable 17,993,424 32,175,363 17,993,424 32,175,363

NBTpayable - 4,959,828 -4,959,828

Trade&customerdeposits 5,393,846 6,562,291 5,393,846 6,562,291

Provisionforbonus 58,000,000 52,000,000 58,000,000 52,000,000

Provisionformarketreturns 3,650,524 - 3,650,524 -

Unclaimeddividendpayable 3,271,037 2,945,293 3,271,037 2,945,293

Others 4,546,475 4,577,334 4,546,475 4,577,329

119,072,974 135,615,471 118,900,178 135,397,162

25. LEASECREDITOR


Additionsduringtheyear 6,124,819 - 6,124,819 -

Interestamortisedfortheyear 534,287 - 534,287 -

Re-payment (6,063,600) - (6,063,600) -

Balanceasat31March 595,506 - 595,506 -

Non-Current

Leasecreditor-dueafteroneyear 440,479 - 440,479 -

Current

Leasecreditor-duewithinoneyear 155,027 - 155,027 -

595,506 - 595,506 -

25.1 Amountrecognizedinstatementofcomprehensiveincome

2019/2020-LeaseunderSLFRS16

Interestonleaseliabilities 534,287 - 534,287 -

ROUamortisation 11,042,092 - 11,042,092 -

2018/2019-OperatingleaseunderLKAS17

Leaseexpense(Rentexpense) - 10,032,000 - 10,032,000

Amountrecognizedinstatementofcash�lows

2019/2020-Totalcashout�lowsforleases 6,063,600 - 6,063,600 -

-63-

27.2 Keymanagementpersonnelcompensation

AccordingtoSriLankaAccountingStandardLKAS24"RelatedPartyDisclosures",keymanagementpersonnelarethose

havingauthorityandresponsibility forplanning.directingandcontrollingtheactivitiesof theentity.Accordingly, the

directorsoftheCompanyhavebeenclassi�iedasKMPoftheCompanyandtheGroup.

AstheCompanyistheultimateparentofitssubsidiary,HarischandraMills(Distributors)LimitedandtheBoardofthe

Companyhastheauthorityandresponsibilityforplanning,directingandcontrollingoftheGroup,theDirectorsofthe

Companyhavebeenidenti�iedastheKMPoftheGroup.

i) LoanstoDirectors

NoloanshavebeengiventothedirectorsoftheCompany.

ii) Keymanagementpersonnelcompensationcomprised:

GROUP COMPANY

FORTHEYEARENDED31MARCH 2020 2019 2020 2019

Rs. Rs. Rs. Rs.

Shorttermbene�its 39,756,702 35,991,793 39,756,702 35,991,793

Longtermbene�its 6,928,966 5,787,279 6,928,966 5,787,279

Total(Note06) 46,685,668 41,779,072 46,685,668 41,779,072

27.3 Transactionswithsubsidiary

Recurrenttransactions

2020 2019

Nameofthe Natureof Volumeof Balance Volumeof Balance

relatedparty transaction transaction asat31.03.20 transaction asat31.03.19

Harischandra Interestexpenses - - 4,505,711 -

Mills FundTransfers - - (19,543,474) -

(Distributors) Dividendpayment (3,160,477) - (66,219,527) -

Limited OutstandingBalances


GROUP COMPANY

ASAT31MARCH, 2020 2019 2020 2019

Rs. Rs. Rs. Rs.

26. CURRENTTAXLIABILITIES

Asat01April 13,542,676 25,120,288 16,126,097 28,646,616

Provisionfortheyear(Note08) 81,547,954 71,118,913 81,547,954 69,972,247

Prioryearunderprovision(Note08)10,678,8863,083,23410,678,886 -

Taxonintercompanydividend 514,500 10,779,924 - -

106,284,016110,102,359108,352,937 98,618,863

Paymentsduringtheyear (101,995,487) (96,559,683) (101,480,986) (82,492,766)

Asat31March 4,288,529 13,542,676 6,871,951 16,126,097

27. TRANSACTIONSWITHRELATEDPARTIES

TheGroupcarriesouttransactionsintheordinarycourseofitsbusinesswithpartieswhoarede�inedasrelatedpartiesin

SriLankaAccountingStandardLKAS24"RelatedPartyDisclosures.",thedetailsofwhicharereportedbelow.

TheCompany'srelatedpartiesincludekeymanagementpersonnel,closefamilymembersofkeymanagementpersonnel

andentitieswhicharecontrolled,jointlycontrolledorsigni�icantlyin�luencedforwhichsigni�icantvotingpowerisheldby

keymanagementpersonnelortheirclosefamilymembers.

27.1 Parentandultimatecontrollingparty

IntheopinionofDirectorstheCompanydosenothaveanidenti�iableparentofitsown.

-64-


27. TRANSACTIONSWITHRELATEDPARTIES(CONTD.)

27.4 Transactionswithotherentities

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

28. CAPITALEXPENDITURECOMMITMENTS

Therewerenomaterialcommitmentswhichrequiredisclosureasatthereportingdate.

29. CONTINGENTLIABILITIES

TheGroupdidnothaveanycontingentliabilitiesoutstandingasatthereportingdate.

30. EVENTSOCCURRINGAFTERTHEREPORTINGDATE

Therewerenomaterialeventsoccurringafterthereportingdatethatrequireadjustmentordisclosureinthe�inancialstatements,otherthananinterimdividendofRs.20.00pershareamountingtoRs.38,392,000/-wasapprovedon24July2020bytheBoardofDirectorsandpaidon23August2020.

31. COMPARATIVEINFORMATION

Comparativeinformationhasbeenrearrangedandreclassi�iedtoconformwiththecurrentyearpresentation.

32. DIRECTORS'RESPONSIBILITY

DirectorsoftheCompanyareresponsibleforthepreparationandpresentationofthese�inancialstatements.

33. OTHERMATTERS:IMPACTOFCOVID19

COVID-19pandemicwillhaveanadverseimpactontheoverallbusinessactivitiesandoperationsofHarischandraMillsPLCGroupintheforeseeableshorttomediumterm.TheGroupexperiencedtemporarydisruptioninretailsalesandcollectionsfromtradedebtors.Asthegovernmentdeclaredastateof“WorkfromHome”,mostofouroperationswererestrictedespeciallysalesandproductionduringthepeakbusinessperiodof2020.DespitethesechallengesCompanyhasobtainedpermissiontorestart theoperationsatreducedscaleduring themonthofApril2020subject to therestrictionsandguidelineofthehealthsector.

Managementhadcarriedoutadetailassessmentandplannedas tohowtheGroupwillcontinue itsoperations in itsoptimumcapacitytogenerateprojectedpro�itsandliquidity,basedondifferentmodels.Giventhevolatileandevolvinglandscape,theGroupmanagementconsistentlymonitortheimpactofCOVID-19ontheGroup'soperationsandpro-activelytakemeasurestoensurethebusinesscontinueswithadequateworkingcapitalmanagement,costreductionmethods,innovationsindoingthebusiness.Directorsaresatis�iedthattheGrouphasadequateresourcesandcapabilitiestocontinueoperationsintheforeseeablefuture.

-65-

NOTESTOTHEFIN

ANCIA

LSTATEMENTS(CONTD.)

34.

SEGMENTALIN

FORMATIO

N

GROUP

Inform

ationbasedonth

eprimarysegments

FoodPro

ducts

FuelandLubrica

ntSoap

Total

Fortheyearended31March

2020

2019

2020

2019

2020

2019

2020

2019

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Revenue:

Totalsales

2,348,627,427

2,193,624,009976,625,6301,128,919,886327,015,354

303,874,4653,652,268,4113,626,418,360

Operatingpro

�it:

Segm

ento

peratingpro�itb

eforedep

reciation257,080,314252,217,98411,752,665

19,207,8985,227,766

1,285,876

274,060,745272,711,758

Dep

reciationandamotization

(93,290,195)

(77,700,910)(448,697)

(525,263)(12,989,428)

(10,763,614)(106,728,320)

(88,989,787)

Segm

ento

peratingpro�it

163,790,119174,517,07411,303,968

18,682,635(7,761,662)

(9,477,738)

167,332,425183,721,971

Otheroperatingincome

43,497,065

35,756,807

Net�inan

ceincome

31,542,460

28,165,362

Pro�itb

eforeincometaxexpen

se

242,371,950247,644,140

Incometaxexpen

se

(94,079,038)

(74,847,887)

Pro�itafterincometax

148,292,912172,796,253

Assets:

Operatingassets

1,193,710,385995,416,181496,378,500512,277,909166,208,408137,891,2511,856,297,2931,645,585,341

Cash&cashequivalen

ts

74,111,035

80,128,815

Totalassets

1,930,408,3281,725,714,156

Liabilities:

Operatingliab

ilities

307,044,072

190,376,729127,677,598

97,974,89242,751,831

26,372,170477,473,501

314,723,791

Deferredtaxliab

ilities

41,818,461

41,250,533

Incometaxpayab

le

4,288,529

13,542,676

Totalliabilities

523,580,491

369,517,000

-66-

NOTESTOTHEFIN

ANCIA

LSTATEMENTS(CONTD.)

35.

SEGMENTALIN

FORMATIO

N

COMPANY

Inform

ationbasedonth

eprimarysegments

FoodPro

ducts

FuelandLubrica

ntSoap

Total

Fortheyearended31March

2020

2019

2020

2019

2020

2019

2020

2019

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Revenue:

Totalsales

2,348,627,427

2,193,624,009976,625,6301,128,919,886327,015,354

303,874,4653,652,268,4113,626,418,360

Operatingpro

�it:

Segm

ento

peratingpro�itb

eforedep

reciation257,620,024

252,571,07211,752,665

19,207,8985,302,914

1,334,787274,675,603273,113,757

Dep

reciationandamortization

(93,290,195)

(77,700,910)

(448,697)

(525,263)(12,989,428)

(10,763,614)(106,728,320)

(88,989,787)

Segm

ento

peratingpro�it

164,329,829

174,870,16211,303,968

18,682,635(7,686,514)

(9,428,827)167,947,283184,123,970

Otheroperatingincome

46,657,542101,976,334

Net�inan

ceincome

31,542,460

23,668,136

Pro�itb

eforeincometaxexpen

se

246,147,285

309,768,440

Incometaxexpen

se

(93,564,538)

(59,838,063)

Pro�itafterincometax

152,582,747

249,930,377

Assets:

Operatingassets

1,193,710,431995,416,223496,378,518512,277,931166,208,414137,891,2571,856,297,3631,645,585,411

Cash&cashequivalen

ts

73,159,225

74,841,630

Totalassets

1,929,456,5881,720,427,041

Liabilities:

Operatingliab

ilities

306,932,953

190,244,674127,631,39297,906,93142,736,360

26,353,877

477,300,705314,505,482

Deferredtaxliab

ilities

41,818,461

41,250,533

Incometaxpayab

le

6,871,951

16,126,097

Totalliabilities

525,991,117

371,882,112

-67-


36. FINANCIALINSTRUMENTS-FAIRVALUEANDRISKMANAGEMENT

36.1 FinancialRiskManagement

TheGroupisexposedtofollowingrisksarisingfrom�inancialinstruments.Inparticular,thekey�inancialrisk

categoriesare:

A.Creditrisk

B.Liquidityriskand

C.Marketrisk

d.Operationalrisk

36.1.1 RiskManagementFramework

TheBoardofdirectorshasoverallresponsibilityfortheestablishmentandoverseetheGroup'sriskmanagement

framework.TheGroup'sriskmanagementpoliciesareestablished, identifyandanalyze therisk facedby the

Group,tosetappropriaterisklimitsandcontrols,andtomonitorrisksandadherencetolimits.Riskmanagement

policiesandsystemareregularlytore�lectchangesinmarketconditionsandtheGroup'sactivities.

TheGroupAuditCommitteeoverseeshowmanagementmonitorscompliancewiththeGroup'sriskmanagement

policiesandprocedures,andreviewstheadequacyoftheriskmanagementframeworkinrelationtotherisksfaced

bytheGroup.TheGroupAuditCommitteeisassistedinitsrolebyinternalaudit.Internalauditundertakesboth

regularandadhocreviewmanagementcontrolsandprocedures,theresultsofwhicharereportedtotheAudit

Committee.

ThisNotepresentsinformationabouttheGroup'sexposuretoeachoftheaboverisks,theGroup'sobjectives,

policiesandprocessesformeasuringandmanagingrisks,andtheCompany'smanagementofcapital.

36.1.2 CreditRisk

Creditriskisthe�inanciallosstotheGroupifacustomerorcounterpartytoa�inancialinstrumentfailstomeetits

contractualobligation,andarisesprincipallyfromtheGroup'sreceivablefromcustomers.

36.1.2.1ExposuretoCreditRisk

Thecarryingamountof�inancialassetsrepresentingthemaximumcreditexposure.Themaximumexposureto

creditriskatthereportingdatewas,

GROUP COMPANY

ASAT31MARCH, 2020 2019 2020 2019

Rs. Rs. Rs. Rs.

Tradeandotherreceivables 368,943,481 404,074,959 368,943,481 404,074,959

Shorttermdeposits 48,629,457 61,108,910 48,629,457 61,108,910

Investmentinunittrust 5,751,000 5,379,000 5,751,000 5,379,000

Investmentsin�ixeddeposit 239,565,685 221,143,528 239,565,685 221,143,528

662,889,623 691,706,397 662,889,623 691,706,397

(a) TradeandOtherReceivables

TheGroup'sexposuretocreditriskisin�luencedmainlybytheindividualcharacteristicofeachcustomer.However,

managementalsoconsiderthedemographicsof theCompany'scustomerbase, includingthedefaultriskof the

industryandcountryinwhichcustomeroperate,asthesefactorsmayhaveanin�luenceoncreditrisk.

Theagingoftradeandotherreceivablesattheendofthereportingperiodthatwerenotimpairedwasasfollows,

1-60days 269,448,051 342,949,024 269,448,051 342,949,024

61-180days 60,516,422 25,766,388 60,516,422 25,766,388

Above181days 38,979,008 35,359,547 38,979,008 35,359,547

368,943,481 404,074,959 368,943,481 404,074,959

-68-


Tominimizethecreditriskfromcustomers,theCompanyobtainsbankguaranteesfromitstradingcustomerswheninitiating

thebusinessrelationships.TheCompanymonitors the levelof transactionwith theguaranteeand increases theguarantee

amountwherenecessary.Further,creditperiodsareestablishedandthereceivablebalancesaremonitoredcontinuously.The

amountspastduebymore than181daysare still consideredcollectible in full,basedonhistoricalpaymentbehaviorand

analysisofcustomercreditrisk.

Impairmentlosses

TheCompanyestablishesanallowanceforimpairmentthatrepresentsitsestimateofincurredlossesinrespectoftradeand

otherreceivables.Themaincomponentsofthisallowanceareaspecificlosscomponentthatrelatestoindividuallysignificant

exposures, and a collective loss component established for groups of similar assets in respect of losses that have been

incurredbutnotyetidentified.Thecollectivelossallowanceisdeterminedbasedonhistoricaldataofpaymentstatisticsfor

similarfinancialassets.

Theagingoftradereceivablesatthereportingdatewasasfollows:

(b)CashandCashEquivalents

TheGroupheldcashandcashequivalentsofRs.74millionasat31March2020(2019:Rs.80million),whichrepresent its

maximum credit exposure on these assets. Cash and cash equivalents are heldwith bank,which are rateAA (LKA) toA+

(LKA),basedonFitchratings.

(c)InvestmentinUnitTrust

InvestmentinunittrustismadeinunitsmanagedbyNDBwealthmanagementLtd.

(d)InvestmentinFixeddeposits

Investmentinfixeddepositsrepresentsfixeddepositsplacedatvariouslicencedcommercialbanks.

36.1.3Expectedcreditlosses

With the adoption of SLFRS 9 - Financial Instruments, the Companymanages credit quality using a three stage approach

whichinlinewiththenewstandardrequirementsaswell.

Stageone:12monthexpectedcreditlosses(ECL)

Stagetwo:Lifetimeexpectedcreditlosses(ECL)-notcreditimpaired

Stagethree:Lifetimeexpectedcreditlosses(ECL)-creditimpaired

GROUP/COMPANY

ASAT31MARCH, 2020 2019

Gross Impairment Gross Impairment

Balance Balance

Rs. Rs. Rs. Rs.

Pastdue0-30days 202,615,539 - 264,584,870 -

Pastdue31-90days 90,045,408 - 75,014,988 -

Pastdue91-180days 8,874,861 - 1,529,546 -

Pastdue181-270days 892,568 - 1,901,426 -

Pastdue271-365days 1,002,547 - 1,358,055 -

Morethanoneyear 4,461,997 4,258,479 5,239,295 3,186,614

Total 307,892,920 4,258,479 349,628,180 3,186,614

-69-

Tablebelowshowstheclassificationofasstsandliabilitiesbasedontheabovementionedthreestagemodel:


Group

Asat31March2020

LifeTime LifeTime

ECL– ECL–

12-month NotCredit Credit

ECL Impaired Impaired Unclassi�ied Total

Rs. Rs. Rs. Rs. Rs.

Cashandcashequivalents Note18 74,111,035 - - - 74,111,035

Tradeandotherreceivables Note17 371,438,404 - - - 371,438,404

Investmentin�ixeddeposits 239,565,685 - - - 239,565,685

Investmentofunittrust 5,751,000 - - - 5,751,000

Othernon�inancialassets - - -1,239,542,204 1,239,542,204

Totalassets 690,866,124 - -1,239,542,204 1,930,408,328

Company

Asat31March2019

LifeTime LifeTime

ECL– ECL–



Rs. Rs. Rs. Rs. Rs.






Totalassets 719,827,439 - -1,000,599,602 1,720,427,041

Group

Asat31March2019

LifeTime LifeTime

ECL– ECL–



Rs. Rs. Rs. Rs. Rs.






Totalassets 725,114,624 - -1,000,599,532 1,725,714,156

Company

Asat31March2020

LifeTime LifeTime

ECL– ECL–



Rs. Rs. Rs. Rs. Rs.






Totalassets 689,914,314 - -1,239,542,274 1,929,456,588

-70-

36.1.4 LiquidityRisk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial

liabilitiesthataresettledbydeliveringcashoranotherfinancialasset.

CashflowforecastingisdonebytheCompanyonaregularbasis.ThefinancedivisionmonitorsrollingforecastsoftheGroup's

liquidity requirements to ensure it has sufficient funds to meet operational needs. Further, the Group has not obtained

borrowingfromanythirdpartyexcepttemporarybankoverdraft.

Asat31March2020

TheMaturityAnalysisofLiabilities

Contractualcashflows

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

amount less 5years

LIABILITIES

Bankoverdraft 128,540,284 128,540,284 - - -

Tradeandotherpayables 239,091,211 239,091,211 - - -

Leasecreditor 595,506 75,583 79,444 440,479 -

Interestinsuspense - 28,217 24,358 48,723 -

Totalliabilities 368,227,001 367,735,295 103,802 489,202 -

Asat31stMarch2019



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

amount less 5years

LIABILITIES

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


Totalliabilities 219,339,334 219,339,334 - - -

Asat31March2020



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

amount less 5years

LIABILITIES

Bankoverdraft 128,540,284 128,540,284 - - -


Leasecreditor 595,506 75,583 79,444 440,479 -

Interestinsuspense - 28,217 24,358 48,723 -

Totalliabilities 368,054,205 367,562,499 103,802 489,202 -


-71-


Asat31March2019



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

amount less 5years

LIABILITIES

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


Totalliabilities 219,121,025 219,121,025 - - -

36.1.5 MarketRisk

Market risk is the risk that the fair valueof future cash flowsof a financial instrumentwill fluctuatebecauseofchangesinmarketprice.Marketriskcomprisesthreetypesofriskscurrencyrisk,interestrateriskandothermarketprice risk. The objective of market risk management is to manage and control market risk exposure withinacceptableparameters,whileoptimisingthereturn.

36.1.5.1CurrencyRisk

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

36.1.5.2InterestRateRisk

Interest rate risk is the risk to the Group's earnings and Economic Value of Equity (EVE) arising from adversemovementsininterestrates.

Atpresent,theGrouphasnotobtainedfundsfromanyinterestbearingfinancial liabilitiesexcepttemporarybankoverdraftsassuchsensitivityanalysisoninterestratefluctuationwillnotapply.

TheGroup'sshortterminvestmentsareatfixedinterestratesandmaturewithinoneyear.

36.1.6 OperationalRisk

OperationalriskistheriskofdirectorindirectlossarisingfromawidevarietyofcausesassociatedwiththeGroup'sprocesses, personnel, technology and infrastructure, and from external factors other than credit, market andliquidity risks such as those arising from legal and regulatory requirements and generally accepted standards ofcorporatebehaviour.OperationalrisksarisefromalloftheGroup'soperations.

TheGroup'sobjectiveistomanageoperationalrisksoastobalancetheavoidanceoffinanciallossesanddamagetothe Group's reputationwith overall cost effectiveness and to avoid control procedures that restrict initiative andcreativity.

36.2 AccountingClassificationsandFairValues

FinancialInstrumentsaremeasuredonanongoingbasiseitheratfairvalueoratamortisedcost.Thesummaryofsignificantaccountingpoliciesdescribeshowtheclassesoffinancialinstrumentsaremeasured,andhowincomeandexpenses,includingfairvaluegainsandlosses,arerecognised.

Thefollowingtablesanalyzefinancial instrumentsmeasuredat fairvalueatthereportingdate,bythe level inthefairvaluehierarchyintowhichthefairvaluemeasurementiscategorizedandacomparisonofthecarryingamountsandfairvaluesofthefinancialassetsandliabilitiesoftheCompanyandGroupwhicharenotmeasuredatfairvalueinthefinancialstatements.Theamountsarebasedonthevaluesrecognisedinthestatementoffinancialposition.

The carrying values of financial assets and liabilities which has a shortermaturity period and based on normalmarketconditions,havebeenconsideredasareasonableapproximationtothefairvalue.Accordingly,thefairvaluehierarchydoesnotapplytocashandcashequivalents,tradeandotherreceivables,tradeandotherpayableandbankoverdraft.

-72-

NOTESTOTHEFINANCIALSTATEMENTS(CONTD.)Group

Asat31March2020

FVTPL Amortized Other Total Fairvalue Fairvalue

investments cost �inancial carrying hierarchy

liabilities amount level

Rs. Rs. Rs. Rs. Rs. 123

Cashandcashequivalents -74,111,035 - 74,111,035 - ---

Tradeandotherreceivables -368,943,481 -368,943,481 - ---

Investmentsinunittrust 5,751,000 - - 5,751,0005,751,000-5,751,000-

Investmentsin�ixeddeposit - 239,565,685 - 239,565,685 - ---

Tradeandotherpayables - -(239,091,211)(239,091,211) - ---

Overdraft - - (128,540,284)(128,540,284) - ---

5,751,000682,620,201(367,631,495) 320,739,706 5,751,000 -5,751,000-

Group

Asat31March2019





Cashandcashequivalents - 80,128,815 - 80,128,815 - ---

Tradeandotherreceivables - 403,306,468 - 403,306,468 - ---

Investmentinunittrust 5,379,000 - - 5,379,0005,379,000 -5,379,000-


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

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

5,379,000704,578,811(219,339,334) 490,618,4775,379,000 -5,379,000-

Company

Asat31March2019





Cashandcashequivalents - 74,841,630 - 74,841,630 - ---

Tradeandotherreceivables - 403,306,468 - 403,306,468 - ---

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


Tradeandotherpayables - -(190,588,247)(190,588,247)- ---

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

5,379,000699,291,626(219,121,025)485,549,6015,379,000 -5,379,000-

Company

Asat31March2020





Cashandcashequivalents -73,159,225 - 73,159,225 - ---

Tradeandotherreceivables -368,943,481 - 368,943,481 - ---

Investmentsinunittrust 5,751,000 - - 5,751,000 5,751,000 -5,751,000-


Tradeandotherpayables - - (238,918,415) (238,918,415) - ---

Overdraft - - (128,540,284)(128,540,284) - ---

5,751,000681,668,391(367,458,699) 319,960,6925,751,000-5,751,000-

-73-


Thefollowingtableshowsthevaluationtechniqueusedinmeasuringlevel2fairvalues,aswellasthesigni�icantunobservable

inputsused.

36.3 CapitalManagement

TheBoard'spolicyistomaintainastrongcapitalbasetomaintaincon�idenceoftheinvestors,creditorsandthemarket

whilesustainingfuturedevelopmentofthebusinesscapitalconsiststototalequity.TheBoardofDirectorsmonitorsthe

returnoncapitalaswellasthelevelofdividendstoordinaryshareholders.

ThecapitalstructureoftheGroupconsistsofdebtandequityoftheGroup.ThecapitalstructureoftheGroupisreviewedby

theBoardofDirectors.

TheGroupmonitorscapitalusingtheratioofnetdebttoequity.Forthispurposeadjustednetdebtisde�inedastotal

liabilitiescomprisinginterestbearingloansandborrowings,lesscashandcashequivalents.

Type Valuationtechnique Signi�icantunobservableinputs

Inter-relationshipbetweenkeyunobservableinputsandfairvaluemeasurement

Investmentsinunittrusts

FairvalueisbasedontheunitpricesasatyearendRs.38.34(2020)Rs.35.86(2019)

Basedonunitprices

Theestimatedfairvaluewouldincrease(decrease)if:theunitpriceswerehigher(lower)

GROUP COMPANY

ASAT31MARCH, 2020 2019 2020 2019

Rs. Rs. Rs. Rs.

TotalLiabilities 465,580,491 317,517,000 467,991,117 319,882,112

Less:Cashandcashequivalents (74,111,035) (80,128,815) (73,159,225) (74,841,630)

Adjustednetdebt 391,469,456 237,388,185 394,831,892 245,040,482

Totalequity 1,406,827,837 1,356,197,156 1,403,465,471 1,348,544,929

Netdebttoequityratio 0.28 0.18 0.28 0.18

TherewerenochangesintheCompany'sapproachtocapitalmanagementduringtheyearandthecompanyisnotsubjecttoexternallyimposedcapitalrequirements.

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STATEMENTOFVALUEADDED

FORTHEYEARENDED31MARCH, 2020 2019

Rs.000 Rs.000

Turnover 3,652,268 3,626,418

OtherIncome 76,488 66,659

3,728,756 3,693,077

CostofGoods&Servicesboughtin (2,828,787) (2,851,176)

ValueAdded 899,969 841,901

Distributionasfollows % Rs.000 % Rs.000

ToEmployees 51.68 465,017 49.43 416,148

ToGovernment 10.45 94,079 8.89 74,848

ToLenders 0.10 914 0.33 2,737

ToShareholders 10.66 95,980 10.26 86,382

RetainedinBusiness

Depreciation 10.63 95,686 10.57 88,990

Pro�itRetained 16.48148,293 20.52 172,796

100.00 899,969 100.00 841,901

ToEmployees

ToGovernment

ToLenders

ToShareholders

Depreciation

Pro�itRetained

20192020

49.43

10.26

8.89

20.52

10.57

0.33

10.45

10.66

0.10

51.68

16.48

10.63

-75-

TENYEARSSTATISTICALSUMMARY

Reportedasper

SLAS

SLFRS/LKAS

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Rs.000's

Rs.000's

Rs.000's

Rs.000's

Rs.000's

Rs.000's

Rs.000's

Rs.000's

Rs.000's

Rs.000's

Resu

lts

--

--

--

--

Groupturnover

1,475,664

2,245,1672,577,9272,599,0692,720,1602,826,223

3,003,824

3,131,6743,626,4183,652,268

Pro�itbeforetax

115,317

150,554

138,773

172,727

219,644

218,034

179,075

204,478

247,644

242,372

Taxation

(51,227)

(49,572)

(42,338)

(55,409)

(69,886)

(76,646)

(53,930)

(81,635)

(74,848)

(94,079)

Pro�itaftertax

64,090

100,982

96,435

117,318

149,758

141,388

125,145

122,843

172,796

148,293

FundsEmployed

Stated

Cap

ital

9,598

9,598

9,598

9,598

9,598

9,598

9,598

105,578

105,578

105,578

Cap

italreserves

89,871

30,849

32,643

19,852

19,852

19,852

19,852

19,852

7,011

7,011

Reven

uereserves

414,244

850,872

908,9151,000,0211,084,3251,147,187

1,199,258

1,141,8301,243,6081,294,239

Shareh

olders'funds

513,713

891,319

951,1561,029,4711,113,7751,176,637

1,228,708

1,267,2601,356,1971,406,828

AssetsEmployed

Noncurren

tassets

234,834

539,604

579,502

652,533

680,855

786,226

817,348

829,444

811,752

929,357

Curren

tassets

536,254

596,997

641,114

697,172

780,909

723,606

783,556

869,128

913,9621,001,051

Curren

tliab

ilities

(197,442)

(184,499)

(200,413)

(240,976)

(251,841)

(227,679)

(260,725)

(292,908)

(232,882)

(372,075)

Provisions

(59,933)

(60,783)

(69,047)

(79,258)

(96,148)

(105,516)

(111,471)

(138,404)

(136,635)

(151,505)

Cap

italemployed

513,713

891,319

951,1561,029,4711,113,7751,176,637

1,228,708

1,267,2601,356,1971,406,828

Cash

Flow

Netcashin

�low/(out�low)fromoperatingactivities

33,348

75,457

89,915

129,424

236,717

147,562

117,719

224,296

167,953

167,642

Netcashin

�low/(out�low)fromin

vestingactivities

(13,772)

(44,958)

(48,244)

(108,877)

(29,988)

(154,718)

(67,707)

(74,322)

(132,917)

(172,247)

Netcashin

�low/(out�low)from�inan

cingactivities

(37,791)

(28,794)

(38,392)

(43,191)

(62,387)

(76,784)

(81,584)

(80,133)

(86,383)

(101,420)

Increase/(decrease)incashandcashequivalen

ts

(18,215)

1,705

3,279

(22,644)

144,342

(83,940)

(31,572)

69,841(51,347)(106,025)

KeyIndicators

Earningspershare

66.77

106.25

100.47

122.23

156.03

147.31

130.38

63.99

90.02

77.25

Netassetspershare

535.23

928.65

990.99

1,072.59

1,160.42

1,225.92

1,280.17

660.17

706.50

732.88

Marketpricepershare

950.00

2,199.00

2,488.00

2,200.00

2,348.90

2,700.70

2,799.90

1,351.10

1,388.90

1687.20

Returnonequity

12.48

11.44

10.14

11.40

13.44

12.02

10.19

9.6912.74

10.54

Priceearningratio

14.23

20.69

24.76

18.00

15.05

18.33

21.47

21.1115.43

21.84

Dividen

dpershare

30.00

30.00

40.00

45.00

65.00

80.00

85.00

42.0045.00

50.00

th

**On05June2017,shareh

olderspassedanordinaryresolutiontocap

italizeRs.95,980,000/-fromandoutofretained

earningsbyallocating959,800ordinarysharesasfullypaidshares.

**

-76-

INVESTORINFORMATION

01. StockExchangeListing

TheissuedOrdinarySharesofHarischandraMillsPLCarelistedwiththeColomboStockExchangein1983.

02. OrdinaryShareholders

2.1Distributionofstatedcapital

Asat31March

2.2 Classi�icationofShareholders

Asat31March 2020 2019

No.of Total Percentage No.of Total Percentage

Shareholders Holdings % Shareholders Holding %

Directors 4 277,140 14.44 4353,790 18.44

Institutionalinvestors 11 485,544 25.29 8 2,008 0.10

Employees 15 77,940 4.06 13 1,170 0.06

Others 487 1,078,976 56.21 5021,562,632 81.40

517 1,919,600 100.00 5271,919,600 100.00

2.3 Twentylargestshareholdersofthecompany

Shareholder'sname No.ofShares % No.ofShares %

01. SeylanBankPLC/SenthilverlT. 480,858 25.05 480,101 25.01

02. DeSilvaU. 286,936 14.95 286,936 14.95

03. RodrigoC.P. 278,920 14.53 278,920 14.53

04. SamarasingheR.K 270,120 14.07 270,120 14.07

05. SampathBankPLC/SenthilverlT. 267,571 13.94 267,571 13.94

06. SamarasingheS.N. 76,670 3.99 76,670 3.99

07. RodrigoN. 30,736 1.60 30,736 1.60

08. RodrigoS.A. 30,736 1.60 30,736 1.60

09. EkanayakeD.H.C. 28,292 1.47 28,292 1.47

10. SelvarajA.G.I. 27,014 1.41 27,014 1.41

11. WijayanandanaH.D. 24,760 1.29 24,760 1.29

12. WoodwardH.W.M. 15,220 0.79 15,220 0.79

13. DeSilvaM.P. 5,000 0.26 5,000 0.26

14. SigamoneyC. 4,494 0.23 4,494 0.23

15. JayanthaD. 3,800 0.20 3,800 0.20

16. WijayawardhaneC.J. 3,788 0.20 3,570 0.19

17. ThirugnanasambandarSenthilverl 3,752 0.20 3,752 0.20

18. AbeysekaraS. 2,800 0.15 2,800 0.15

19. JayasinghaD.A. 2,720 0.14 2,720 0.14

20. EstateofMohommedRafeek 2,668 0.14 2,668 0.14

ResidentsNon-ResidentsTotal

Rangeof No.of No.of No.of No.of No.of No.of

Shreholdings Shareholders Shares % Shareholders Shares % Shareholders Shares %

1 1,000 476 43,969 2.29 3 220 0.01 479 44,189 2.30

1,001 5,000 25 53,084 2.77 1 4,494 0.23 26 57,578 3.00

5,001 10,000 - - 0.00 - - 0.00 - - 0.00

10,001 50,000 5 141,538 7.37 1 15,220 0.80 6 156,758 8.17

50,001 100,000 1 76,670 3.99 - - 0.00 1 76,670 3.99

100,001 500,000 5 1,584,405 82.54 - - 0.00 5 1,584,405 82.54

500,001 1,000,000 - - 0.00 - - 0.00 - - 0.00

Over1,000,000 - - 0.00 - - 0.00 - - 0.00

Total 512 1,899,666 98.96 5 19,934 1.04 517 1,919,600 100.00

2020

-77-

INVESTORINFORMATION(CONTD.)

FORTHEYEARENDED31MARCH 2020 2019

03. Detailsofsharetransactionsduringtheyear

No.oftransactions 294 230

No.ofsharetraded 485,364 4,544

Valueoftransactions(Rs.) 762,170,833 6,450,623

04. Thetransactedvalueofanordinaryshare

Rs. Rs.

HighestPrice 1800.00 1749.90

LowestPrice 1411.00 1057.10

LastTradedPrice 1687.20 1388.90

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

Interim 57,588,026 47,990,550

Final 95,980,026 86,382,550

06. Earning

Earningspershare(Rs.)

Basic 77.25 90.02

Diluted 77.25 90.02

Priceearningratio 21.84 15.43

07. Dividedpershare(Rs.) 50.00 45.00

08. Dividedcover(Times) 1.55 2.00

09. DividendYield(%) 2.96 3.24

10. DividendPayout(%) 64.72 49.99

AsAt31March 2020 2019

11. PublicHolding

No.ofshares 817,381 818,138

Percentage 42.58% 42.62%

No.ofpublicshareholders 517 521

The Company had float adjusted market capitalization of

Rs.1,379,059,375andcompanyqualifiesunderoptiononeof

the minimum public holding requirement for the Diri Savi

BoadoftheCSE.

12. NetAssetpershare(Rs.) 732.88 706.50

13. Currentassetratio 2.69:1 3.92:1

14. Quickassetratio 1.86:1 3.11:1

15. Equitytototalassetratio(%) 72.88 78.59

-78-

FORMOFPROXY

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

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

beingaShareholder/ShareholdersofHARISCHANDRAMILLSPLCdoherebyappoint

1. Mr.M.A.Bastiansz orfailinghim,

2. Mr.S.N.Samarasinghe orfailinghim,

3. Mr.G.S.V.DeSilva orfailinghim,

4. Mrs.M.P.DeSilva orfailingher,

5. Mr.S.A.S.Jayasundara orfailinghim,

6. Mr.T.K.Bandaranayake orfailinghim,

7. Mrs.R.K.Samarasinghe orfailingher.

..................................................................... (holder of National Identity Card No. : ..................................................) of

.............................................................................................. asmy/ourProxy toattendandvoteat the68AnnualGeneralMeetingof the

CompanytobeheldattheregisteredofficeoftheCompanyatNo.11C.A.HarischandraMawatha,Mataraon14November

2020at11.00a.m.andatanyadjournmentthereof.

1. to receive and consider the Annual Report of the Board together with the

FinancialStatementsoftheCompany.

2. to declare a final dividend of LKR 30/- per share as recommended by the

Directors.

3. tore-electasaDirector,Mr.S.A.SJayasundaraasaDirector,whoretiresinterms

ofArticle98oftheArticlesofAssociation.

4. tore-appointM/sKPMG,CharteredAccountants,astheAuditorsoftheCompany

andauthorizetheDirectorstofixtheirremuneration.

5. to approve the donations and contributionsmade by the Directors during the

yearunderreview,andtoauthorisetheDirectorstodeterminecontributionsto

charitiesfortheensuingyear.

Signedthis............................................dayof.............................2020

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

Signature/s

For Against

Note:Instructionsasto

completionarenotedonthe

reversehereof

-79-

INSTRUCTIONSASTOCOMPLETION

1. KindlyperfecttheFormofProxyafterfillinginlegiblyyourfullnameandaddressandsigninthespaceprovided.Please

fillinthedateofsignature.

2. PleasereturnthecompletedFormofProxytotheCompanyaftercrossingoutoneortheotherofthealternativewords

indicated by the asterisks on the body of the Form and by indicating with an 'X' in the space provided against each

resolution,themannerinwhichyouwishyourvotetobecast.

3. AMemberentitledtoattendandvoteattheMeetingisentitledtoappointaProxywhoneednotbeamember,toattend

andvoteinsteadofhim.

4. In thecaseofaCorporateShareholder, theFormmustbecompletedunder itsCommonSealorotherwisesignedby its

AttorneyorbyanofficeronbehalfoftheCorporation.TheCorporateShareholdermay,butshallnotbeboundtorequire

evidenceoftheauthorityofanysuchAttorneyorofficer.

5. IftheFormofProxyissignedbyanAttorney,therelevantPowerofAttorneyshouldalsoaccompanythecompletedForm

ofProxy,inthemannerprescribedbyArticlesofAssociation.

6. The completed Form of Proxy should be deposited at the RegisteredOffice of the Company, No. 11, C.A. Harischandra

Mawatha,Mataranotlessthanfortyeight(48)hoursbeforetheappointedtimefortheMeeting.

7. Ifthereisanydoubtastothemannerinwhichtheproxyshouldvotebyreasonofthemannerinwhichinstructionsin2

abovehavebeencarriedout,theproxyholderwillvoteasshe/hethinksfit.

8. Ashareholderappointingaproxy(otherthanadirectoroftheCompany)toattendthemeetingshouldindicatetheproxy

holder'sNationalIdentityCard(NIC)numberontheFormofProxyandshouldinstructtheproxyholdertobringhis/her

NationalIdentityCardtotheMeeting.

-80-

Documents

Harischandra Annual Report Inner Pages 3