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vision
mission
2 r | 6 | 8 | 10 t
12 | 15 a journey of a 128,000 sq. ft | 16 s | 18 ne a 20-year journey |
20 an oasis for your senses | 22 tl | 24 ae | 34 | 36 k |
37 just a smile | 38 e.
43 n | 44 d | 47
report | 48 t | 49 t | 50 | 51 y | 52
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At Odel we take our uniqueness toanother level - by creating a spacefor action where we conceptualise,
implement and succeed in our plans.This also means that we love challenging
boundaries. Its where we put ourimagination to the test.
We offer people an array of diverseproducts and services that are INstyle,distinctive and constantly evolving, for
the better. By incorporating the conceptof a balanced mind, body & soul we
create and give people a multi-sensorialexperience that is matchless in every way.
Yet, we also offer more than that. Ourdistinctiveness lies in the ability to always
give all our stakeholders a space; toaspire, live, make and createa lifestyle.
And we do just that. Our future plans forexpansion are visionary and strategic,while keeping in mind the power of a
business to do good.
This is why we believe thatwere one-of-a-kind.
at Odel, we believethat wereone-of-a-kind
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2 | Annual Report 2009/2010
Quite unostentatious in comparison to
what it is today, but carpeted. And it had
wheels!
Long before the iconic 33,000 square
Place, Colombo, there was the boot of
a blue station-wagon. Brimming with a
surplus clothing, it was driven by a
The clientele were friends and family of
local fashion industry, and armed with a
degree in Biology from the USA. They
trusted her eye for style.
It was sometime in 1989.
The year in which the World Wide
Web was invented and Giorgio Armani
opened his very first Emporio Armani inthe US, on a sprawling 10,000 square
feet on Fifth Avenue, New York. A year,
where nothing momentous happened in
the fashion retail industry, in Sri Lanka.
But dreams were being dreamt. Of
distinctive clothing and maybe a little bit
more. Something iconic. There were also
the dreams of a father who registered a
business in the name of his only daughte
name. The birth of Odel.
Yes. There were dreams. But it really did
start from the boot of a car.
1989.
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aspire
live
make
create
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6 | Annual Report 2009/2010
Group revenue Rs.Millions 1,950.71 2,416.78Gross profit Rs.Millions 636.81 842.22 211.31 140.69Profit attributable to Equity Holders of Parent Rs.Millions 34.31 141.80Total Dividends Rs.Millions 8.10 148.33
Total Assets Rs.Millions 1,508.96 2,348.56Total Equity/Net Assets Rs.Millions 627.48 1,196.40Total Liabilities Rs.Millions 881.48 1,152.16
Diluted earning per share Rs. 0.27 1.11Average Return on equity (ROE) % 5.20 15.40Gross margin % 32.6 34.85Net Margin % 1.65 5.82Interest Cover Number of times 1.70 3.90Net Debt to Equity 75:100 45:100
Acid Test (Liquid Assets/ Current Liabilities) Number of times 0.20 0.10Inventory days Number of Days 114 123
Revenue % 23.9Gross Profit % 32.3 82.4 233.5Net Profit % 337.1Net Asset % 91.0Total Assets % 56.0
Group revenue
2009/10
2008/09
2,416.78 mn
1,950.71 mn
23.90%
Group revenue Revenue Growth
Net assets
31/03/2010
31/03/2009
3%1,196.40 mn91%
Total Equity/Net Assets Net Assets Growt
Gross profit
2009/10
2008/09
-5.1%842.22 mn32.3%
Gross profit Gross Profit growth
636.81 mn 627.48 mn
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2,416.78mn
842.22mn
1,196.40mn
211.31mn
Profit before tax
2009/10
2008/09
-53%211.31 mn233.5%
Profit Before Tax Profit Before Tax Growth
63.39 mn
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ODEL kicked off its2010 expansionplan with an
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Annual Report 2009/2010 | 9
which was coined by my father using
the company has grown beyond casualfamily inputs to a professionally run
operation with the governance structures
required to take the company public.
Otara remains the hard charging CEO
with the driving force and vision that has
made the Odel brand synonymous with
fashion and retailing in Sri Lanka.
confident that it will continue to set the
benchmark in retailing and continue itsmomentum in the new emerging post war
Sri Lanka.
I will be stepping down as Chairman of
the company mainly as a result of my
other official obligations. I am confident
that Odel will grow from strength to
strength and continue to pleasantly
surprise and please all its stakeholders in
the future.
I would like to take this opportunity
to welcome the newly appointed
independent directors Eardley Perera,
the board of the company. I am confident
add significant value to the company.
I would also like to thank Otara and the
management team for their significant
contribution during the last 20 years
which has made Odel what it is today.
I would also like to wish Ruchi the very
best as he takes over the mantle of
Chairman.
Chairman - Odel
Dear Stakeholder,
comments on the macroeconomic, socio
politcal and specific financial factors
that impacted the company in the year
under review. I intend to deviate from
this. Sri Lanka is on the cusp of a growth
momentum that has never been seen
before. And I believe so is Odel. Hence
history is irrelevant. However, for the
sake of posterity I will briefly touch on the
Otara who had returned from the USA
after a degree in Biology and a stint in
did not want to work in the formal private
sector as has been the family tradition.
Instead, in what was the emerging new
economic landscape with the thrust on
factories to resell to the mushrooming
years until she felt that Colombo needed
a better quality store which she was
confident she could offer. And that was
the beginning of Odel. Borrowing the
Dickmans Road premises from our father
as the location and tapping into virtually
all the family members for various
inputs from finance, interior design,
operations etc., and in fact the name
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say idea,someone on theteam comes up with
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Odel did happen quite by accident. But
what followed in the subsequent decades
was, however, far from accidental.
Yes, we made a determined effort
at unlocking ways to indulge each
customer. And yes, creativity across the
world provided a muse for our eclectic
brand.
But mostly it was our own imagination
that inspired us.
The imagination of a team, who like
me, wake up each morning challenging
a part of Odel. That, I believe, is what
makes us distinctly different from the
rest. And it is their incredible energy,
combined with our understanding of
what our customer wants, that will
help me drive Odel into the world of
possibilities.
challenges. A prolonged war and
restrictive import duties compelled us to
adapt, and keep our internal structures
and pricing strategies constantly under
the microscope. A determined focus on
ethics and good governance helped us
survive some tough times.
why, in the very midst of the recent
aggressively. In fact, we witnessed some
of our best years yet.
in business. The end of the war in Sri
Lanka has coincided with an era where
Asia is simply forging ahead in global
were to ask about my plans for Odel, I
across many more cities in Sri Lanka over
the international aura of the brand. And
maybe a new format of stores.
up interest overseas and these are
opportunities that we will keep an eye
on.
know.
I need to innovate, everyday. And
so does my team. Dreams and ideas
makes us tick.
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Executive Director / CEO
Otara, a 1986 biology graduate ofthe Bowling Green State University,Ohio, is a natural entrepreneur. With anappreciation for fashion and a desire tomake a marked difference in whatevershe set out to do, she wasted no time inapplying her knowledge and skills in the
business world. In time she created asuccessful brand by simply doing whatshe loved.
a business venture was selling hair careproducts. She then ventured into sellingapparel. A chance request by an apparelmanufacturer to help him dispose of anled her to set up shop in the boot of hercar. Her friends were her first regularclientele and she consolidated this
early success by selling to other storesin Colombo as well. Realising theenormous potential in this segment, sheset up her first retail store in 1990 onof her first name, Otara, with herher original, energetic and confidentapproach to business, amidst thechallenges faced due to the war, Otarawould go on to make her brand ODELa celebrated name and a retail successstory for Sri Lanka.
Non-Executive Director
Mr. Gunewardene is the CEO of
fully integrated strategic marketing andbrand consulting firm. He counts overas the former Country Manager /CEO of Coca-Cola Sri Lanka, Regionalthe Coca-Cola Company and Head ofSri Lanka. Prior to this, he was employedby multinationals Reckitt Benckiser and
JWT in their Sri Lankan operations.Mr. Gunewardene holds a Bachelorof Science, Honors Degree in Applied
Non-Executive Independent Director
Directorships within the Beira Group ofcompanies, a Group that is engagedsubstitution. He is one of the co-founders of Amba Research Lanka, aninternationally acclaimed and ranked
multinational knowledge processoutsourcing firm and serves as a Directoron its board since its incorporation.Prior to his stints as an entrepreneur and
Jardine Fleming Securities, starting inColombo and culminating as a Regionalhas a 1st Class Degree in Commercefrom the University of Poona, India andan MBA from the University of Chicago,
is also an associate member of theChartered Institute of ManagementAccountants (ACMA) as well as aChartered Financial Analyst (CFA).
Non-Executive Independent Director
Mr. Perera is the Chairman of M&E(Private) Limited, while also serving onPLC, Janashakthi Insurance PLC, STING
Consultants (Pvt) Ltd., and other privatecompanies. He also serves as a Memberon the Board of Study, PostgraduateInstitute of Management (PIM), Universityof Sri Jayewardenepura. A CharteredMarketer and senior member of TheChartered Institute of Marketing, Mr.in general management and marketingin trade and industry, and as a lectureron graduate and postgraduate levelprogrammes.
Non-Executive Independent Director
Mr. Topping counts over two decades ofand travel retailing in the European,American and Asian continents. UntilDirector-Asia and President-Asia. Alphais a member of the Italian Autogrillfood & beverage and retail services fortravellers. Prior to this, Mr.Topping heldthe position of Group MD of the RetailDivision of Trusthouse Forte Airportand Hornes-Menswear for ten years.Mr.Topping was voted Joint TravelRetailer of 2005 and won the CannesFrontier award on two occasions.
01
030504
02
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journey
viaggiovoyage
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2010 The 11th outlet in the Odel chain opens
in Panadura, followed by the 12th, at
Maharagama.
2009 Embracing opportunities and entering
set up a Warehouse in Nugegoda. This
was followed by a dramatic opening
event for its 6,000 sq. ft store in the
coastal suburb of Mount Lavinia and a
3,000 sq. ft store in Moratuwa.
personalised fitness training to the health
conscious is launched.
2007
is marked by the 11,000 sq. ft. store
4,000 sq. ft. store in Ja-ela.
shopping in a theatre-style dressing
launched by Odel.
- a CR initiative to improve
the well being of animals and create
launched. Embark branded merchandise
become an instant success at Odel.
2005
at the departure/transit lounge of theBandaranaike International Airport,
2004 Odel Mind Body & Soul
A new brand identity is unveiled.
, becomes the new logo and the first
international superstore.
1999 Millennium Dome opens toThe flagship of Odel. Eclectic.
Sophisticated. Recognised by shoppers
across the globe. The lifestyle store of
33,000 square feet opens its doors, at
1995 space shuttle Atlantis, docks withThe first branching-out of the Odel chain
City opens.
1990
brand, Odel is born. And so is our very
first store at Dickmans Road.
Now converted into a factory outlet,
this 1,165 sq. ft. store gives you that
out of stock but is still available, at an
unbelievably discounted prices.
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find uswalk into any one ofour 12 stores locatedwith your conveniencein mind, and
experience shoppinglike youve neverimagined before.
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Flagship Store
Colombo 07
+94 112 682 712/3
Odel Factory Warehouse
Lester James Pieris Mawatha
Colombo 05
+94 112 590 435
Majestic City
Galle Road
Colombo 04
+94 112 595 763
Kohuwela
135, Dutugemunu Street
+94 114 542 756
Crescat
L-19A, Crescat Boulevard
Colombo 03
+94 114 700 984
Warehouse
286, Highlevel road
Colombo 06
+94 114 209 139
Mt. Lavinia
4, Hotel Road
Mount Lavinia
+94 114 640 490
Moratuwa
89A, New Galle Road
Moratuwa
+94 114 209 571
Panadura
29A, Jayathilake Mawatha
Panadura
+94 384 285 008
Maharagama
278, Highlevel Road
Maharagama
+94 114 641 180
Ja Ela
165, Colombo Road
Realty Plaza
Ja-Ela
+94 114 619 102
Bandaranaike International Airport
Shop No 2-D Departure/Transit Lounge
Bandaranaike International Airport
+94 114 830 634
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18 | Annual Report 2009/2010
91%
11.5%
Rs.1,196mn 21%
337%
4stores in6 monthsby April 2010, marks anextremely successful urbanexpansion.
2009/10 marks aremarkable turnaround ivolatile profits.
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1,165 to128,000
Rs.842.22mn
our supply-chainincludes over
10 countries500+ suppliers &
200+ factoriesin Sri Lanka and across
the globe.
Focused buying andstrategic pricing - the key toGross Profit growth.
More stores will beadded to the chain ofshops during the currentfinancial year
Total staff strength of2has now grown to 650 plusdirect employees
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an oasissenses
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for your
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MindBody& S l
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Chic . Extravagant .
Accessories Belts Evening Handbags Headwear Purses Scarves Sunglasses Backstage An Odel Brand a wide range of fashionaccessories in a theatre dressing-room ambience Beauty Bodywash Cosmetics Deodorants Eyes Gift Packs Lips Moisturisers Oils Casual wear Evening wear
Only for Ladies It doesnt matter ifyoure 9 or 95, Odel gives the girl inyou a million excuses to shop
Foot wearBedroom slippers Sandals Thongs Lingerie Otara CollectionAn exclusive collection of jewellery that reflects Otaras magical style SariBarSri Lankas first haute couture sari bar featuring designer labels fromIndia Select Ladies wearAn avant-garde collection of prt-a-porter pieces,
handpicked from fashion houses around the world Sports wearSwim wear& Beach Accessories Winter wear
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Simple . Eclectic That is Odel, today.
Home ware & Gifts Bath & bed linen,
gels & soaps, cushions, candle holders,table runners, saucers & cups..where on earth would I fit it all in?Dining Room Kitchen Lush Natural health & Beauty Body Splash
Accessories Bathroom Bath linen BathrobesBedroom
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Accessories Bags Belts Bracelets Cufflinks Rings Sarongs Sunglasses Ties Wallets Boys Toys Gadgets MugsStationery Casual wear Foot wear Mens Grooming Bath & Body Hair care Shaving Skincare
Just for guysOff-the-beaten-trackgift ideas. Or a discreet shoppingexperience where he can get lost in hisworld
Sports wearAccessories Foot wear Head wear Shorts Tops Winter wearGloves Hats Tops Work wear & Accessories Cufflinks Shirts Ties
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Chocolates Tea Fruit Gift Boxes Gourmet Selection Green Teas Herbal Infusions Premium Ceylon Single Estate Watte Single Nuts &Nibbles
Gourmet Food Something new,
something fresh. Just delicious!EverydayOdel Treats From fried onions to Kitul Jaggery bottled and ready to useOrganic Odel Organic range of teas nuts cinnamon & spices Sweets
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Accessories Clocks Desk Lamps Chairs Baby wear Books Boys clothing & Accessories
For the kids Their tiny world ofimagination comes alive. Some leftspeechless some, want it all!Foot wearGirls clothing & Accessories Toys & Games Activity Baby AndPre-School Board Games Card Games Dolls Jigsaws OutdoorSoft
Toys
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Bags & Luggage Books Art Design Biography Fiction Food and DrinkHistory Magazines Mind Body Natural History New Books PhilosophyPolitics Popular Culture Reference Specialist Sports Travel DVDs Embark An Odel Brand Caps Mugs T-shirts and a whole lot more ofembark branded merchandise help to fund the pet CR project of Odel
Greeting Cards MusicSouvenirs & LeisureMaking leisurechic. And oh those souvenirs .. do Ikeep them or gift them?Otone An Odel Brand A personalised fitness training concept and centreopened at the Odel Alexandra Place complex Six Runs An Odel Brand ofaffordable clothing and fun accessories Souvenirs Sports Accessories
Cricket Equipment Health Racket Sports Swimming Equipment StationeryT-Shirts
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Our services - mainly at ourflagship store at Ward Place,found at other fashion retailoutlets, make shopping atOdel that much more special.
Foot massage & Nail Spa
Wi Fi service
Boulevard
Place. From hot dogs to doughnuts, it
also provides sandwiches, Italian food,
Stand-alone food outlets are also
available at some stores.
A supervised kids play area
Perfumes
Concierge
Leave it all with our friendly concierge -
to help you shop without baggage
Drivers seating area
Wrist watches
Alteration of garments purchased from
us, while you wait
Wine Bar
Baby diaper changing facility
Mobile phone company outlets
Car Wash
Sari Draping
By our fully trained and friendly staff
members. Prior appointments could be
made.
Shop & ship service
You shop, we ship
Gift Wrapping
Our trained gift wrappers will delight
you with their interesting wrapping-
ideas
Stitching
Sari Jackets & Under Skirts
Customer Shuttle Service
To make shopping at our store at
during busy times.
Bridal Registry / Gift registry
Celebrate any occasion with our
popular Odel Gift Registry.
Gift Vouchers
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Alexandra Place
Moratuwa Maharagama Mt. Lavinia
For sponsors and event organisers, a
counter to sell tickets for any event,
Mount Lavinia
Bank & ATM in-store
We will communicate with you with
customer database online or fill a form
at the store.
Lost Property
Report any lost or found items to our
special customer services desks.
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One word. Convenience
Whether youre homeboundor its
one-of-those-days where you need
everything to be just a click away,
our virtual store opens up the world
of Odel to you. Its really just too
convenient for words.
Offers almost the entire range of
merchandise, in cyberspace almost as if
you were inside our stores.
special events.
View the gift registries of your friends and
family and buy what they really want. Or
you can even create your own gift registry,
online.
New Home
Bridal
Birthday
Baby shower
Other
Help us suggest the perfect gift to give
to friends, family, for a new home, for
teenagers or to take on vacation. You
choose and we will wrap and deliver
Purchase an online voucher to be
delivered and redeemed online, or an in-
store voucher which we will deliver to the
recipients address and can be redeemed
at our stores.
Companies.
Content.
Website.
shop is really our international store, if
you like. Its our platform to share whats
new, a medium to promote our very own
Odel-brands, showcase the hottest trends
this season and make you a part of whats
important to us, at Odel.
The spin-off effect of being connected to
social networking sites like Facebook and
Twitter, gives us a head-on in marketing
our brand overseas. Its a cutting-edge
medium to create top-of-mind recall for
Odel, wherever in the world you may be.
And if youre a fan of Odel, its just one
of the many ways that you could interact
with your favourite lifestyle store. Or even
if youre not, Odel online gives us another
chance to take your complaints and
suggestions on board. Another chance
to go that extra mile to indulge you. And
make you a fan.
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Annual Report 2009/2010 | 37
Trustee
Ambassador Habitat for Humanity
Founder Embark
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It started with just 2.
Otara with the 2 members of staff whocompleted 20 years
Staff get together 2010
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Annual Report 2009/2010 | 39
Organised by the Wildlife and
Nature Protection Society (WNPS) in
collaboration with MAS Linea Aqua
hectare area of two invasive plants at the
Bundala National Park.
Odel contributed by funding to clear 6
hectares of Cactus and Proposis Juliflora
which are alien to the Park and are
endangering the natural vegetation.
Celebrating two decades since the birth
of Odel, we are partnering with Habitat
for Humanity to construct 20 houses to
mark the occasion.
from Colombo, who were affected by the
Tsunami.
In 2009, Otara Gunawardene was
appointed a Goodwill Ambassador for
Habitat for Humanity in Sri Lanka.
The Odel Foundation also donated
Trust to construct houses for those
area in Southern Sri Lanka.
All animals have the same rights as
humans
Embarks Vision:
Sri Lanka free of stray dogs and to give
all dogs a home, the love and respect
they deserve.
Embark is not merely an animal welfare
initiative, but a community based
intervention aimed at influencing a
change in the attitude towards stray
but create cleaner streets and safer
communities.
Our amazing circle of volunteers does it,
Embark branded merchandise
More than 600,000 stray dogs roam the
streets of Sri Lanka. Funds raised through
merchandise will support our efforts to
give a better life to as many of them as
possible.
Otara with Niko
The Tsunami in 2004, triggered our
collaboration with Habitat for Humanity
constructing simple and affordable
houses for those in need. As part of our
efforts, we funded the construction of 7
houses of 500 sq ft each, to help resettle
families in the Balapitiya area, 80 km
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2,416.78mn
1,196.40mn
211.31mn
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44 annual report of the directors on the state of affairs of odel limited | 47 independent auditors report | 48 balance sheet |
49 income statement | 50 cash flow statement | 51 statement of changes in equity | 52 notes to the financial statements
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44 | Annual Report 2009/2010
The Directors presents their report to
the members together with the audited
Financial Statements of Odel Limited and
Consolidated Financial Statements of the
Group for the year ended 31st March
2010.
The principle activity of the Company
during the year was fashion retailing
offering its customers a total shopping
significant changes in the activities of the
Company during the year under review.
The Board of Directors is satisfied that the
Company has the adequate resources to
continue its operations in the foreseeable
future. Accordingly, the Financial
Statements are prepared based on the
Going Concern assumption.
The revenue of the Group during the year
was Rs. 2,417 Mn (2008/09-Rs. 1,951
Mn). An analysis of the revenue is given
in Note 3 to the Financial Statements.
Profit for the year 140,693 32,212
211,314 63,394
70,622 31,181
140,693 32,212
Amount attributable to Minority Interest (1,105) (2,094)
Profit attributable to the Shareholders 141,798 34,307
Retained Earnings B/F 628,857 602,650
Dividends Paid Rs. 1.16 (2008/09 Rs
0.06) per Share
(148,335) (8,100)
(2,876) Nil
Retained Earnings C/F 619,444 628,857
Number of Ordinary shares 128,250,000
(After sub-division)
142,500
number of shares after subdivision
1.11 0.27
present number of shares after subdivision
1.16 0.06
present number of shares after subdivision
9.33 4.89
The Company subdivided its ordinary shares on 4th November 2009 at a ratio of 1 to
900 which caused the increase in number of shares without any change in the stated
capital.
The Group had employed 702 persons as
at 31st March 2010.
During the year Company paid
dividends amounting to Rs 148,335,006
(Rs 8,100,000 in 2008/09) to the
shareholders. When the dividends
were paid the company was a Private
Company and as the Directors were
satisfied with the solvency of the
company, a formal Solvency Test was not
carried out.
Based on the audited Financial Statements
for the year ended 31st March 2010 the
Board is of the opinion that the company
is in a position to pay debts in the normal
course of business and the value of
stated capital.
Total Group Reserves as at 31st March2010, amounted to Rs. 1,195 Mn (2009
- Rs. 629 Mn). The movements of the
Reserves during the year are shown in the
Statement of Changes in Equity on page
51.
Immovable property was revalued during
the year resulting in a revaluation surplus
of Rs 575,535,775 net of deferred
on acquisition of Property, plant andequipment during the year including
finance leased assets amounted to
Rs. 160,780,100. (2008/09-Rs.
38,139,577). The details of Property,
plant and equipment are given in Note 4
to the Financial Statements.
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Annual Report 2009/2010 | 45
The Directors, to the best of their
knowledge and belief, confirm that all
payments in respect of statutory liabilities
to Employees and to the Government have
been made within the stipulated period
during the financial year 2009/10.
The Company has donated Rs 8,022,106
during the year to Odel Foundation which
carries out the CSR activities of the group.
Apart from the above the group has made
other donations of Rs 67,805.
The Directors have disclosed the nature
shares issued by the Company and
interest in transactions or proposed
transactions with the Company during the
year, to the Board of the Company and
such information have been duly entered
in the Interest Register of the Company
which is a part and partial of this Annual
Report. All the Company Records that arerequired to maintain under the provisions
of the Act have also been properly
maintained.
Until the company was transformed to
a Public Company on 24th February
2010 it operated as a private company.
Consequent to the transformation
independent directors were appointed to
the Board with effect from 1st April 2010.
During the year the following members
served in the Board:
(Resigned w.e.f. 18th May 2010)
Director/CEO
The following Directors were appointed
with effect from 1st April 2010
Independent Director
Mr. Atulugamage Damian Eardley
Independent Director
Pursuant to Article 23(2) of the Articles
of Association of the Company Messrs
Perera retire and being eligible offer
themselves for re-election.
2010 and as at the date of this report is as follows:
47,500 42,750,000 40,416,900
Ruchi Hubert Gunewardene Nil Nil 1,000,000
Otara Del Gunewardene 95,000 85,500,000 80,833,100
The increase in number of shares as at 31st March 2010 is purely due to the sub-
division of shares at 1 to 900.
Company is disclosed in Note 26 to
the Financial Statement, and has been
declared at meetings of the Directors
and entered in the Interest Register of the
Company. The Directors have no direct or
indirect interest in any other contract or
proposed contract with the Company.
The Company functioned as a Private
Company until it was transformed in to a
public company on 24th February 2010.The Board of Directors of the Company
has always acknowledged the necessity
of conducting the business activities of
the company in accordance with good
governance practices even when it was a
Private Company. With the transformation
of the company in to a Public Company
and with further intentions of listing on
is committed to be in compliance with
all rules and regulations applicable
to a listed company. As another step
further, independent directors have
been appointed to the Board and Board
Committees have been set up as follows.
(Chairman)
Mr. Paul Topping
Mr. Ruchi Hubert Gunewardene
Chairman
Mr. Atulugamage Damian Eardley
Ignatius Perera
Mr Paul Topping
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46 | Annual Report 2009/2010
As part of governance processes the
Board on a continuous basis, reviews and
evaluates the internal controls and risks
of the company and takes any measures
required to mitigate the risks.
As at the date of this report there are only
seven shareholders who own the entirety
of the stated capital of the company who
are as follows.
80,833,100
1,000,000
40,416,900
2,775,000
To the best of knowledge and information
available to the Board there are no
contingencies or commitments.
No circumstances have arisen and no
material events have occurred during the
period between the Balance Sheet date
and Directors signing of Accounts that
Financial Statements.
In accordance with the Companies Act
No. 7 of 2007, resolution proposing
the re-appointment of Messrs. Ernst
and Young, Chartered Accountants,
as Auditors to the Company will be
submitted at the Annual General Meeting.
By Order of the Board of
Odel Limited
A.D.Gunewardene
Director
O.D.Gunewardene
Director
(Sgd.)
Director
SSP Corporate Services (Private) Limited
Secretaries
Date : 17th May 2010
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Annual Report 2009/2010 | 47
We have audited the accompanying
financial statements of Odel Limited
statements of the Company and its
subsidiaries, which comprise the balance
sheets as at 31 March 2010, and the
income statements, statements of changes
in equity and cash flow statements for
the year then ended, and a summary of
significant accounting policies and other
Management is responsible for the
preparation and fair presentation of
these financial statements in accordance
with Sri Lanka Accounting Standards.
This responsibility includes: designing,
implementing and maintaining internal
control relevant to the preparation and
fair presentation of financial statements
that are free from material misstatement,whether due to fraud or error; selecting
and applying appropriate accounting
policies; and making accounting estimates
that are reasonable in the circumstances.
on these financial statements based on
our audit. We conducted our audit in
accordance with Sri Lanka Auditing
Standards. Those standards require
that we plan and perform the audit to
obtain reasonable assurance whether the
financial statements are free from material
misstatement.
basis, evidence supporting the amounts
and disclosures in the financial statements.An audit also includes assessing the
accounting principles used and significant
estimates made by management, as
well as evaluating the overall financial
statement presentation.
We have obtained all the information
knowledge and belief were necessary
for the purposes of our audit. We
therefore believe that our audit provides a
reasonable basis for our opinion.
In our opinion, so far as appears from our
proper accounting records for the year
ended 31 March 2010 and the financialstatements give a true and fair view of the
2010 and its profit and cash flows for the
year then ended in accordance with Sri
Lanka Accounting Standards.
In our opinion, the consolidated financial
statements give a true and fair view of
the state of affairs as at 31 March 2010
and the profit and cash flows for the year
then ended, in accordance with Sri Lanka
Accounting Standards, of the Companyand its subsidiaries dealt with thereby, so
far as concerns the shareholders of the
Company.
In our opinion, these financial statements
also comply with the requirements of
Sections 151(2) and 153(2) to 153(7) of
the Companies Act No. 07 of 2007.
17 May 2010
Colombo
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As at 31 March 2010 2009 2010 2009Note Rs. Rs. Rs. Rs.
Restated Restated
Non-Current AssetsProperty, Plant and Equipment, net 4 1,311,384,115 751,932,099 1,575,777,656 902,642,002Intangible Assets 5 2,510,021 2,645,442 13,526,614 17,813,699Investment in Subsidiaries 6 118,101,030 108,100,020 - -
1,431,995,167 862,677,560 1,589,304,270 920,455,701
Inventories 7 645,170,733 408,888,587 653,767,834 408,888,587Trade and Other Receivables 8 76,100,211 77,956,213 80,510,902 80,612,111 - 9,434,906 - 9,434,906Amounts due from Related Parties 9 75,913,004 144,265,865 - 30,326,313
Cash and Bank Balances 16 23,092,215 20,725,041 24,981,992 21,179,268820,276,163 661,270,612 759,260,728 550,441,185Non- Current Asset Classified as held for sale 10 - 38,072,097 - 38,072,097 2,252,271,329 1,562,020,270 2,348,564,997 1,508,968,983
Stated Capital 11 1,425,000 1,425,000 1,425,000 1,425,000Revaluation Surplus 442,885,640 - 575,535,775 -Retained Earnings 542,493,084 578,494,429 619,444,129 628,857,360
986,803,724 579,919,429 1,196,404,903 630,282,360Minority Interest - - - (2,800,415) 986,803,724 579,919,429 1,196,404,903 627,481,945
Interest Bearing Loans and Borrowings 12 142,782,622 113,349,904 142,782,622 113,349,904
40,071,946 27,297,667 40,695,101 27,718,156Other Deferred Liabilities 13 29,361,667 20,282,393 31,731,182 21,339,533
212,216,235 160,929,963 215,208,905 162,407,592
Trade and Other Payables 14 471,119,153 312,661,732 483,318,016 316,721,017Amounts due to related parties 15 132,529,034 129,233,206 - 22,149,802 26,135,963 - 30,165,951 932,688Dividend Payable - 540,000 - 540,000Interest Bearing Loans and Borrowings 12 423,467,222 378,735,939 423,467,222 378,735,939
1,053,251,370 821,170,877 936,951,189 719,079,446 2,252,271,329 1,562,020,270 2,348,564,997 1,508,968,983
These Financial Statements are in compliance with the requirements of the Companies Act No :07 of 2007.
Group Chief Financial Officer
The board of directors is responsible for the preparation and presentation of these Financial Statements. Signed for and on behalf of theboard by:
Director Director
The accounting policies and notes on pages 52 through 74 form an integral part of the Financial Statements.
17 May 2010Colombo
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Year ended 31 March 2010 2009 2010 2009Note Rs. Rs. Rs. Rs.
178,347,285 44,225,430 211,314,666 63,394,090
Depreciation 4 39,405,142 35,189,549 46,518,459 38,790,771Intangible Assets Amortisation 1,046,793 894,658 6,592,520 6,003,619Income from Investments 17 (4,033,975) (13,862,251) (4,033,975) (1,262,251)Finance Costs 18 72,259,059 92,228,488 72,461,410 92,255,561Inventory Write-off - 60,909,346 - 60,909,346Profit on disposal of Property, Plant and Equipment (75,594,553) (557,676) (75,594,553) (557,676)Gain on disposal of equity investment (2,406,678) - (2,406,678) -Impairment Loss - - 36,890,822 -Unrealised Profit - - 4,941,856 -Provision for Doubtful debt 45,183,055 - - -Provision for Defined Benefit Plans 13 10,818,457 3,582,893 11,421,429 3,599,711Lease Interest 168,370 - 168,370 -
Operating Profit before Working Capital Changes 265,192,955 222,610,437 308,274,326 263,133,170
Decrease/(Increase) in Inventories (236,282,146) (58,883,592) (242,568,872) (58,883,592)(Increase)/ Decrease in Trade and Other Receivables 1,856,002 (4,011,543) (288,201) (5,437,954)(Increase)/Decrease in Dues from Related Parties 22,629,806 (56,172,874) 39,517,853 (17,772,337)(Increase)/Decrease in Dues to Related Parties 3,295,827 51,031,152 (31,807,480) -Decrease in Trade and Other Payables 158,457,421 62,559,669 160,592,918 62,274,878
Cash Generated from Operations 215,149,865 217,133,249 233,720,544 243,314,165
Finance Costs paid (72,259,059) (92,228,488) (72,461,431) (92,255,561)Defined Benefit Plan Costs paid 13 (1,739,182) (1,427,323) (2,294,527) (1,427,323)
(32,431,727) (63,323,077) (33,575,918) (65,535,076)Net Cash From/(Used in) Operating Activities 108,719,897 60,154,361 125,388,667 84,096,205
Acquisition of Property, Plant and Equipment 4 (128,087,857) (33,336,724) (137,911,685) (43,028,327)Acquisition of Intangible Assets 5 (911,373) (718,855) (2,197,728) (2,179,903)Net Increase in Capital work in progress (17,300,084) - (17,300,084) -
84,492,969 1,455,202 84,492,969 1,455,202Investment in subsidiaries 6 (10,001,010) - (14,124,042) -Investment in Backstage Singapore - (38,072,097) - (38,072,097)Proceeds from disposal of Investment 40,478,775 - 40,478,775 -Investment Income Received 17 4,033,975 13,862,251 4,033,975 1,262,249
Net Cash Flows from/(Used in) Investing Activities (27,294,605) (56,810,223) (42,527,820) (80,562,876)
Repayment of Interest Bearing Borrowings 12.1 (83,254,741) (103,804,835) (83,254,740) (103,804,835)Proceeds From Interest Bearing Borrowings 12.1 158,600,000 36,662,237 158,600,000 36,662,238Lease Rentals Paid - Vehicle (332,618) - (332,618) -Loan Settlement - Director - (5,000,000) - (5,000,000)Dividends Paid (148,335,000) (8,100,000) (148,335,006) (8,100,000)Net Cash Flows from/(Used in) Financing Activities (73,322,359) (80,242,598) (73,322,364) (80,242,597)
8,102,933 (76,898,460) 9,538,483 (76,709,268)
(278,106,071) (201,207,613) (277,651,844) (200,942,576)16.2 (270,003,137) (278,106,071) (268,113,361) (277,651,844)
The accounting policies and notes on pages 52 through 74 form and integral part of the Financial Statements.
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Stated Revaluation Retained TotalCapital Reserve Earnings
Rs. Rs. Rs. Rs.
1,425,000 - 570,017,221 571,442,221
Net Profit / (Loss) for the period - - 16,577,209 16,577,209
Dividends - - (8,100,000) (8,100,000)
1,425,000 - 578,494,429 579,919,429
Revaluation Surplus - 457,648,885 - 457,648,885
Net Profit / (Loss) for the period ended
31 March 2010 - - 112,333,655 112,333,655Dividends - - (148,335,000) (148,335,000)
1,425,000 442,885,640 542,493,084 986,803,724
Stated Revaluation Retained Minority TotalCapital Reserve Earnings Interest
Rs. Rs. Rs. Rs. Rs.
1,425,000 - 602,681,990 (705,734) 603,401,255
Net Profit / (Loss) for the period - - 34,307,370 (2,094,681) 32,212,689
Dividends - - (8,100,000) - (8,100,000) 1,425,000 - 628,889,360 (2,800,415) 627,513,944
1,425,000 - 628,857,360 (2,800,415) 627,481,944
Revaluation Surplus - 590,299,020 - - 590,299,020
Revaluation Reserve- Building - (15,006,840) - - (15,006,840)
Revaluation Reserve - 243,595 - - 243,595
Net Profit / (Loss) for the
period ended 31 March 2010 - - 141,798,095 (1,105,100) 140,692,995
Dividends - - (148,335,006) (6) (148,335,012)
Negative Goodwill recogniseddirectly in Equity - - 1,029,200 - 1,029,200
change in holding - - (3,905,521) 3,905,521 -
1,425,000 575,535,775 619,444,129 - 1,196,404,902
The accounting policies and notes on pages 52 through 74 form an integral part of the Financial Statements.
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52 | Annual Report 2009/2010
Odel Limited is a limited liability company
incorporated and domiciled in Sri Lanka.
The registered office of the Company
business is situated at No. 10, Ward
Place Colombo 07.
Odel Properties (Pvt) Ltd.,
Odel Properties (Pvt) Limited is a limited
liability company incorporated and
domiciled in Sri Lanka. The registered
office and the principal place of business
Odel Lanka (Pvt) Ltd.,
Odel Lanka (Pvt) Limited is a limited
liability company incorporated and
domiciled in Sri Lanka. The registered
office of the Company is located at
Odel Information Technology Services
(Pvt) Ltd
Odel Information Technology Services
(Pvt) Ltd is a limited liability company
incorporated and domiciled in Sri Lanka.
The registered office of the Company
Odel Apparels (Pvt) Ltd .
Odel Apperals (Pvt) Ltd is a limited
liability company incorporated and
domiciled in Sri Lanka. The registered
office of the Company is located at
Otone (Pvt) Ltd
OTONE (Pvt) Ltd is a limited liability
company incorporated and domiciled
in Sri Lanka. The registered office of the
Company is located at No.38, Dickmans
Road, Colombo -05 and the principal
place of business is situated at No.2,
Ward Place Colombo 07.
During the year, the principal activities
of the Company were the sale of ready-
made Garments, Home-ware and other
accessories.
Odel Properties (Pvt) Ltd
During the year, the principal activities
of the Company were to build, own,
establish, manage, run warehousing
Odel Lanka (Pvt) Ltd
Principal activities of the Company were
to initiate and plan the preliminary
activities required to construct a high rise
not yet commenced.
Odel Apparels (Pvt) Ltd .
During the year, the principal activities of
the Company were manufacturing and
supply of Garments.
Otone (Pvt) Ltd
During the year, the principal activities of
the Company were to carry on, operate
manage and undertake the business
of health and fitness centers, spas,
gymnasium, of kind and description.
Odel Information Technology Services
(Pvt) Ltd
During the year, the principal activities of
the Company were to provide information
technology infrastructure services for the
local market and to provide maintenance
services in connection with computers
and peripheral equipment and word
processing and similar equipment.
The Financial Statements of Odel Limited
for the year ended 31 March 2010 were
authorised for issue on 17th May 2010
by the Board of Directors.
The financial statements have been
prepared on a historical cost basis. The
financial statements are presented in
Sri Lankan Rupees. The preparation and
presentation of these financial statements
are in compliance with the Companies
Act No. 07 of 2007.
2.1.1 Statement of Compliance
The balance sheet, statements of income,
changes in equity and cash flow, together
with the accounting policies and notes,
Financial Statements of the Group and the
Company as at 31st March 2010 and for
the year then ended comply in all materialrespects with the applicable Sri Lanka
Accounting Standards.
2.1.2 Going Concern
The Directors have made an assessment
a going concern and they do not intend
either to liquidate or to cease trading.
2.1.3 Comparative Information
The accounting policies have been
consistently applied by the Group and,are consistent with those used in the
previous year.
2.1.4 Foreign Currency Translation
The Financial Statements are presented
in Sri Lanka Rupees, which is the
currency. Transactions in foreign
currencies are initially recorded at
the functional currency rate ruling at
the date of the transaction. Monetary
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assets and liabilities denominated in
foreign currencies are retranslated at
ruling at the balance sheet date. All
differences are taken to profit or loss. Non
monetary items that are measured in terms
of historical cost in a foreign currency are
the dates of the initial transactions. Non
monetary items measured at fair value in
a foreign currency are translated using
fair value was determined.
2.1.5 Basis of consolidation
The Consolidated Financial Statements
include the results, assets and liabilities
of Odel Limited, Odel Lanka (Pvt) Ltd,
Odel Information Technology Services
(Pvt) Ltd, Odel Properties (Pvt) Limited,
Odel Apparels (Pvt) Ltd & Otone (Pvt)
2010 which is its financial year end.
Control means the ability or power of the
Company to dominate decision making
directly or indirectly in relation to financialand operating policies of another
company to enable that other company to
of the controlling company.
All intra- Group balances, transactions
and profits are eliminated on
consolidation.
The interest of the outside shareholders
in net assets and the proportion of the
profit and loss are stated separately inthe consolidated balance sheet under the
heading minority interest.
In the Separate Financial Statements
of the company the investments in
subsidiaries are accounted for at cost.
that dividends are received from those
investments.
2.1.6 Effect of Sri Lanka Accounting
Standards that have been issued
but not yet effective
The following standards have been issued
by the Institute of Chartered Accountants
of Sri Lanka and are effective for the
accounting periods on the dates specified
below.
Sri Lanka Accounting Standard 44:
Financial Instruments; Presentation (SLAS
44) and Sri Lanka Accounting Standard
45: Financial Instruments; Recognition &
Measurement (SLAS 45)
SLAS 44 and 45 would be effective forfinancial years beginning on or after 1
January 2011. Accordingly, the financial
Statements for the year ending 31
December 2011 will adopt SLAS 44 and
45, for the first time.
These two standards together provide
comprehensive guidance on identification,
classification, measurement and
presentation of financial instruments into
financial assets, financial liabilities and
equity instruments.
these standards the impact of adoption is
not estimable as at the date of publication
of these financial statements.
b) Sri Lanka Accounting Standard 39:
Share Based Payments (SLAS 39)
SLAS 39: Share based payments is
effective for periods beginning on or
after 1 January 2010 and will be first
adopted in the year ending 31 December
to be recognised where the Company
for shares or rights over shares (equity
other assets equivalent in value to a given
number of shares or rights over shares
(cash- settled transactions). For equity-
settled share-based payment transactions,
the Company is required to apply SLAS
39 to grants of shares, share options or
other equity instruments that were granted
after 01 January 2010.
The Group is in the process of evaluating
the impact of this standard, and the
impact of the same is not currently
estimable as at the date of the publication
of these financial statements.
The accounting policies adopted are
consistent with those of the previousfinancial year.
accounting policies, management is
those involving estimations, which may
have significant effects on the amounts
recognised in the Financial Statements.
Further, management is required toconsider key assumptions concerning the
future and other key sources of estimation
uncertainty at the balance sheet date,
that have a significant risk of causing
amounts of assets and liabilities within
carrying amounts of such assets and
liabilities are as given in related notes to
the Financial Statements. The key items as
such are discussed below;
Review of Impairment of Assets
The Group determined whether assets
had been impaired by performing
an impairment test. This requires an
cash generating units. Estimating a value
in use amount requires management to
cash flows from the cash generating unit
and also to choose a suitable discount
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54 | Annual Report 2009/2010
rate in order to calculate present value of
those cash flows. This valuation requires
the Company to make estimates about
uncertainty.
Owner Occupied Properties and
Investment Property
In determining if a property qualifies as
Investment Property the Group makes a
independent cash flows rather than cash
flows that are attributable not only to the
property but also other assets. Judgment
is also applied in determining if ancillary
services are significant, so that a property
does not qualify as investment property.
Defined Benefit Plans
The Defined Benefit Obligation and
the related charge for the year are
determined using assumptions required
under actuarial valuation techniques. The
valuation involves making assumptions
about discount rates, future salaryincreases, staff turnover rates etc. Due to
the long-term nature of such obligations
uncertainty. Further details are given Note
No 12.
2.4.1 Taxation
a) Current Taxes
for the current and prior periods are
used to compute the amount are those that
are enacted or substantively enacted by
the balance sheet date.
as reported in the Financial Statements
and computed in accordance with the
recognised directly in equity is recognised
in equity and not in the income statement.
b) Deferred Taxation
the liability method, on all temporary
differences at the balance sheet date
liabilities and their carrying amounts for
financial reporting purposes.
liability arises from goodwill
amortisation of an asset or liability
in a transaction that is not a
business combination and , at
the time of the transaction, affects
neither the accounting profit nor
differences associated with
investments in subsidiaries,
of the reversal of the temporary
differences can be controlled and
it is probable that the temporary
differences will not reverse in the
foreseeable future.
recognised for all deductible temporary
be available against which the deductible
temporary differences, and the carry-
where the deferred income
temporary differences arises from
the initial recognition of an asset
or liability in a transaction that is
not a business combination and, at
the time of the transaction, affects
neither the accounting profit nor
In respect of deductible temporary
difference associated with
investments in subsidiaries,
it is probable that the temporary
differences will reverse in the
profit will be available against
which the temporary differences
can be utilised.
The carrying amount of deferred income
it is no longer probable that sufficient
be utilised.
asset is realised or the liability is settled,
have been enacted or substantively
enacted at the balance sheet date.
c) Sales Tax
a purchase of assets or service is not
as a part of the cost of the asset or part
receivable and payable that are stated
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is included as a part of receivables and
payable in the Balance Sheet.
2.4.2 Borrowing Costs
Borrowing costs are recognised as an
incurred.
2.4.3 Inventories
Inventories are valued at the lower of cost
and net realisable value, after making
due allowances for obsolete and slow
moving items. Net realisable value is the
price at which inventories can be sold
in the ordinary course of business less
the estimated cost of completion and the
estimated cost necessary to make the sale.
The cost incurred in bringing finished
inventories to its present location and
condition is accounted using the actual
cost (Weighted Average).
2.4.4 Trade and Other Receivables
Trade receivables are stated at the
amounts they are estimated to realise
net of provisions for bad and doubtful
receivables.
Other receivables and dues from
Related Parties are recognised at cost
less provision for bad and doubtful
receivables.
2.4.5 Cash and Cash EquivalentsCash and cash equivalents are defined as
cash in hand, demand deposits and short-
term highly liquid investments, readily
convertible to known amounts of cash and
value.
For the purpose of cash flow statement,
cash and cash equivalents consist of cash
in hand and deposits in banks net of
outstanding bank overdrafts. Investments
with short maturities i.e. three months or
less from the date of acquisition are also
treated as cash equivalents.
2.4.6 Intangible Assets
Intangible assets acquired separately are
measured on initial recognition at cost.
Following intangible assets are carried at
cost less any accumulated amortisation
and any accumulated impairment losses.
Computer Software: Straight line method
over 04 Years
Intangible assets with finite lives are
amortised over the useful economic life
and assessed for impairment whenever
there is an indication that the intangible
assets may be impaired. The amortisation
period and the amortised method for an
intangible asset with a finite useful life
is reviewed at least at each financial
consumption of future economic benefitsembodied in the asset is accounted for
by changing the amortisation period or
method, as appropriate, and treated
as changing accounting estimates. The
assets with finite lives is recognised in
category consistent with the function of
the intangible assets.
2.4.7 Property, Plant and Equipment
Plant and equipment is stated at cost,
servicing, less accumulated depreciation
and accumulated impairment in value.
Such cost includes the cost of replacing
part of the plant and equipment when that
cost is incurred, if the recognition criteria
are met.
Land and buildings are measured at fair
value less depreciation on buildings and
impairment charged subsequent to the
date of the revaluation.
Depreciation is calculated on a straight
line basis over the following useful lives
of the assets using the applicable rates as
follows.
Landscaping Over 2 years
Buildings Over 40 years
Lease hold
Buildings Over the lease period
Equipment Over 10 years
Furniture Over 10 years
Office Equipment
Office Equipment
Motor Vehicle Over 5 Years
Motor Vehicle
Finance Lease Over the lease period
Any revaluation surplus is credited to the
revaluation reserve included in the equity
decrease of the same asset previously
recognised in profit or loss, in which case
the increase is recognised in profit or
loss. A revaluation deficit is recognised in
offsetting a previous surplus on the same
asset is directly offset against the surplus
in the asset revaluation reserve.
Accumulated depreciation as at the
revaluation date is eliminated against the
gross carrying amount of the asset and
the net amount is restated to the revalued
amount of the asset. Upon disposal,
any revaluation reserve relating to the
particular asset being sold is transferred
to retained earnings.
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56 | Annual Report 2009/2010
performed, its cost is recognised in
the carrying amount of the plant and
equipment as a replacement if the
recognition criteria are satisfied.
An item of property, plant and equipment
is derecognised upon disposal or when
from its use or disposal. Any gain or loss
arising on derecognition of the asset
(calculated as the difference between the
net disposal proceeds and the carrying
amount of the asset) is included in theincome statement in the year the asset is
derecognised.
lives and methods of depreciation are
each financial year end.
2.4.8 Lease
a) Finance Leases where the Company
is the Lessee
Property, plant and equipment on financeleases, which effectively transfer to the
Company substantially all of the risk
and benefits incidental to ownership of
the leased item are capitalised at their
fair value or if lower, at the present
value of the minimum lease payments
and disclosed as property, plant and
equipment and depreciated over the
benefit from the use of the leased assets.
The corresponding principal amountpayable to the lessor together with the
interest payable over the period of
the lease is shown as a liability. Lease
payments are apportioned between the
finance charges and reduction of the
lease liability so as to achieve a constant
rate of interest on the remaining balance
of the liability. Finance charges that are
charged, are reflected in the Income
Statement.
2.4.9 Investments
a) Long Term Investments
Long term investments are stated at cost.The cost of the investment is the cost of
acquisition inclusive of brokerage fees,
duties and bank fees.
The carrying amount of long term
investments is reduced to recognise
a decline other than temporary in the
value of investments, determined on an
individual investment basis.
2.4.10 Investment Properties
Investment properties are measured
initially at cost, including transaction
costs. The carrying amount includes
investment property at the time that cost
is incurred if the recognition criteria are
servicing of an investment property.
Investment properties are derecognised
when either they have been disposed
of or when the investment property ispermanently withdrawn from use and no
its disposal. Any gains or losses on the
retirement or disposal of an investment
property are recognised in the income
statement in the year of retirement or
disposal.
Transfers are made to investment
property when, and only when, there is
a change in use, evidenced by the end
of owner occupation, commencementof an operating lease to another
party or completion of construction or
development. Transfers are made from
investment property when, and only
when, there is a change in use, evidenced
by commencement of owner occupation
or commencement of development with a
view to sale.
For a transfer from investment property to
owner occupied property or inventories,
the deemed cost of property for
subsequent accounting is its fair value
at the date of change in use. If the
property occupied by the Group as an
owner occupied property becomes an
investment property, the Group accounts
for such property in accordance with
the policy stated under property, plant
and equipment up to the date of change
in use. For a transfer from inventories
to investment property, any difference
between the fair value of the propertyat that date and its previous carrying
amount is recognised in the income
statement. When the Group completes
the construction or development of a
self constructed investment property, any
difference between the fair value of the
property at that date and its previous
carrying amount is recognised in the
income statement.
2.4.11 Impairment of Non Financial
AssetsThe Group assesses at each reporting
date whether there is an indication
that an asset may be impaired. If any
impairment testing for an asset is
required, the Group makes an estimate of
recoverable amount is the higher of an
less costs to sell and its value in use and is
determined for an individual asset, unless
the asset does not generate cash inflowsthat are largely independent of those from
other assets or groups of assets. Where
its recoverable amount, the asset is
considered impaired and is written down
to its recoverable amount. In assessing
value in use, the estimated future cash
flows are discounted to their present value
current market assessments of the time
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value of money and the risks specific to
the asset. In determining fair value less
costs to sell, an appropriate valuation
model is used. These calculations are
corroborated by valuation multiples or
other available fair value indicators.
2.4.12 Provisions
Provisions are recognised when the
company has a present obligation (legal
or constructive) as a result of a past event,
where it is probable that an outflow of
resources embodying economic benefits
will be required to settle the obligation
and a reliable estimate can be made of
the amount of the obligation. If the effect
of the time value of money is material,
provisions are determined by discounting
assessments of the time value of money
and, where appropriate, the risks specific
to the liability.
2.4.13 Retirement Benefit Obligations
a) Defined Benefit Plan GratuityGratuity is a Defined Benefit Plan. The
Group is liable to pay gratuity in terms of
the relevant statute. In order to meet this
liability, a provision is carried forward in
the balance sheet, computed based on
16 (Revised 2006), this formula measures
Credit Method.
The gratuity liability is not funded nor
actuarially valued. This item is groupedunder Other Deferred Liabilities in the
Balance Sheet.
b) Defined Contribution Plans
Employees Provident Fund &
Employees Trust Fund
Provident Fund Contributions and
in line with the respective statutes and
regulations. The Company contributes
12% and 3% of gross emoluments of
2.4.14 Revenue Recognition
it is probable that the economic benefits
will flow to the Company and the revenue
and associated costs incurred or to be
incurred can be reliably measured.
Revenue is measured at the fair value of
the consideration received or receivable
following specific criteria are used for the
purpose of recognition of revenue.
a) Sale of Goods
Revenue from sale of goods is recognised
when the significant risks and rewards of
ownership of the goods have passed to
the buyer; with the Company retaining
neither continuing managerial involvement
to the degree usually associated with
ownership, nor effective control over the
goods sold.
b) Interest
Interest Income is recognised as the
interest accrued (taking into account
the effective yield on the asset) unless
collectability is in doubt.
c) Dividends
Dividend Income is recognised when the
is established.
d) Rental income
Rental income is recognised on an accrual
basis.
e) Others
Other income is recognised on an accrual
basis.
Net Gains and losses of a revenue
nature on the disposal of property, plant
& equipment and other non current
assets including investments have been
accounted for in the income statement,
having deducted from proceeds on
disposal, the carrying amount of the
Gains and losses arising from incidental
activities to main revenue generating
activities and those arising from a group
of similar transactions which are not
material, are aggregated, reported and
presented on a net basis.
2.4.15 Expenditure Recognition
statement on the basis of a direct
association between the cost incurred and
the earning of specific items of income.
of the business and in maintaining the
property, plant & equipment in a state of
efficiency has been charged to income in
arriving at the profit for the year.
For the purpose of presentation of theIncome Statement the Directors are of
method presents fairly the elements of the
presentation method is adopted.
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Year ended 31 March 2010 2009 2010 2009Rs. Rs. Rs. Rs.
Summary
Sales - Local 2,435,166,433 1,950,633,573 2,438,777,109 1,950,633,573
2,181,120 19,673,082 2,181,120 19,673,082
2,437,347,553 1,970,306,654 2,440,958,228 1,970,306,654
(24,177,466) (19,591,391) (24,177,466) (19,591,391)
2,413,170,087 1,950,715,263 2,416,780,762 1,950,715,263
4.1.1 Gross Carrying Amounts
Balance Acquisitions/ Revaluations Disposals/ BalanceAs at Transfers Transfers As at
01-04-2009 31-03-2010At Cost Rs. Rs. Rs. Rs. Rs.
Land 538,597,854 - - (538,597,854) -
Landscaping 884,560 - - - 884,560Building 65,509,375 400,000 - (65,509,375) 400,000
Building - Lease Hold 13,982,104 26,696,340 - - 40,678,444
Office Equipment 63,697,874 39,949,993 - - 103,647,867
74,151,511
12,915,663
Furniture 19,249,149 22,916,200 - - 42,165,349
Computer Equipment 38,732,367 2,357,900 - (101,900) 40,988,367
Office Equipment - Other 5,431,661 - - - 5,431,661
92,840,775
Shop Fittings - Mobiles 22,574,601 882,798 - - 23,457,399
Motor Vehicles 22,843,951 255,446 - (4,814,409) 18,284,988
Motor Vehicles - Finance Lease - 4,718,750 - - 4,718,750
936,782,266 132,806,607 - (609,023,538) 460,565,335
Land - 531,346,801 414,772,199 - 946,119,000
Building - 65,509,375 31,640,625 - 97,150,000
- 596,856,176 446,412,824 - 1,043,269,000
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4.1.2 In the course of construction
Balance as at Incurred During Reclassified/ Disposal/ Balance as at01-04-2009 the year Transferred Written off 31-03-2010
Rs. Rs. Rs. Rs. Rs.
Capital Work In Progress - 127,106,370 (109,806,286) - 17,300,084
Total Gross Carrying Amount - 127,106,370 (109,806,286) - 17,300,084
936,782,266 856,768,153 336,606,538 (609,023,538) 1,521,134,420
4.1.3 Depreciation
Balance Additions Charge for Disposals/ BalanceAs at /Transfers the year/ Transfers As at
At Cost 01-04-2009 /Acquisitions Transfers 31-03-2010Rs. Rs. Rs. Rs. Rs.
Landscaping 884,560 - - - 884,560
Building 10,417,194 - 825,534 (11,236,061) 6,666
Building - Lease Hold 2,032,379 - 4,270,458 - 6,302,838
Office Equipment 32,418,466 - 7,576,642 - 39,995,108
41,327,089
10,800,739
Furniture 7,615,079 - 2,685,703 - 10,300,782
Computer Equipment 30,381,603 - 4,328,947 (94,053) 34,616,497Office Equipment - Other 1,103,513 - 271,853 - 1,375,365
32,447,324
Shop Fittings - Mobiles 9,972,184 - 2,250,909 - 12,223,094
Motor Vehicles 20,223,678 - 725,262 (3,174,891) 17,774,049
Motor Vehicles - Lease - - 78,646 - 78,646
184,850,167 - 37,787,594 (14,505,005) 208,132,756
Land - - - - -
Building - - 1,617,549 - 1,617,549
- - 1,617,549 - 1,617,549
184,850,167 - 39,405,142 (14,505,005) 209,750,304
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4.1.4 Net Book Value
As at As at31-03-2010 31-03-2009
At Cost Rs. Rs
Land - 538,597,854
Landscaping - -
Building 393,334 55,092,182
Building - Lease Hold 34,375,606 11,949,725
Office Equipment 63,652,760 31,279,409
32,824,422 40,239,550
2,114,924 2,532,331
Furniture 31,864,568 11,634,071
Computer Equipment 6,371,870 8,350,764
Office Equipment- Other 4,056,296 4,328,148
60,393,452 32,705,377
Shop Fittings - Mobiles 11,234,305 12,602,417
Motor Vehicles 510,939 2,620,273
Motor Vehicles - Lease 4,640,104 -
252,432,580 751,932,099
Land 946,119,000 -
Building 95,532,451 -
1,041,651,451 -
4.1.5 Capital Work In Progress 17,300,084 -
1,311,384,115 751,932,099
4.1.6 The fair value of land and buildings was (last) determined by means of a revaluation during the year ended 31, March 2010
by Messrs.A.Y.Daniel & Sons an independent valuer in reference to market based evidence. The results of such revaluation
were incorporated in these Financial Statements from its effective date which is 1, October 2009. The surplus arising from the
revaluation was transferred to a revaluation reserve.The carrying amount of revalued assets that would have been included in
the financial statements had the assets been carried at cost less depreciation is as follows:
Cumulative
Depreciation Net Carrying Net CarryingIf assets were Amount Amount
Cost carried at cost 31-03-2010 31-03-2009Class of Asset Rs. Rs. Rs. Rs.
Building 65,509,375 12,054,928 53,454,447 55,092,181
4.1.7 During the financial year, the Company acquired Property, Plant & Equipment to the aggregate value of Rs.132,806,607/=,
(2009 Rs.33,336,724/=) of which Rs. 4,718,756/=(2009 Rs. Nil) was acquired by means of finance leases. Cash payments
amounting to Rs. 128,087,857/= (2009 Rs. 33,336,724/=) were made during the year for purchase of Property, Plant &
Equipment.
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4.1.8 Property, Plant & Equipment includes fully depreciated assets having a gross carrying amount of Rs. 68,989,063 /-
(2009- Rs. 48,241,156 /-).
4.2.1 Gross Carrying Amounts
Balance Acquisitions/ Revaluations Disposals/ BalanceAs at Transfers Transfers As at
01-04-2009 31-03-2010At Cost Rs. Rs. Rs. Rs. Rs.
Land 586,491,420 - - (586,491,420) -Landscaping 884,560 - - - 884,560
Building 129,934,809 - - (129,934,809) -
Building - Lease Hold 13,982,104 29,363,614 - - 43,345,718
Office Equipment 63,697,874 40,125,173 - - 103,823,047
83,026,181
12,915,663
Furniture 27,024,297 23,280,511 - - 50,304,808
Computer Equipment 45,140,676 10,381,876 - (101,900) 55,420,652
Office Equipment - Other 7,252,532 1,616,328 - - 8,868,860
97,740,322
Shop Fittings - Mobiles 22,574,601 882,798 - - 23,457,399
Motor Vehicles 22,843,951 2,007,653 - (4,814,409) 20,037,195Motor Vehicles -Lease - 4,718,750 - - 4,718,750
1,065,105,594 160,780,100 - (721,342,538) 504,543,156
Land - 579,240,367 480,378,634 - 1,059,619,001
Building - 130,334,809 88,215,191 - 218,550,000
- 709,575,176 568,593,825 - 1,278,169,001
4.2.2 In the course of construction
Balance as at Incurred During Reclassified/ Disposal/ Balance as at
01-04-2009 the year Transferred Written off 31-03-2010Rs. Rs. Rs. Rs. Rs.
Building work in progress 36,890,824 - - (36,890,824) -
Capital Work In Progress - 127,106,370 (109,806,286) - 17,300,084
36,890,824 127,106,370 (109,806,286) (36,890,824) 17,300,084
1,101,996,418 997,461,646 458,787,539 (758,233,362) 1,800,012,241
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4.2.3 Depreciation
Balance Additions Charge for Disposals/ BalanceAs at /Transfers the year/ Transfers As at
At Cost 01-04-2009 /Acquisitions Transfers 31-03-2010Rs. Rs. Rs. Rs. Rs.
Landscaping 884,560 - - - 884,560Building 20,081,010 - 1,624,185 (21,705,195) -Building - Lease Hold 2,032,379 385,754 4,603,867 - 7,022,001Office Equipment 32,418,466 5,418 7,585,677 - 40,009,560 42,805,285 10,800,739Furniture 11,185,336 75,250 3,529,658 - 14,790,245Computer Equipment 31,367,607 - 6,231,428 (94,053) 37,504,982Office Equipment - Other 1,387,684 57,439 756,381 - 2,201,503 32,957,532Shop Fittings - Mobiles 9,972,184 - 2,250,909 - 12,223,094Motor Vehicles 20,223,678 1,576,986 900,479 (3,174,891) 19,526,256Motor Vehicles - Lease - - 78,646 - 78,646
199,354,416 3,335,853 43,088,271 (24,974,139) 220,804,401
Land - - - - -Building - - 3,430,185 - 3,430,185
- - 3,430,185 - 3,430,185 199,354,416 3,335,853 46,518,455 (24,974,139) 224,234,585
4.2.4 Net Book Value
As at As at31-03-2010 31-03-2009
At Cost Rs. Rs
Land - 586,491,420Landscaping - -Building - 109,853,799Building - Lease Hold 36,323,717 11,949,725Office Equipment 63,813,488 31,279,408 40,220,896 40,239,549
2,114,924 2,532,331Furniture 35,514,564 15,838,961Computer Equipment 17,915,670 13,773,069Office Equipment - Other 6,667,357 5,864,848 64,782,791 32,705,378Shop Fittings - Mobiles 11,234,305 12,602,417Motor Vehicles 510,939 2,620,273Motor Vehicles - Lease 4,640,104 -
283,738,755 865,751,178
Land 1,059,619,001 -Building 215,119,815 -
1,274,738,816 -
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As at As at31-03-2010 31-03-2009
At Cost Rs. Rs
4.2.5 Capital Work In Progress 17,300,084 36,890,824
1,575,777,656 902,642,002
4.2.6 The fair value of land and buildings was (last) determined by means of a revaluation during the period ended 31, October
2009 by Messrs. A. Y. Daniel & Sons an independent valuer in reference to market based evidence. The results of such
revaluation were incorporated in these Financial Statements from its effective date which is 1, October 2009. The surplus
arising from the revaluation was transferred to a revaluation reserve. The carrying amount of revalued assets that would have
been included in the financial statements had the assets been carried at cost less depreciation is as follows:
CumulativeDepreciation Net Carrying Net CarryingIf assets were Amount Amount
Cost carried at cost 31-03-2010 31-03-2009Class of Asset Rs. Rs. Rs. Rs.
Building 129,934,809 23,329,380 106,605,430 109,583,800
4.2.7 During the financial year, the Company acquired Property, Plant & Equipment to the aggregate value of Rs.160,780,100/-,
(2009 Rs.38,139,577/-) of which Rs. 4,718,756/- (2009 Rs. Nil) was acquired by means of finance leases and
Rs.17,932,360/- was acquired through new subsidiaries. Cash payments amounting to Rs. 137,911,685/- (2009 Rs.
43,028,327/-) were made during the year for purchase of Property, Plant & Equipment.
Computer Software
As of 31, March 2010 2009 2010 2009
7,234,490 6,515,635 28,766,119 26,586,215
911,373 718,855 2,197,727 2,179,903
Transferred from under development - - 110,000 -
Impairment during the year - - - -
Disposals/Transfers - - - -
8,145,862 7,234,490 31,073,845 28,766,118
Cumulative amortisation as at 1st April 4,589,048 3,694,390 10,952,420 4,948,802
Amortised during the year 1,046,793 894,658 6,592,520 6,003,617
Acquired through new subsidiaries - - 2,292 -
Cumulative amortisation as at 31, March 5,635,841 4,589,048 17,547,231 10,952,419
Balance as at 31, March 2,510,021 2,645,442 13,526,614 17,813,699
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5.1 During the period, the Company acquired Intangible assets to the aggregate value of Rs.911,373/- (2009 Rs.718,855/-).Cash
payments amounting to Rs. 911,373/- (2009 Rs.711,855/-) were made during the period for purchase of Intangible Assets.
During the period, the Group acquired Intangible assets to the aggregate value of Rs.2,197,727/- (2009 - Rs.2,179,903/-).
Cash payments amounting to Rs. 2,197,727/- (2009 - Rs.2,179,903/-) were made during the period for purchase of Intangible
Assets.
2010 2009 2010 2009Rs. Rs. Rs. Rs.
Odel Properties (Pvt) Ltd. 100% 108,100,000 108,100,000 - -
Odel Information Technology
Services (Pvt) Ltd 100% 10 10 - -
Odel Lanka (Pvt) Ltd 100% 20 10 - -
Otone (Pvt) Ltd. 100% 10,000,000 - - -
Odel Apparels (Pvt) Ltd 100% 1,000 - - -
118,101,030 108,100,020 - -
2010 2009 2010 2009Rs Rs Rs Rs
Finished Goods 642,205,126 403,796,892 650,802,228 403,796,892
Goods In Transit 2,965,607 5,091,695 2,965,607 5,091,695
645,170,733 408,888,587 653,767,834 408,888,587
2010 2009 2010 2009
Trade Debtors 9,506,045 11,650,444 10,352,978 14,306,142
Other Debtors (Note 8.1) 19,472,948 29,100,219 21,140,701 29,100,419
Deposits & Prepayments 47,121,218 37,205,550 49,017,223 37,205,550
76,100,211 77,956,213 80,510,902 80,612,111
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2010 2009 2010 2009
Other debtors 19,087,958 26,785,219 20,755,711 26,785,419
Loans to key management personnel 384,990 2,315,000 384,990 2,315,000
19,472,948 29,100,219 21,140,701 29,100,419
8.1.1 Movement of the loan to key management personnel has been disclosed in the note 26.1 (b) to the Financial Statements
2010 2009 2010 2009
Rs. Rs. Rs. Rs.
Odel Properties (Pvt) Ltd. 5,607,246 32,923,698 - -
Odel Apparels (Pvt) Ltd 46,844,438 28,861,725 - 29,191,725
Odel Lanka (Pvt) Ltd 45,240,518 42,219,231 - -
Odel IT Services (Pvt) Ltd 19,090,478 39,126,624 - -
Otone (Pvt) Ltd 4,313,379 - - -
121,096,059 143,131,278 - 29,191,725
Less: Provision for doubtful debt - Odel Lanka (Pvt) Ltd (45,183,055) - - -
75,913,004 143,131,278 - 29,191,725
Backstage Retail (India) Pvt Ltd - 1,066,937 - 1,066,937
Backstage (Pvt) Ltd - 67,650 - 67,650
- 1,134,587 - 1,134,588
75,913,004 144,265,865 - 30,326,313
2010 2009 2010 2009Rs. Rs. Rs. Rs.
Investment in Backstage Retail (Singapore) Pvt Ltd - 38,072,097 - 38,072,097
Investment in 500,000 Equity shares in Backstage Retail (Singapore) Private Ltd. Company which was a fully owned subsidiary of
Odel Ltd has been sold during the year and recognised a gain of Rs. 2,406,678/- on this transaction.
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Number Rs. Number Rs.
Fully Paid Ordinary Shares 128,250,000 1,425,000 142,500 1,425,000
128,250,000 1,425,000 142,500 1,425,000
2010 2010 2009 2009Repayable Repayable 2010 Repayable Repayable 2009
within 1 year after 1 year Total within 1 year after 1 year TotalRs. Rs. Rs. Rs. Rs. Rs.
Bank Loan (12.1) 129,652,636 138,947,354 268,599,990 79,904,827 113,349,904 193,254,731
Lease Creditors (12.2) 719,233 3,835,268 4,554,501 - - -
Bank Overdrafts (16.2) 293,095,353 - 293,095,353 298,831,112 - 298,831,112
423,467,222 142,782,622 566,249,844 378,735,939 113,349,904 492,085,843
As at As at01-04-2009 Obtained Repayment 31-03-2010
Rs. Rs. Rs. Rs.
Short term working capital loans 6,381,115 58,600,000 (6,381,115) 58,600,000
209,999,990
193,254,731 158,600,000 (83,254,741) 268,599,990
12.1.1 Terms of the Loan
Principal Loan Amount Rs. 400 Mn
Security Primary mortgage over the property situated at lot A, bearing assessmentNo 15 situated at Cinnamon Gardens, Colombo 07.
Principal Loan Amount Rs. 200 Mn (As of 31 March 2010, bank disbursed Rs. 100 Mn only)
Security Primary mortgage over the property situated at lot A, bearing assessment
No 15 situated at Cinnamon Gardens, Colombo 07.
Principal Loan Amount Rs. 58.6 Mn
Security Primary mortgage over the property situated at lot A, bearing assessment
No 15 situated at Cinnamon Gardens, Colombo 07.
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2010 2010 2010 2009 2009 2009Repayable Repayable Total Repayable Repayable Total
within 1 year 1 < 5 Year within 1 year 1 < 5 YearRs. Rs. Rs. Rs. Rs. Rs.
Future minimum lease payments 1,330,476 4,989,285 6,319,761 - - -Finance cost
allocated to future period (611,243) (1,154,017) (1,765,260) - - -Net Liability 719,233 3,835,268 4,554,501 - - -
There are no installments to be paid after five years
Defined Benefit Plan Cost - Gratuity 2010 2009 2010 2009
Defined benefit obligation as at thebeginning of the year 20,282,393 14,724,545 21,339,534 15,819,834
Balance transferred from new subsidiaries - - 1,264,747 -Transitional effect - 3,402,277 - 3,347,312Interest cost 4,193,999 1,993,950 4,436,702 2,108,386Charge for the year 8,831,203 3,729,899 9,091,527 3,928,846Payments made during the year (1,739,182) (1,427,323) (2,294,527) (1,427,323)Actuarial Loss/ (Gain) on obligation (2,206,745) (2,140,956) (2,294,527) (2,437,523)
Defined benefit obligation as at the end of the year 29,361,667 20,282,393 31,731,182 21,339,533
The principal financial assumptions underlying the valuation are as follows.
2010 2009
Discount rate 11% 11%
Salary Increment rate 10% 10%
Staff Turnover 35% 35%
Retirement Age 55 Years 55 Years
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2010 2009 2010 2009Rs. Rs. Rs. Rs.
Trade payables 350,628,722 212,527,268 358,607,022 214,501,462
119,336,389 98,972,772 123,556,952 101,057,923
Odel Foundation Trust 1,154,042 1,161,692 1,154,042 1,161,692
471,119,153 312,661,732 483,318,016 316,721,017
2010 2009 2010 2009Rs. Rs. Rs. Rs.
Odel Properties (Pvt) Ltd 48,562,553 60,972,341 - -
Odel Information Technology Services (Pvt) Ltd 37,514,720 46,111,064 - -
Otone (Pvt) Ltd 1,210,001 -