contents · 2019-08-02 · mr. ranjitha s. jayasekera - general manager mr. prasanna lenaduwa -...

KELANI TYRES PLC ANNUAL REPORT 2018/2019 i

Contents

Page

Corporate Information 01

Chairman’s Review 02

Annual Report of the Board of Directors on the affairs of the Company 03 - 06

Profile of Directors 07

Statement on Corporate Governance 08 - 12

Statement of Directors’ Responsibility 13

Audit Committee Report 14

Remuneration Committee Report 15

Related Party Transaction Review Committee 16 - 17

Independent Auditor’s Report 18 - 21

Statements of Comprehensive Income 22 Statements of Financial Position 23 Statement of Changes in Equity 24 - 25 Cash Flow Statement 26 Notes to the Financial Statements 27 - 62

Related Party Transactions (Receivables) as at 31-03-2019 63

Information to Shareholders and Investors 64 - 65

Performance Highlights 66

Financial Review of the Group 67

Consolidation Analysis 68 - 69 Statement of Value added 70

Joint Venture (JV) – Performance Highlights 71 - 72

Summarized Income Statement – JV 73

Summarised Financial Position - JV 74

Performance Highlights - JV 75 Notice of Meeting 76 Form of Proxy

Attendence Slip

KELANI TYRES PLC ANNUAL REPORT 2018/2019ii

KELANI TYRES PLC ANNUAL REPORT 2018/2019 1

Corporate Information

NAME OF COMPANY

Kelani Tyres PLC

LEGAL FORM

A quoted Public Company with limited liability

COMPANY REGISTRATION NO

PQ 123

DIRECTORS

Chanaka De Silva - Chairman

Rohan T. Fernando - Managing Director

T. Bevan Perera - Executive Director

D. S. Kamantha Amarasekera - Director

Ms S. S. Jayatilaka - Director

Eraj T. Fernando - Executive Director

R. P. Weerasooria - Director

SECRETARIES & REGISTRARS

P W Corporate Secretarial (Pvt) Ltd

3/17, Kynsey Road,

Colombo 08.

Tel: 011 4640360/3

AUDITORS

PricewaterhouseCoopers

Chartered Accountants

100, Braybrooke Place,

Colombo 02.

BANKERS

Sampath Bank PLC

Commercial Bank of Ceylon PLC

MANAGEMENT

Mr. Ranjitha S. Jayasekera - General Manager

Mr. Prasanna Lenaduwa - GM/Finance -Seconded to the JV

REGISTERED OFFICE

P.O. Box 8, Nungamugoda, Kelaniya.

CORPORATE OFFICE

203, Union Place, Colombo 2.

Tel.: 2434183/2421418, Fax: 2300877

[email protected]

KELANI TYRES PLC ANNUAL REPORT 2018/20192

Chairman’s Review

On behalf of the Board of Directors I welcome you to the Twenty Fifth Annual General Meeting of the Company for the year ending 31st March 2019.

The CEAT Kelani Joint Venture (JV) achieved a turnover of Rs 12.056 billion in the year under review compared to Rs 11.629 in the previous year. Operating profit recorded for the year under reference was Rs. 1.182 billion compared to Rs 1.292 in the previous year.

The domestic business environment was affected from October 2018 due to political uncertainty coupled with a significant depreciation of the Sri Lanka rupee which suppressed growth and profitability of the JV.

I give below main performance statistics of our JV.

All amounts are in Thousands

Period Prodcution G.Sales Profit PAT Costof Export CAPEx

MT fromOperations Sales Earnings

2014 (14/15) 15,440 10,349,115 1,961,271 1,500,391 6,254,401 2,415,996 516,012

2015 (15/16) 15,211 10,080,957 2,026,787 1,610,072 5,689,022 2,398,209 764,304

2016 (16/17) 15,200 10,327,260 1,664,692 1,289,355 6,072,683 1,473,528 649,338

2017 (17/18) 17,122 11,629,546 1,291,693 1,111, 658 7,248,667 2,049,307 298,922

2018 (18/19) 16,074 12,056,055 1,182,273 989,247 7,603,842 2,252,940 1,234,200

As you would note from the above table, we have invested Rs 1.234 billion in plant and machinery due to our commitment to improve our production capabilities/quality to compete and continue to maintain our leadership in a market where all international brands are available, where, we hold Number 1 position for Truck, Light Truck, Radial, 3-Wheeler and Agricultural tyres.

Inyear2019wecommencedthesaleof 20”TruckBusRadial(TBR)tyresforthefirsttimeinSriLanka.TheinitialfeedbackforTBRshasbeenmostfavorable. We introduced 7 more new Radial Passenger Car sizes/patterns, one new motorcycle tyre size/pattern and also went into commercial production of tubeless 3 wheel tyres during the year under reference.

I place on record my sincere appreciation of the support extended by the Ministry of Finance and the Ministry of Industries and Commerce, to achieve our vision of total import substitution of pneumatic tyre requirements of Sri Lanka with quality products that are in par with the best accepted tyre brands in the world.

To my fellow Directors, Thank you for the guidance and support extended at all times. I also place on record my appreciation of advice and support given by Mr. Harsh Goenka – Chairman CEAT Ltd India and Mr. Anant Goenka – Managing Director CEAT Ltd India. I also thank the Management Team and all the staff of Kelani Tyres PLC and CEAT Sri Lanka Companies for their untiring efforts to make the operations successful.

I thank you, our shareholders for the continuous support extended to your Board of Directors and the confidence shown which has enabled us to make the necessary decisions in the best interest of the Company.

In closing, I am pleased to inform you that based on the performance of the Company during the year under review and subsequent dividend received from the JV, the Directors have approved an Interim Dividend of Rs. 2.50 (net) per share amounting to Rs.201.00 million for the year 2019/20.

ChanakadeSilva22nd July 2019Colombo.


The Directors of Kelani Tyres PLC have pleasure in presenting

their Annual Report together with the Audited Financial

Statements for the year ended 31st March 2019.

GeneralKelani Tyres PLC is a public limited liability company which

was incorporated under the Companies Act, No.17 of 1982 as

a limited liability company on 4th October 1990, listed on the

Colombo Stock Exchange on 28th January 1994 and re-

registered as per the Companies Act, No. 07 of 2007 on 3rd

March 2008 with PQ 123 as the new number assigned to the

Company.

Principal ActivitiesOn 30th June 1999, the Company transferred its tyre

manufacturing assets to a joint venture company, namely CEAT

Kelani Holdings (Private) Limited (CKH), which commenced

its activities on 1st July 1999. The Company owns 50% of the

equity shares issued by CKH. Associated CEAT (Pvt) Ltd.,

CEAT- Kelani International Tyres (Pvt) Ltd and CEAT Kelani

Radials (Pvt) Ltd. are wholly owned subsidiaries of CKH.

The other joint partner of the Joint Venture is Associated Ceat

Holdings (Pvt) Ltd.

A new company, Asian Tyres (Pvt) Ltd, was formed as a fully

owned subsidiary of CEAT – Kelani International Tyres (Pvt)

Ltd to manufacture radial tyres.

The fully owned subsidiary of the Company, Executive Cars

(Pvt) Ltd [previously known as KTL Executive Hire (Pvt) Ltd]

commenced its principal activity of vehicle hiring on 1st January

2006.

Review of PerformanceThe Chairman’s review, which forms an integral part of the

Directors’ Report, contains a detailed description of the

operations of the Company and the Group during the year

ended 31st March 2019.

ResultsThe profit/(loss) for the year of the Company and the Group

amounted to Rs.148.616 million and Rs. 484.202 million,

respectively, as compared to last year’s profit/(loss) of Rs.22.617

million and Rs. 576.380 million, respectively. The results for the

year and changes in equity are set out in the Income Statement

and Statement of changes in equity on pages 22, 24 , and 25.

Financial StatementsThe Financial Statements of the Company and the Consolidated

Financial Statements of the Group have been prepared in

accordance with the Sri Lanka Accounting Standards (SLFRS)

laid down by The Institute of Chartered Accountants of Sri

Lanka and comply with the requirements of the Companies Act,

No.7 of 2007.

The aforesaid Financial Statements, duly signed by the Finance

Officer, two Directors on behalf of the Board and the Auditors

are included in this Annual Report and form an integral part of

this Annual Report of the Board of Directors.

Auditors’ ReportThe Report of the Auditors on the Financial Statements of the

Company and the Group is given on pages 18 to 21.

Accounting PoliciesThe accounting policies adopted in the preparation of the

Financial Statements are given on pages 27 to 39 to the Financial

Statements. There were no significant changes to the accounting

policies used by the Company during the year under review

vis-à-vis those used in the previous year.

Directors’ responsibility for Financial Reporting The Directors are responsible for the preparation of the

Financial Statements of the Company and the Group to reflect

a true and fair view of the state of its affairs.

The Directors are of the view that the Statement of Financial

Position, Statement of Comprehensive Income, Statement of

Changes in Equity, Cash Flow Statement and Notes to Financial

Statements appearing on pages 22 to 62 have been prepared in

conformity with the requirements of the Sri Lanka Accounting

Standards, Companies Act No. 07 of 2007, Sri Lanka

Accounting and Auditing Standards Act No. 15 of 1995 and

the amendments thereto and the Listing Rules of the Colombo

Stock Exchange.

The Statement of Directors’ Responsibility for Financial

Reporting is given on page 13.

Annual Report of the Board of Directors on the affairs of the Company


Annual Report of the Board of Directors on the affairs of the Company (Contd..)

Information on the Directors of the Company and the Group as at 31st March 2019

Directors of the Company

The Board of Directors of the Company as at 31st March 2019

consisted of seven (7) Directors, with a broad range of skills,

experience and attributes.

The names of the Directors who held office as at 31st March

2019 are given below:

Executive DirectorsMr. Rohan T. Fernando - Managing Director

Mr. T. Bevan Perera

Mr. Eraj T. Fernando

Non-Executive DirectorsMr. Chanaka De Silva - Chairman

Mr. Kamantha Amarasekera*

Ms. S. S. Jayatilaka*

Mr. R. P. Weerasooria

* Independent Director as per the Listing Rules

- Mr R C D De Silva who is Seventy Seven (77) years of

age will vacate office at the conclusion of the forthcoming

Annual General Meeting in pursuance of Section 210 of

the Companies Act, No.07 of 2007 and is recommended

by the Board, for re-appointment as a Director under

Section 211 of the Companies Act, specially declaring

that the age limit stipulated in Section 210 of the

Companies Act shall not apply to the said Director.

- Ms. S. S. Jayatilaka retires by rotation at the Annual

General Meeting in terms of Articles 84 and 85 of the

Articles of Association and being eligible is recommended

by the Directors for re-election.

Directors of the subsidiary Names of the Directors of the fully owned subsidiary, Executive

Cars (Pvt) Ltd are given below :

Mr. Chanaka De Silva - Chairman

Mr. Rohan T. Fernando - Managing Director

Mr. T. Bevan Perera - Director

Ms. S. S. Jayatilaka - Director

Interest RegisterThe Company maintains an interest register in term of the

Companies Act, No. 7 of 2007, which is deemed to form part

and parcel of this Annual Report and is available for inspection

upon request.

All related party transactions which encompasses the

transactions of Directors who were directly or indirectly

interested in a contract or a related party transaction with the

Company during the accounting period are recorded in the

Interest Register in due compliance with the applicable rules

and regulations of the relevant Regulatory Authorities.

The relevant Interest of Directors in the shares of the Company

as at 31st March 2019 as recorded in the Interest Register is

given in this Report under Directors’ Shareholding.

Directors’ Remuneration and other benefits Mr Bevan Perera – Executive Director is paid a remuneration

from the Company, and the total payment made to him during

the year ended 31st March 2019 amounts to Rs. 123,703/-

All other expenses relating to the Directors are included under

Management Related Expenses and Related Party Disclosure

in Note 9 and 31.(a).(ii) to the Financial Statements on pages

43 and 62.

Related Party TransactionsThe Directors declare that the Company is in compliance with

Rule 9 of the Listing Rules of the Colombo Stock Exchange

pertaining to Related Party Transactions during the Financial

Year ended 31st March 2019.

Details of the Related Party Transaction Review Committee

and its Report are given on pages 16 to 17.

Directors’ Interest in Shares of the CompanyThe relevant interests of Directors in the shares of the Company

as at 31st March 2019 and their corresponding holdings as at

the end of the previous financial year are as follows: -


Asat Asat

31.03.2019 31.03.2018

Mr. Chanaka De Silva 525,000 525,000

Mr. Rohan T. Fernando Nil Nil

Mr. T. Bevan Perera 1,920 1,920

Mr. D. S. K. Amarasekera Nil Nil

Ms. S. S. Jayatilaka 240 240

Mr. Eraj T. Fernando Nil Nil

Mr. R. P. Weerasooria Nil Nil

Mr. Chanaka De Silva and Mr. Rohan T. Fernando are Directors

of Silverstock Limited which held 36.915Mn shares constituting

45.915% of the issued shares of the Company.

Auditors The Financial Statements for the year ended 31st March 2019

were audited by PricewaterhouseCoopers, Chartered

Accountants.

The Auditors have confirmed that they have had no interest in

or relationship with the Company than that of Auditors. They

confirm that they are independent in accordance with the Code

of Ethics issued by the Institute of Chartered Accountants of

Sri Lanka.

The Auditors were paid Rs.470,317/- and Rs.255,631/- as

Audit Fees by the Company and its Subsidiary, respectively.

The Auditors have expressed their willingness to continue in

office. A resolution to re-appoint the Auditors and to authorize

the Directors to determine their remuneration will be proposed

at the Annual General Meeting.

Stated CapitalThe Stated Capital of the Company is Rs.402,000,000/-

represented by 80,400,000 ordinary shares.

ShareholdersThere were 8,261 registered shareholders as at 31st March 2019

(8,239 shareholders as at 31st March 2018). The distribution

of shareholding as at 31st March 2019 is given on page 64.

Public HoldingsA percentage of 53.42% of the issued shares of the Company

are held by the public comprising of 8,253 shareholders as at

the end of the year (31/03/2018 – 54.35% comprising 8,232

shareholders).

Major ShareholdingDetails of the major shareholders of the Company as at 31

March 2019 are given on page 65.

Stock Market InformationInformation relating to trading of shares of the Company is

given under Share Valuation on page 64.

Property, Plant and Equipment and Investment PropertyThe Land and Building situated at Dr. Colvin R. De Silva

Mawatha, Colombo 2 is classified under Property Plant and

Equipment in the Financial Statements:

- Land to the extent of 9.5 perches and One two Storey

Building 3,364 sq.ft.

The Land and Building situated at Nungamugoda Kelaniya is

classified under Investment Property (IP) in the Financial

Statements:

- IP (income generated) Land called Philmount Estate

together with factory and administrative buildings (4Nos)

Land to the Extent of 1A. 2R. 19P and Building 30,351

sq.ft..

An independent valuation was performed by valuers to

determine the fair value of the said property as at 31st

March 2019 and the value of the said property increased

by Rs. 24.0Mn compared with the previous year’s value

of Rs. 24.0Mn.

During the year under review the Company has incurred

Rs. Nil (2018 – Rs. 0.203Mn) for IP (Income Generated) and

Rs. Nil (2018 – Rs. 1.634Mn) for IP (Non-Income Generated)

as repairs and maintenance.

Details of Property, Plant and Equipment and Investment

Property of the Company and its Group, additions and disposals



made during the year and depreciation charge for the year are

shown in Note xx and xx to the Financial Statements.

Material Foreseeable Risk FactorsThe Directors review the Group internal control system and

the associated risks of the business through the Business Review

Committee and the joint venture companies’ Audit Committee.

ReservesThe reserves of the Company with the movements during the

year are given in Note 27 to the Financial Statements.

Charitable ContributionsAlthough the mandate was given to Directors, the Company

made no contribution for charitable purpose during the year.

Industrial RelationsDuring the year under review, the industrial relations of the

Company have been excellent.

Statutory PaymentsAll statutory payments of the Company as at the balance sheet

date have been made or where necessary provided for in the

Financial Statements.

DividendAn interim dividend of Rs.2/50 per share for the year under

review was paid on 2nd August 2018 and a second interim

dividend of Rs. 2/50 was paid on 5th March 2019.

The Directors have approved the payment of an interim a

dividend of Rs.2/50 per share for the year 2019/20, payable

on 8th August 2019, subject to obtaining a Certificate of

Solvency from the Auditors. As required by Section 56 of the

Companies Act, the Directors have certified that the Board is

satisfied that the Company will immediately after the distribution

is made, satisfy the solvency test in accordance with the

provisions of the Companies Act, No. 07 of 2007.

Going ConcernThe Financial Statements are prepared on going concern

principles. After making adequate enquiries from Management,

the Directors are satisfied that the Company has adequate

resources to continue its operations in the foreseeable future.

Events occurring after the Reporting DateNo other events of significance occurred since the reporting

date, which would require adjustments to or disclosure in the

Financial Statements.

Corporate GovernanceThe Board of Directors are responsible for the governance of

the Company. The Board has placed considerable emphasis on

developing rules, structures and processes to ensure integrity

and transparency in all the dealings of the Company and

adopting good governance in managing the affairs of the

Company. The Board in the discharge of its responsibilities

aforesaid had been guided by the Code of Best Practice on

Corporate Governance issued by the Institute of Chartered

Accountants of Sri Lanka and the Listing Rules of the Colombo

Stock Exchange.

The Board of Directors confirms that the Company is compliant

with Section 7.10 of the Listing Rules of the Colombo Stock

Exchange.

The Statement on Corporate Governance appears on pages 8

to 12.

Annual General MeetingThe Notice of the twenty fifth Annual General Meeting appears

on page 76.

This Annual Report is signed for and on behalf of the Board

of Directors by

RohanT.Fernando (Mrs)S.S.Jayatilaka

Director Director

PWCorporateSecretarial(Pvt)Ltd.,

Director/Secretaries

22nd July 2019

Colombo.



Mr. Chanaka De SilvaChairman

Mr. Chanaka De Silva possess over 40 years management experience of which more than 30 years has been at Director/Chairman level.

He has been the Chairman of KelaniTyres PLC since privatisation (in 1992) and the Chairman of Ceat Sri Lanka Group Companies since the formation of the Joint Venture (in 1998). He is also the Chairman of Silverstock Holdings Group of Companies - the major shareholders of KelaniTyres PLC.

He has been the former Chairman of Sri Lanka Insurance Corporation, TransAsia Hotel, Club Robinson, Union Bank of Colombo Ltd., Union Conmodities (Pvt) Limited and also a former Director of Sri Lankan Airlines Ltd and Sri Lankan Catering Ltd.

Mr. Rohan T. FernandoManaging Director

Mr. Rohan Fernando is one of the most experienced persons in the tyre trade in Sri Lanka having been actively involved in the tyre trade for more than 30 years.

In addition to his position as Managing Director of KelaniTyres PLC he also holds the position of Executive Director of Ceat Sri Lanka Group Companies.

He is also the Managing Director of Silverstock Holdings Group of Companies - the major shareholders of KelaniTyres PLC.

Mr. T. Beven PereraExecutive Director

Mr. BevenPerera is a well known businessman and counts over 25 years experience in the field of tyres in Sri Lanka. He was the Director of Sri Lanka Tyre Corporation (prior to privatisation) and continued holding his board position post privatisation to present.

He was a former director of C.W.E. (2001-2004) and STC General Trading Company (2004-2008).

Mr. D.S.K. AmarasekeraACA, B.Sc., Attorney-at-lawDirector

Mr. Kamantha Amarasekera is an eminent tax consultant and the Senior Tax and Legal Partner of Amarasekera & Company – a leading tax consultancy firm in the country.

He is a member of the Institute of Chartered Accountants of Sri Lanka and is an Attorney-at-Law of the Supreme Court of Sri Lanka.

He graduated in Business Administration from the University of Sri Jayawardenapura.

Profile Of Directors

Mr. Kamantha Amarasekera is also a Director of Associated Ceat (Pvt) Ltd., Lanka Milk Food PLC, Madulsima Plantation PLC, Balangoda Plantation PLC, Eden Hotels PLC, Confifi Hotels Holdings PLC, Finco Holding Ltd., Browns Investment PLC, Palm Garden Hotels PLC and Ceylon Hotel Holdings PLC.

Mrs. S. Saroja JayatilakaFCA, MBADirector

Mrs. SarojaJayatilaka is a fellow member of the Institute of Chartered Accountants of Sri Lanka and holds a Masters in Business Administration from the University of Colombo.

She has well over 30 years of experience in key managerial positions in the fields of Accounting and Finance out of which 16 years have been in the Tyre Industry.

Currently she holds the position of Director Finance at Union Commodities (Pvt) Ltd.

Mr. Eraj T. FernandoExecutive Director

Mr. Eraj T. Fernando has more than 25 years of experience in the Rubber and Commodity Trade. He was the former Chairman of the Corporative Wholesale establishment (C.W.E) and prior to that a senior manager at CEAT Sri Lanka. In addition he is a Director of CEAT Sri Lanka Group Companies. He is also a Director of Hangover Hostels (Pvt) Ltd and Revognah Leisure (Pvt) Ltd.

Mr. R. P. WeerasooriaBsc in Marketing (Bently College - USA)Director

Mr. R. P. Weerasooria functions as the Managing Director of Uga Escapes (Pvt) Ltd., a subsidiary of the Finco Group and encompasses over 22 years of experience specializing in the areas of production, marketing, merchandizing and finance. Mr. Weerasooria’s efforts as Managing Director have been instrumental in overseen the evaluation of the Uga Escapes brand to one of the premier boutique leisure destinations in Sri Lanka.

In addition to the top position at Uga Escapes (Pvt) Ltd., Mr. Weerasooria is Vice President of the Finco Group and holds several directorships in a number of subsidiaries of the Finco Group, which includes operating as Managing Director of Alpha Industries (Pvt) Ltd.

Prior to holding this position, Mr. Weerasooria worked as Commercial Manager at Orient Garments Limited (OGL), before assuming duties as Managing Director/ Cheif Executive in 1996. He was a key factor in OGL’s expansion drive which included the growth of its product portfolio, value addition through designs to consummers, and the establishment of new manufacturing plants to increase production.


Corporate Governance is the system of rules and principles by

which companies are directed, managed and controlled and

which creates a relationship between corporate Managers,

Directors and the providers of equity, people and institutions

who save and invest their capital to earn a return. Therefore,

the Company is committed to maintain a high standard of

Corporate Governance rules and practices. Good governance

facilitates effective management and control of the business,

while maintaining a high level of business ethics and involves

balancing the interest of the many stakeholders of the Company

and provides the frame work for attaining the Company’s

objective and act as a measure of improving economic efficiency,

growth and enhancing investor confidence.

The Board of DirectorsThe prime responsibilities of the Board of Directors are setting

up the Company’s strategic aims, providing the leadership to

put them into effect, supervising the management of the business

and reporting to shareholders on their stewardship. The Board

of Directors is also responsible to create value for its

shareholders, potential shareholders and stakeholders through

actions that are in compliance with laws and regulations, and,

to promote a culture that rewards integrity, transparency, fair

dealings and accountability.

The Board has placed high priority on following the Code of

Best Practice on Corporate Governance issued by the Institute

of Chartered Accountants of Sri Lanka, new rules of disclosure

requirements for listed companies as mandated by the Colombo

Stock Exchange, Securities and Exchange Commission of Sri

Lanka and the Companies Act, No. 7 of 2007 in carrying out

its business.

The Directors who have expertise in varied business fields bring

along many years of diverse experience at the board level. They

participate actively in defining goals, strategies and business

aims of the Company and its Group collectively through their

expertise in varied business fields.

The Board has overall collective responsibility for better

performance and in carrying out activities for the best interest

of the Company as well as its shareholders. In particular, Non-

Executive Directors are responsible for:

Statement on Corporate Governance

• Using their un-biased wide range of skills, experience

and recent relevant knowledge based on independent

judgment on issues faced by the business.

• Constructively challenging and helping to develop

proposals on strategy.

• Scrutinize management performance in meeting agreed

goals and monitor performance reporting and overseas

the management of the business.

• Satisfy themselves on the integrity of financial

information and that financial controls and system of

risk management are robust and defensible.

• Determining appropriate levels of remuneration for

Executive Directors, and also appointment, removal and

succession planning.

The Directors are required to update the Board with any new

information in relation to their independence and to satisfy the

Board that any outside commitments are not in conflict with

the duties as a Director of the Company.

Composition of the Board and IndependenceThe Board of Kelani Tyres PLC comprises of three Executive

Directors and four Non-Executive Directors. Their names and

profiles are given on pages 4 and 7 of the Annual Report.

Based on the declarations submitted by the None-Executive

Directors, the Board has determined that two Non-Executive

Directors, namely, Mrs. S. S. Jayatilaka and Mr. D.S.K.

Amarasekera are “Independent” as per the Listing Rules.

In determining the Directors’ independence the Board has taken

into consideration that Mrs. S.S. Jayatilaka serves as Non-

Executive Director of Executive Cars (Pvt) Ltd of which

Mr. Rohan Fernando is the Managing Director and Mr. Bevan

Perera is a Non-Executive Director. Mr. R.C.D. De Silva serves

as the Chairman of Exective Cars (Pvt) Ltd. Accordingly, the

total number of common Directors on the Board of the said

comapny is four (4) being a majority of the Directors of the

Company.

The period of service of Mr. D.S.K. Amarasekera exceeds nine

years.


Statement on Corporate Governance (Contd..)

The Board has decided that Mrs. S.S. Jayatilaka and Mr. D.S.K.

Amarasekera shall nevertheless be treated as Independent

Directors, on the basis that the aforesaid factors do not

compromise the Independence and objectivity of the said

Directors in discharging the functions as Independent Directors.

Chairman and Managing DirectorThe roles of the Chairman and the Managing Director are

separate with a clear distinction of responsibilities, which ensure

balance of power and authority.

Board MeetingsThe Board meets regularly to review and approve the set

objectives, monitor performance against set objectives and also

ensure compliance with the statutory obligations.

The Board met on ten (10) occasions during the year under

review and the attendance at the relevant meetings is as follows;

Name of Director AttendanceExecutive Directors: Mr. Rohan T. Fernando 10 occasions

Mr. T. Bevan Perera 09 occasions

Mr. Eraj T. Fernando 09 occasions

Non-Executive Directors:Mr. Chanaka De Silva 10 occasions

Mr. R. Priyanjith Weerasooria 06 occasions

Independent Non-Executive Directors:Mr. D. S. Kamantha Amarasekera 02 occasions

Ms. S. S. Jayatilaka 10 occasions

The Directors receive a comprehensive package of relevant

information of the Company and joint venture investee

companies on all issues prior to each meeting. The Board

monitors and oversees the business performance of the

Company and its investments. Subject to formal and transparent

procedures, approvals relating to key appointments and capital

expenditure are granted at Board meetings. There were also

written Board Minutes relating to discussions and key decisions

of the meetings and they are available for inspection at any

time. All the Directors have access to details of Board minutes

through the Board Secretary.

Dedication of adequate time and effortThe Board dedicated adequate time and effort to discharge

their duties effectively. Adequate time is devoted at every meeting

to ensure that the Board’s responsibilities are carried out

satisfactorily to create a confidence that all the activities and

affaires of the entity are controlled and highly monitored for

the best interest of the shareholders and other stakeholders.

Appointments to the BoardThe Board collectively decides on the appointment of Directors.

As per the Articles of Association of the Company, at each

Annual General Meeting (AGM), one Director, except the

Directors referred to hereinafter shall retire by rotation and offer

himself for re-election. A Director appointed to the office of

Executive Chairman, Managing or joint Managing Director

shall not, whilst holding that office, be subject to retirement by

rotation. Any Director appointed during the year seeks re-

election at the next AGM.

Access to Management and Independent AdvisorsThe Board members have access to the Management. The

Board and the Board Committees have access to the advice

of the Company Secretaries and independent legal,

accounting and other experts and consultants, as they may

deem appropriate at the Company’s expense.

Board Sub CommitteesThe Board has established three (3) Sub Committees in order

to monitor, review and enhance the transparency and

accountability of overall functions and by doing so they

safeguard and maintain the good governance practices of the

Company and the Group. These Sub Committees are as follows:

• Audit Committee

• Remuneration Committee

• Related Party Transactions Review Committee

Audit CommitteeThe Audit Committee consists of the following two Independent

Non-Executive Directors:

Mr D S Kamantha Amarasekera - Chairman

Ms S. S. Jayatilaka - Member



The Audit Committee is responsible to assist the Board in accomplishing its oversight responsibilities in the financial reporting process. The detailed Audit Committee Report appears on Page xxx of this report.

Remuneration CommitteeThe Remuneration Committee consists of two Independent Non-Executive Directors and their names are as follows:

Mr D S Kamantha Amarasekera - Chairman Ms S. S. Jayatilaka – Member

The Remuneration Committee is responsible to the Board to determine the remuneration policy for the Executive Directors and Key Management Personnel. The detailed Remuneration Committee Report appears on Page xxx of this report.

The Related Party Transaction Review CommitteeAccording to the Code of Best Practices on Related Party Transactions (Code) issued by the Securities and Exchange Commission of Sri Lanka (SEC) together with the Colombo Stock Exchange (CSE), the Company has formed a Related Party Transactions Review Committee in January 2016. The Committee is responsible to review all Related Party Transactions (RPT) other than those excepted by the Code of Best Practices on RPTs. The Committee comprises of two (2) Independent Non-Executive Directors. The Committee members can get assistance from the Managing Director by an invitation. The Committee is expected to meet at least once in every quarter (during the year under review the Committee met 4 times) to discharge their responsibilities in reviewing all RPTs to ensure all those transaction are in accordance with the Code of Best Practices of RPT.

The detailed Related Party Transactions Review Committee Report appears on Pages 16 and 17.

Shareholder Interest/RelationsYour Board has always given priority to establish policies to protect and promote the shareholders rights to ensure that all shareholders will be treated fairly and equally and values the importance of equitable treatment to them. The Board is accountable on its activities delivering value through good governance of the business and ensures to make available information on strategies, performance and the financial status of the Company at the Annual General Meeting each year.

Your Board always encourages maximizing attendance of shareholders at General Meetings and gives the shareholders opportunities to ask questions. The Directors are always ready

to answer reliably and maintain an appropriate dialogue with them and also continue to treat all shareholders fairly.

Oversight on the Performance of Investee CompaniesSince your Company is only a vehicle to carry the investment in the four-Kelani production entities which handle all production and commercial operations vis-à-vis the manufacture of motor vehicle tyres, the oversight function of the Audit and Remuneration Committees ought to be and was in fact directed on the operation of these four production companies.

This task was affected via the Business Review Committee chaired by your Chairman and the joint venture companies Audit Committee chaired by one of the Independent Directors of your Company.

The functions of the Remuneration Committee for the four production companies are also carried out by the Business Review Committee.

The Directors are satisfied that the Company has sufficient resources to continue in operation for the foreseeable future. Your Board has ensured to make available accuracy, integrity and reliability of financial statements and reports through maintaining an efficient, proper internal control system.

Company Secretaries/Legal OfficersP W Corporate Secretarial (Pvt) Ltd, who act as Secretaries to the Company are qualified to act as Secretaries as per the provisions of the Companies Act, No. 07 of 2007.

All Directors have access to the advice and services of the Company Secretaries as well as the Company Lawyers and the Tax Consultants.

Compliance with Legal RequirementsThe Board through the Company Secretaries and the finance division makes every endeavor to ensure that the Company complies with laws and regulations. It is the Board of Directors’ responsibility to follow host of legal and non - legal principles and practices affecting the control of the affairs of the Company. The Board of Directors requires that in all possible aspects, the financial statements of the Company are prepared in accordance with Sri Lanka Accounting Standards and the relevant Statutes. The Company has regular communication with shareholders through quarterly updates of performance. Maximum possible information is provided to shareholders and full disclosure is made subject only to any sensitive information, which could directly impact the business of the Company.



The Board is satisfied with its level of compliance with the governance requirements and recognizes that practicing its procedures creates a good corporate culture that will satisfy reliability of the shareholders towards the Company and your Board will assure to continue the same with timely and relevant changes of governance requirements in the future. The Company has adopted a Code of Business Conduct and Ethics for Directors and the Members of the Senior Management.

CSERuleNumber CorporateGovernance Compliance Remarks&Subject Principle Status

7.10. 1(a) Non-Executive Directors Compliant Four out of Seven Directors are NEDs

7.10. 2(a) Independent Directors Compliant Two out of Four NEDs were Independent

7.10. 2(b) Independent Directors Compliant All the Non- Executive Directors have submitted declarations on his/her Independence/Non-Independence during 2018/19

7.10. 3(a) Disclosure relating to Directors Compliant Please refer page 4 and 8 for the names of the Independent Directors

7.10. 3(b) Disclosure relating to Directors Compliant Please refer page 8 of this Report

7.10. 3(c) Disclosure relating to Directors Compliant Please refer page 7 for the brief resumes of each Director

7.10. 3(d) Disclosure relating to Directors Compliant There were no new appointments to the Board during the year 2018/19

7.10.5 Remuneration Committee Compliant Refer Remuneration Committee Report on page – 15

7.10.5(a) Composition of Remuneration Committee Compliant Refer Remuneration Committee Report on page – 15

7.10.5(b) Functions of Remuneration Committee Compliant Refer Remuneration Committee Report on page – 15

7.10.5(c) Disclosure in the Annual Report relating Compliant Please refer Remuneration Committee to Remuneration Committee Report on page – 15 and Note 31 (b) - Key Management Personnel on page 62

7.10.6 Audit Committee Compliant Please refer Audit Committee Report on page 14

The Company has complied with the Colombo Stock Exchange Listing Rules and the best practices setout in the Code of Best Practice on Corporate Governance issued jointly by the Institute of Chartered Accountants of Sri Lanka and the Securities and Exchange Commission of Sri Lanka.

The Directors’ confirmation on complying with all statutory

dues is given in the Report of the Directors on page 6.

Compliance with CSE Continuing Listing Rules



By Order of the BoardKELANI TYRES PLC

PWCorporateSecretarial(Pvt)LtdDirector/Secretaries

22nd July 2019

Colombo

CSERuleNumber CorporateGovernance Compliance Remarks&Subject Principle Status

7.10.6(a) Composition of Audit Committee Compliant Please refer Audit Committee Report on page 14

7.10.6(b) Functions of Audit Committee Compliant Please refer Audit Committee Report on page 14

7.10.6(c) Disclosure in Annual Report relating to Compliant Please refer Audit Committee Report Audit Committee on page 14 9.2.1 Related Party Transactions Review Committee Compliant Please refer the Related Party Transactions Review Committee Report on pages 16 and 17

9.2.2 Composition Compliant Please refer the Related Party Transactions Review Committee Report on pages 16 and 17

9.2.4 Meetings Compliant The Committee met 04 times during the year 2018/19

9.3.2 (a) and (b) Disclosure of Non-Recurrent and Recurrent Compliant Please refer Note 31 (a) to the Accounts Related Party Transactions on page 62

9.3.2 (c) The Report by the Related Party Transactions Compaliant Please refer page 4 Review Committee

9.3.2 (d) A Declaration by the Board of Directors Compaliant Please refer the Annual Report of the Board of Directors on page 4 for an affirmative statement of compliance


Statement of the Directors’ Responsibility

STATEMENT OF THE DIRECTORS’ RESPONSIBILITY

FOR THE PREPARATION OF FINANCIAL STATEMENTS

The Board of Directors is responsible for preparing and

presenting the Financial Statements, which are set out on pages

22 to 62.

As per the provisions of the Companies Act, No. 07 of 2007,

the Directors are required to prepare Financial Statements for

each financial year giving a true and fair view of the state of

affairs of the Company and its subsidiary as at the Reporting

Date and of the profit or loss for the financial year.

In preparing the Financial Statements, the Directors have

selected appropriate accounting policies and applied them in a

consistent manner. Such policies are supported by reasonable

and prudent, judgment and all applicable Accounting Standards

have been followed.

Further, the Directors have a responsibility to ensure that the

Company and its subsidiary maintains sufficient accounting

records to disclose with reasonable accuracy, the financial

position of the Company and its subsidiary and that the

Financial Statements presented comply with the requirements

of the Companies Act No. 07 of 2007.

The Directors have taken reasonable steps to safeguard the

assets of the Company and to establish appropriate internal

control systems with a view to preventing and detecting fraud

and other irregularities.

The Directors are confident that they have discharged their

responsibility as set out in this statement.

By Order of the Board

KELANI TYRES PLC

PWCorporateSecretarial(Pvt)Ltd.,

Secretaries

22nd July 2019

Colombo


Audit Committee Report

IntroductionThe Audit Committee of the Company is constituted as a Sub-

Committee of the Main Board, to which it is accountable. The

Charter of the Committee clearly defines its terms of reference

and the activities of the Audit Committee are in line with the

Code of Best Practice on Corporate Governance jointly issued

by the Institute of Chartered Accountants of Sri Lanka and the

Securities and Exchange Commission of Sri Lanka.

PurposeThe Committee assists the main board in fulfilling its

responsibility to the shareholders and other stakeholders

relating to the Company’s financial statements and the financial

reporting process to ensure that the financial reporting systems

adhere to the Sri Lanka Accounting Standards and with other

regulatory bodies.

The Committee also reviews the internal controls, business risks

and pursues other operational activities.

CompositionThe Audit Committee comprises of the following two

Independent Non-Executive Directors.

D.S. Kamantha Amarasekera

Chairman - Independent Non-Executive Director

Mrs. S. S. Jayatilaka- Member

Independent Non-Executive Director (also, the Chairman of

CEAT-Kelani JV Companies Audit Committee)

The Chairman, Mr. D.S. K Amarasekera is a member of The

Institute of Chartered Accountants of Sri Lanka.

MeetingsThe Committee met seven (07) times during the year and

reviewed and discussed with the Company’s Management team

and the External Independent Auditors, the recurrent business

transaction of the Company as well as the interim financials

and consolidated financial statements for the year ended 31st

March 2019.

The Managing Director, Mr. Rohan Fernando attends the

meetings at the invitation of the Committee.

The attendance of the Directors at the said meetings is given

below.

Nameof Director TotalMeetingsattended

Mr. D.S. K. Amarasekera 7

Mrs. S. S. Jayatilaka 7

Main role and responsibilities of the Audit Committee• Review and discuss the annual and quarterly financial

statements prior to their release, to ensure compliance with

the Sri Lanka Accounting Standards and the Companies

Act, No 7 of 2007.

• Review the operational effectiveness of the internal controls

of the systems and procedures and the business risk and

the procedures in place to mitigate such risk.

• Assessment of the independence and performance of the

External Auditors.

The Committee has recommended to the Board of Directors

the reappointment of M/S PricewaterhouseCoopers as its

External Auditors for the financial year ending 31st March

2020 subject to the approval of the shareholders at the Annual

General Meeting.

D.S.K.Amarasekera

Chairman- Audit Committee


Report of the Remuneration Committee

The Remuneration Committee consists of the following

members and is a Sub-Committee of the main Board to

which it is accountable.

Mr. D. S. K. Amarasekera – Chairman - Independent Non-

Executive Director

Mrs. S. S. Jayatilaka- Member - Independent Non-Executive

Director

The Committee reviews and recommends to the Board, the

remuneration packages of the Key Management Personnel,

after taking into account the market conditions and the

guidelines set by the Company.

None of the directors draw any salary from the Company other

than the Executive Director - Mr. T. B. Perera. The expenses

related to Directors are annually analyzed and reviewed.

Mr. Rohan Fernando - Managing Director participates in the

deliberations by invitation.

The Committee met twice (02) during the year under review

and the attendance of the Directors at the said meetings is given

below.




D.S.K.Amarasekera

Chairman- Remuneration Committee


Report of the Related Party Transactions Review Committee

The Related Party Transactions Review Committee (RPTRC)

was formed by the Board of Directors of Kelani Tyres PLC

(KTPLC) as a sub-committee to the Main Board in compliance

with the Code of Best Practices on Related Party Transactions

(Code) issued by the Securities and Exchange Commission of Sri

Lanka (SEC) in January 2016 to conduct an independent review

approval and oversight of all related party transactions (RPT)

of the Company and to ensure that the Company complies with

the Rules set out in the Code.

Composition of the CommitteeThe Related Party Transactions Review Committee of the

Company comprises the following Non-Executive Directors:

Mr. D.S. K. Amarasekera – Chairman (Independent Non-

Executive Director)

Mrs. S. S. Jayatilaka - Member (Independent Non-Executive

Director)

In addition, Mr. Rohan Fernando - Managing Director and

Mr. Ranjitha Jayasekera – General Manager attended meetings

by invitation.

MeetingsThe Committee held four (04) meeting during the period under

review and the attendance of the Directors at the said meetings

is given below.




The minutes of the meetings were tabled at Board meetings

for review.

Charter of the CommitteeThe Charter of the Related Party Transactions Review

Committee clearly sets out the purpose, membership, authority,

the duties and responsibilities of the Committee. In order to

discharge the duties and responsibilities effectively and in an

efficient manner, the Committee has been authorized to:

• Receive regular reports pertaining to related party

transactions from the Management to provide any

information within the scope of its responsibilities.

• Establish policies and procedures that provide general

pre-approvals to certain classes or types of related party

transactions.

• Review and evaluate the terms, conditions, authenticity

and the advisability of any transactions with a related

party.

• Determine whether the transactions entered into with any

related party are fair and transparent to the best interests

of the Company as well as its shareholders.

• Examine whether any transaction entered with any related

party and recommend to the Board is within the policies

and procedures stipulated by the Committee.

• Obtain advice and assistance from legal, technical,

financial and other advisors from within or outside the

Company as deemed necessary by the Committee in order

to carry out its duties.

Responsiblities of the Related Party Transactions Review CommitteeThe following key responsibilities have been set out in the

Charter of RPTRC.

• Ensure that the Company complies with the Rules set out

in the Code.

• Subject to the exception given under Rule 27 of the Code,

review, in advance, all proposed related party transactions

and also examine any previously reviewed transactions,

whether the Management has provided required

information when seeking approval of the Committee

for such proposed material changes, if any, prior to the

completion of the transaction.

• Have meetings every fiscal quarter and report to the Board

on the Committee’s activities.

• The Committee shall take into consideration the facts and

circumstances provided by the Senior Management with

regard to the related party transactions and examine the

Directors’ independence with regard to such proposed

transactions.

• Whether the related party transaction requires immediate

market disclosure, as describe under Section 8 of the CSE

Listing Rules.

• Review guidelines and policies annually and recommend

amendments to the Board as and when determined to be

appropriate by the Committee.


Report of the Related Party Transactions Review Committee (Contd..)

Procedures for Reporting and Review of RPTsThe Managing Director is responsible for reporting to the Committee as per the information set out under Rule 30 of the Code

other than the exceptions given in Rule 27 of the Code.

The Committee reviewed all related party transactions of the Company for the financial year 2018/19 and it was observed that

all related party transactions entered into during the year were of a recurrent nature and necessary for the day-to-day operations

of the Company. The Committee has recommended that these transactions were at “arm’s length” not favorable to any related

party than generally available to the public.

The Company has engaged during the year under review in the trading business of tyres, alloy wheels and batteries and also rented

out stores premises with/to related Companies. All transactions were of a recurrent nature and have been done in compliance

with the policies and procedures set out by the related party review committee. A brief statement of transactions entered into

with related parties are as follows:

*RelatedParty Relationship Transaction Terms Debtperiod Valueof Outstandingas

Type transaction at31-3-2019

(Excl.Vat)

F/Y2018-2019

WPL Group Common Directors Trading 11% GP Margin Rs. 427Mn Rs. 396Mn

and HMC Margin on within one month,

Cost balance within

one year

WPL Group Common Directors Stores Rent At market Monthly Rs. 4.80Mn Nil

rate

CKITL JV Partner Stores Rent At market Monthly Rs. 1.19MN Nil

rate

*WPL Group – Wheels (Pvt) Ltd, Power Wheels (Pvt) Ltd, Tyre World (Pvt) Ltd, HMC - Hercules Motor Company (Pvt) Ltd.

CKITL – CEAT-Kelani International Tyres (Pvt) Ltd

Further, the Committee has proposed and recommended to impose penalty charge of 1% per annum will be applicable on the

outstanding if the dues are not settled on the due date.

The details of the related party transactions entered into during the year are given in Note xx to the Financial Statements on

page xxx of the Annual Report.

DeclarationIn terms of Rule 9.3.2 (d) of the Listing Rules of the Colombo Stock Exchange, a declaration by the Board of Directors as an

affirmative statement of the compliance with the Listing Rules pertaining to Related Party Transactions is given on page 4 of the

Annual Report.

D.S.K.Amarasekera

Chairman- Related Party Transactions Review Committee


Independent Auditor’s Report

Totheshareholdersof KelaniTyresPLCReportontheauditof thefinancialstatements

Our opinion In our opinion, the financial statements of Kelani Tyres PLC (“the Company”) and the consolidated financial statements of the Company and its subsidiary (“the Group”) give a true and fair view of the financial position of the Company and the Group as at 31 March 2019, and of their financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

What we have audited The financial statements of the Company and the consolidated financial statements of the Group, which comprise:

• the statement of financial position as at 31 March 2019;• the statement of comprehensive income for the year then ended;• the statement of changes in equity for the year then ended;• the statement of cash flows for the year then ended; and• the notes to the financial statements, which include a summary of significant accounting policies.

Basis for opinion We conducted our audit in accordance with Sri Lanka Auditing Standards (SLAuSs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence We are independent of the Group in accordance with the Code of Ethics issued by CA Sri Lanka (Code of Ethics), and we have fulfilled our other ethical responsibilities in accordance with the Code of Ethics.

Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.


Independent Auditor’s Report (Contd..)

TheCompany:

KeyauditmatterValuationof InvestmentPropertiesThe Company measures its investment property at fair value.

As discussed in Note 15 to the financial statements, management engaged the services of an independent professional valuer to estimate the fair value of its investment property at the reporting date.

Accordingly, the investment property of the Company had been valued at Rs. 400 Million as at 31 March 2019, and the resulting fair value gain for the year ended 31 March 2019 of Rs. 24 Million credited to the statement of comprehensive income, in arriving at the profit for the year.

The fair valuation of investment property was dependent on certain key assumptions such as discount rate and fair market rent. We have focused in this area due to the key assumptions considered involving judgement and the magnitude of the value of investment property, and the quantum of revaluation gain reported in the financial statements.

HowourauditaddressedtheKeyauditmatter

The procedures we performed in relation to fair valuation of investment property included the following:

- Assessed the independence and competence of the external valuer.

- Checked the completeness and accuracy of the inputs

provided to the valuer.

- Inspected the final valuation report of the valuer for appropriateness of the valuation methodologies used and the key assumptions used by applying our knowledge on the real estate market. For this purpose, we used independent and publicly available information on real estates of similar nature and locations;

- Checked the reasonableness of the input data used in the valuation by referring to price ranges at which nearby lands and buildings are transacted, and also considered of other factors such as access to main roads, physical state of the land and building, architectural design of the building etc.

Based on our work performed, we found that the fair value of investment property and the resulting gain on revaluation to be appropriate and valuation methodology and key assumptions used in the valuation to be reasonable.

OtherinformationManagement is responsible for the other information. The other information comprises the annual report but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.


Responsibilitiesof managementandthosechargedwithgovernanceforthefinancialstatementsManagement is responsible for the preparation of financial statements that give a true and fair view in accordance with Sri Lanka Accounting Standards and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the separate/consolidated financial statements, management is responsible for assessing the Company’s/ Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company/ Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s and the Group’s financial reporting process.

Auditor’sresponsibilitiesfortheauditof thefinancialstatementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SLAuSs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SLAuSs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company and the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s/ Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the separate/ consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company/ Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.



We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with ethical requirements in accordance with the Code of Ethics regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

ReportonotherlegalandregulatoryrequirementsAs required by section 163 (2) of the Companies Act, No. 07 of 2007, we have obtained all the information and explanations that were required for the audit and, as far as appears from our examination, proper accounting records have been kept by the Company.

CHARTEREDACCOUNTANTSCASriLankamembershipnumber-1581COLOMBO22July2019



Consolidated Statement of Comprehensive Income

(allamountsinSriLankaRupeesthousands) Note Group Company Yearended31March Yearended31March

2019 2018 2019 2018

Revenue from contracts with customers 7 426,874 536,452 423,147 532,996

Cost of sales (390,706) (488,523) (388,142) (485,027)

Gross profit 36,168 47,929 35,005 47,969

Other operating income / (expense) 8 11,218 7,193 170,513 7,181

Net gain from fair value adjustment 15 24,000 24,000 24,000 24,000

on investment property

Administrative expenses (85,425) (75,789) (85,041) (75,462)

Depreciation and amortisation (4,930) (2,782) (4,930) (2,765)

Operating profit/(loss) (18,969) 551 139,547 923

Finance income 10 (a) 13,159 32,002 13,159 32,002

Finance costs 10 (b) (4,351) (4,988) (4,090) (4,484)

Finance income - net 8,808 27,014 9,069 27,518

Share of net profit of joint venture accounted for

using the equity method 18 494,624 555,829 Nil Nil

Profit before income tax 484,463 583,393 148,616 28,441

Income tax expense 11 (261) (7,014) Nil (5,824)

Profitfortheyear 484,202 576,380 148,616 22,617

Othercomprehensiveincome:

Itemsthatwillnotbe

reclassifiedtoprofitorloss

Remeasurement of defined benefit obligations 24 293 (1,247) 293 (1,247)

Share of other comprehensive

income from joint venture 18 875 254,120 Nil Nil

Other comprehensive

Income for the year - net of tax 1,168 252,873 293 (1,247)

Incomefortheyear 485,370 829,253 148,909 21,370

Earnings per share - basic (Rs) 12 6.02 7.17 1.85 0.28

The Notes on pages 27 to 62 form an integral part of these financial statements.

Independent auditor’s report - pages 18 to 21.


Statements of Financial Position

(allamountsinSriLankaRupeesthousands)

Note Group Company 31March 31March 2019 2018 2019 2018 ASSETS Non-currentassets Property, plant and equipment 14 50,703 30,687 50,089 31,009 Investment property 15 400,000 376,000 400,000 376,000 Intangible assets 16 Nil 46 Nil 31 Deferred income tax assets 17 Nil 261 Nil Nil Investment in joint venture 18 4,007,233 3,671,054 139,607 139,607 Investment in subsidiary 19 Nil Nil 10 10 4,457,936 4,078,048 589,706 546,657 Currentassets Trade and other receivables 20 443,369 588,102 443,029 588,093 Income tax receivable 359 360 Nil Nil Cash and cash equivalents 21 39,438 169,713 38,706 166,485 483,166 758,175 481,735 754,578 Totalassets 4,941,102 4,836,223 1,071,441 1,301,235 EQUITYANDLIABILITIES Capitalandreserves Stated capital 26 402,000 402,000 402,000 402,000Revaluation reserves 27 487,607 487,607 971 971 Retained earnings 3,961,449 3,878,079 579,660 832,751 Totalequity 4,851,056 4,767,686 982,631 1,235,722 Non-currentliabilities Borrowings 23 Nil 944 Nil Nil Defined benefit obligations 24 4,826 4,344 4,826 4,344 4,826 5,288 4,826 4,344 Currentliabilities Trade and other payables 22 11,969 9,887 11,677 9,694 Borrowings 23 73,251 53,362 72,307 5,475 85,220 63,249 83,984 61,169 Totalliabilities 90,046 68,537 88,810 65,513Totalequityandliabilities 4,941,102 4,836,223 1,071,441 1,301,235

I certify that these financial statements have been prepared in compliance with the requirements of the Companies Act, No. 07 of 2007.

The Board of Directors is responsible for the preparation and presentation of these financial statements. These financial statements were authorised for issue by Board of Directors on 18th July 2019.

Director Director FinanceOfficer




Consolidated Statement of Changes in Equity - Group

(allamountsinSriLankaRupeesthousands)

Stated Revaluation Retained

Note capital reserves earnings Total

Balanceat1April2017 402,000 238,786 3,498,647 4,139,433

Profit for the year Nil Nil 576,380 576,380

Other comprehensive income Nil 248,821 4,052 252,873

Totalcomprehensiveincomefortheyear Nil 248,821 580,432 829,253

Transactionswithownersof theGroup,

recogniseddirectlyinequity

Dividends paid 28 Nil Nil (201,000) (201,000)

Balanceat31March2018 402,000 487,607 3,878,079 4,767,686


Other comprehensive income Nil Nil 1,168 1,168

Totalcomprehensiveincome

fortheyear Nil Nil 485,370 485,370

Transactionswithownersof theGroup,

recogniseddirectlyinequity

Dividends paid 28 Nil Nil (402,000) (402,000)

Balanceat31March2019 402,000 487,607 3,961,449 4,851,056




Statement of Changes in Equity - Company

(allamountsinSriLankaRupeesthousands) Note Stated Revaluation Retained Total capital reserves earnings Attributabletotheequityholderof theCompany

Balanceat31March2017 402,000 971 1,012,381 1,415,352


Other comprehensive income Nil Nil (1,247) (1,247)

Totalcomprehensiveincomefortheyear Nil Nil 21,370 21,370

Transactionswithownersof the

Company,recogniseddirectlyinequity

Dividend paid 28 Nil Nil (201,000) (201,000)

Balanceat31March2018 402,000 971 832,751 1,235,722


Other comprehensive income Nil Nil 293 293

Totalcomprehensiveincomefortheyear Nil Nil 148,909 148,909

Transactionswithownersof the

Company,recogniseddirectlyinequity

Dividend paid 28 Nil Nil (402,000) (402,000)

Balanceat31March2019 402,000 971 579,660 982,631




Consolidated Statement of Cash Flows

(allamountsinSriLankaRupeesthousands) Note Group Company Yearended31March Yearended31March

2019 2018 2019 2018

Cashflowsfromoperatingactivities

Cash generated from / (used in) operations 29 108,720 (216,656) 105,569 (219,810)

Interest received 10 (a) 13,159 32,002 13,159 32,002

Interest paid 10 (b) (4,351) (4,988) (4,090) (4,484)

Defined benefit obligation paid (249) Nil (249) Nil

Tax paid Nil (6,294) Nil (6,130)

Cashgeneratedfrom/(usedin)operatingactivities 117,279 (195,936) 114,389 (198,422)

Cashflowsfrominvestmentactivities

Purchases of property plant and equipment (35,346) (12,075) (31,846) (12,075)

Proceeds from sale of property plant and equipment 11,526 70 11,526 Nil

Dividend received from joint venture 159,320 Nil 159,320 Nil

Netcash(outflow)/inflowfrominvestingactivities 135,500 (12,005) 139,000 (12,075)

Cashflowsfromfinancingactivities

Repayment of borrowing (1,888) (1,888) Nil Nil

Dividends paid 28 (402,000) (201,000) (402,000) (201,000)

Netcash(outflow)fromfinancingactivities (403,888) (202,888) (402,000) (201,000)

Decreaseincashandcashequivalents (151,107) (410,829) (148,611) (411,497)

At start of year 118,238 529,066 115,010 526,507

Decrease in cash and cash equivalents (151,107) (410,829) (148,611) (411,497)

Atendof year 21 (32,869) 118,238 (33,601) 115,010




(In the notes all amounts are shown in Sri Lanka Rupees

thousands unless otherwise stated)

1 Generalinformation

(a) Company

The Company is a public limited liability company

incorporated in accordance with the Companies Act,

No. 17 of 1982 and re-registered under the

Companies Act, No. 7 of 2007. The address of its

registered office is, P.O. Box. 8, Nungamugoda,

Kelaniya. The Company is listed on the Colombo

Stock Exchange under stock code - TYREN000. The

Company is involved in the business of importation

and sale of tyres in addition to holding investments

in its subsidiary and joint venture as well as earning

rental income from investment property.

The Group comprises of the Company, Subsidiary

and the joint venture described in (b) and (c)

respectively.

(b) Subsidiary

In 2006, the vehicle hire business of the Kelani Tyres

PLC was transferred to a fully owned subsidiary

Executive Cars (Private) Limited [Previously known

as KTL Executive Hire (Private) Limited], which was

incorporated on 1 January 2006.

(c) Jointventure(JV)

The Company’s JV comprises of 50% holding of

Ceat Kelani Holdings (Private) Limited. The JV’s

principal activity is the manufacture of automobile

tyres for the purpose of local sales and exports. In

addition, the JV imports and sell tyres of certain sizes.

The JV’s manufacturing facilities are located at their

factories at Nagoda, Kalutara district and Kelaniya,

Gampaha district.

On 1 July 1999 a joint venture was formed after

entering into an agreement between Associated Ceat

(Private) Limited (ACPL) , Ceat Limited India and

the Kelani Tyres PLC [KTPLC]. Ceat Kelani

International Tyres (Private) Limited (CKITL) was

Notes to the Consolidated Financial Statements

incorporated to carry on the tyre manufacturing

operations and the assets and facilities of Kelani

Tyres PLC were transferred to CKITL. ACPL shares

were transferred to Associated Ceat Holding (Private)

Limited (ACH), a new company. Another company

was incorporated, Ceat Kelani Holdings (Private)

Limited (CKHPL) to acquire and hold eventually all

of the shares of ACPL and CKITL. The consideration

for such acquisition was the issuance by CKHPL of

its shares to both ACHPL and KTPLC in equal

proportion. Ceat Kelani Radials (Private) Limited

[previously known as Associated Ceat Kelani Radials

(Private) Limited] which was incorporated on 9

September 2005 is also a fully owned subsidiary of

CKHPL. Asian Tyres (Private) Limited which was

incorporated on 14 November 2012, under

Company’s Act No. 07 of 2007 as a fully owned

subsidiary of CKITL.

2. Changesinaccountingpolicyanddisclosures

(a) Newandamendedstandardsadoptedbythe

Group

The Group has applied the following standards and

amendments for the first time for their annual

reporting period commencing 1 April 2018:

l SLFRS 9 Financial Instruments

l SLFRS 15 Revenue from Contracts with Customers

l Transfers to Investment Property – Amendments to

LKAS 40

Accounting policies and amendments listed above

did not have any impact on the amounts recognised

in prior periods and are not expected to significantly

affect the current or future periods.

(b) Newstandards andamendments effective

after1January2019

SLFRS 16 will affect primarily the accounting by

lessees and will result in the recognition of almost all

leases on balance sheet. The standard removes the

current distinction between operating and financing

leases and requires recognition of an asset (the right


to use the leased item) and a financial liability to pay

rentals for virtually all lease contracts. An optional

exemption exists for short-term and low-value

leases.

The income statement will also be affected because

the total expense is typically higher in the earlier years

of a lease and lower in later years. Additionally,

operating expense will be replaced with interest and

depreciation, so key metrics like EBITDA will

change.

Operating cash flows will be higher as cash payments

for the principal portion of the lease liability are

classified within financing activities. Only the part of

the payments that reflects interest can continue to be

presented as operating cash flows.

The accounting by lessors will not significantly

change. Some differences may arise as a result of the

new guidance on the definition of a lease. Under

SLFRS 16, a contract is, or contains, a lease if the

contract conveys the right to control the use of an

identified asset for a period of time in exchange for

consideration.

The standard is effective for annual periods beginning

on or after 1 January 2019 with earlier application

permitted if SLFRS 15, ‘Revenue from Contracts

with Customers’, is also applied.

The impact of the adoption of SLFRS 16 is being

assessed.

3. Summaryof significantaccountingpolicies

The principal accounting policies applied in the

preparation of these financial statements are set out below.

These policies have been consistently applied to all the

years presented unless otherwise stated.

3.1 Basisof preparation

The consolidated financial statements of Kelani

Tyres PLC have been prepared in accordance with

Sri Lanka Accounting Standards (SLFRSs/LKASs).

The financial statements have been prepared under

the historical cost convention as modified by the fair

valuation of financial assets and liabilities which are

measured at fair value.

The preparation of consolidated financial statements

in conformity with Sri Lanka Accounting Standards

requires the use of certain critical accounting

estimates. It also requires management to exercise its

judgment in the process of applying the accounting

policies. The areas involving a higher degree of

judgment or complexity, or areas where assumptions

and estimates are significant to the Group consolidated

financial statements are disclosed in Note 4.

3.2 Consolidation

The Group financial statements comprise a

consolidation of accounts of the Company with its

fully owned subsidiary, Executive Cars (Private)

Limited and equity method of accounting for

interests in joint venture in Ceat Kelani Holding

(Private) Limited.

Subsidiaries are those entities (including structured

entities) over which the Group has control. Control

exists when the Group is exposed to, or has rights to,

variable returns from its involvement with the entity

and has the ability to affect those returns through its

power over the entity. Subsidiaries are fully

consolidated from the date on which the control is

transferred to the Group, and continued to be

consolidated until the date when such control ceases.

The financial statements of the subsidiaries are

prepared for the same reporting period as the parent

company.

The Group applies the acquisition method to account

for business combinations. The consideration

transferred for the acquisition of a subsidiary is the

fair values of the assets transferred, the liabilities

incurred to the former owners of the acquiree and

the equity interests issued by the Group. The

Notes to the Consolidated Financial Statements (Contd..)

2. Changes in accounting policy and disclosures (Contd..)(b) New standards and amendments effective after 1 January 2019 (Contd..)



consideration transferred includes the fair value of

any asset or liability resulting from a contingent

consideration arrangement. Identifiable assets

acquired, liabilities and contingent liabilities assumed

in a business combination are measured initially at

their fair values at the acquisition date. The Group

recognises any non-controlling interest in the

acquiree on an acquisition-by-acquisition basis, either

at fair value or at the non-controlling interest’s

proportionate share of the recognised amounts of

acquiree’s identifiable net assets.

Acquisition related costs are expensed as incurred.

If the business combination is achieved in stages, the

acquisition date carrying value of the acquirer’s

previously held equity interest in the acquiree is

remeasured to fair value at the acquisition date; any

gains or losses arising from such remeasurement are

recognised in profit or loss.

Any contingent consideration to be transferred by

the group is recognised at fair value at the acquisition

date. Subsequent changes to the fair value of the

contingent consideration that is deemed to be an

asset or liability is recognised in accordance with

SLFRS 9 either in profit or loss or as a change to

other comprehensive income. Contingent

consideration that is classified as equity is not

remeasured, and its subsequent settlement is

accounted for within equity.

Inter-company transactions, balances, unrealised

gains and unrealised losses on transactions between

group companies are eliminated. When necessary,

amounts reported by subsidiaries have been adjusted

to conform with the Group’s accounting policies.

3.3 Segmentreporting

Operating segments are reported in a manner

consistent with the internal reporting provided to the

chief operating decision-maker. The chief operating

decision-maker, who is responsible for allocating

resources and assessing performance of the operating

segments, has been identified as the Board of

Directors.

3.4 Foreigncurrencytranslation

(a)Functionalandpresentationcurrency

Items included in the financial statements are

measured using the currency primary economic

environment in which the entity operates (“the

functional currency”). The financial statements

are presented in Sri Lanka Rupees, which is the

presentation currency of the Group.

(b)Transactionsandbalances

Foreign currency transactions are translated into

the functional currency using the exchange rates

prevailing at the dates of the transactions or

valuation where items are remeasured. Foreign

exchange gains and losses resulting from the

settlement of such transactions and from the

translation at year-end exchange rates of

monetary assets and liabilities denominated in

foreign currencies are recognised in the income

statement.

Foreign exchange gains and losses that relate to

borrowings is presented in the statement of

comprehensive income within ‘finance income

or cost’. All other foreign exchange gains and

losses are presented in the income statement

within ‘other operating income / (expenses).

3.5 Investment

Investments by the Company in the subsidiary and

joint venture are stated in the separate financial

statements of the Company at cost.

3.6 Property,plantandequipment

Land and buildings comprise mainly the office

premises. Land, buildings and motor vehicles are

shown at fair value, based on valuations by external

independent valuers, less subsequent depreciation

for buildings and motor vehicles. Valuations are

performed with sufficient regularity to ensure that

3. Summaryof significantaccountingpolicies(Contd..)3.2 Consolidation (Contd..)


the fair value of a revalued asset does not differ

materially from its carrying amount. Any accumulated

depreciation at the date of revaluation is eliminated

against the gross carrying amount of the asset, and

the net amount is restated to the revalued amount

of the asset. All other property, plant and equipment

is stated at historical cost less depreciation. Historical

cost includes expenditure that is directly attributable

to the acquisition of the items.

Subsequent costs are included in the asset’s carrying

amount or recognised as a separate asset, as

appropriate, only when it is probable that future

economic benefits associated with the item will flow

to the group and the cost of the item can be measured

reliably. The carrying amount of the replaced part

is derecognised.

All other repairs and maintenance are charged to the

income statement during the financial period in

which they are incurred.

Increases in the carrying amount arising on

revaluation of land and buildings are credited to

other comprehensive income and shown as

revaluation reserves in shareholders’ equity. Decreases

that offset previous increases of the same asset are

charged in other comprehensive income and debited

against other reserves directly in equity; all other

decreases are charged to the income statement.

Land is not depreciated. Depreciation on other assets

is calculated using the straight-line method to allocate

their cost or revalued amounts to their residual values

over their estimated useful lives, as follows:

Freehold building and installation 50 years

Plant / machinery and equipment 8 years

Motor vehicles 4 years

The assets’ residual values and useful lives are

reviewed, and adjusted if appropriate, at the end of

each reporting period.

An asset’s carrying amount is written down

immediately to its recoverable amount if the asset’s

carrying amount is greater than its estimated

recoverable amount.

Gains and losses on disposals are determined by

comparing the proceeds with the carrying amount

and are recognised within other operating income in

the income statement.

When revalued assets are sold, the amounts included

in other reserves are transferred to retained earnings.

3.7 Leases

(a)Finance lease

The Group leases certain property, plant and

equipment. Leases of plant, plant and equipment

where the Group has substantially all the risks

and rewards of ownership are classified as finance

leases. Finance leases are capitalised at the lease’s

commencement at the lower of the fair value of

the leased property and the present value of the

minimum lease payments.

Each lease payment is allocated between the

liability and finance charges so as to achieve a

constant rate on the balance outstanding. The

corresponding rental obligations, net of finance

charges, are included in other long-term payables.

The interest element of the finance cost is

charged to the income statement over the lease

period. The plant and equipment acquired under

finance leases is depreciated over the useful life

of the asset.

(b)Operatinglease

Leases in which a significant portion of the risks

and rewards of ownership are retained by the

lessor are classified as operating leases. Payments

made under operating leases (net of any

incentives received from the lessor) are charged

to the income statement on a straight-line basis

over the period of the lease.


3. Summaryof significantaccountingpolicies(Contd..)3.6 Property, plant and equipment (Contd..)


3.8 Investmentproperty

Property that is held for long-term rental yields or

for capital appreciation or both, and that is not

occupied by the companies in the consolidated

Group, is classified as investment property. Investment

property is measured initially at its cost, including

related transaction costs and where applicable

borrowing costs. After initial recognition, investment

property is carried at fair value. Investment property

under construction is measured at fair value if the

fair value is considered to be reliably determinable.

Fair value is based on active market prices, adjusted,

if necessary, for differences in the nature, location or

condition of the specific asset. If this information is

not available, the Group uses alternative valuation

methods, such as recent prices on less active markets

or discounted cash flow projections. Valuations are

performed as of the financial position date by

professional valuers who hold recognised and

relevant professional qualifications and have recent

experience in the location and category of the

investment property being valued. These valuations

form the basis for the carrying amounts in the

consolidated financial statements. Investment

property that is being redeveloped for continuing use

as investment property or for which the market has

become less active continues to be measured at fair

value.

Subsequent expenditure is capitalised to the asset’s

carrying amount only when it is probable that future

economic benefits associated with the expenditure

will flow to the Group and the cost of the item can

be measured reliably. All other repairs and

maintenance costs are expensed when incurred.

When part of an investment property is replaced,

the carrying amount of the replaced part is

derecognised.

Changes in fair values are recognised in the income

statement. Investment properties are derecognised

when they have been disposed. Where the Group

disposes of a property at fair value in an arm’s length

transaction, the carrying value immediately prior to

the sale is adjusted to the transaction price, and the

adjustment is recorded in the income statement

within net gain from fair value adjustment on

investment property.

If an investment property becomes owner-occupied,

it is reclassified as property, plant and equipment. Its

fair value at the date of reclassification becomes its

cost for subsequent accounting purposes. If an item

of owner-occupied property becomes an investment

property because its use has changed, any difference

resulting between the carrying amount and the fair

value of this item at the date of transfer is treated in

the same way as a revaluation under LKAS 16. Any

resulting increase in the carrying amount of the

property is recognised in income statement to the

extent that it reverses a previous impairment loss,

with any remaining increase recognised in other

comprehensive income and increase directly to equity

in revaluation surplus within equity. Any resulting

decrease in the carrying amount of the property is

initially charged in other comprehensive income

against any previously recognised revaluation surplus,

with any remaining decrease charged to income

statement.

3.9 Intangibleassets

Cost associated with computer software which is

subjected to amortisation has been classified as

Intangible assets in accordance with LKAS 38 -

Intangible Assets where the cost of a separately

acquired intangible assets can usually be measured

reliably when the purchase consideration is in the

form of cash or other monetary assets. Estimated

useful lives of the intangible assets is 4 years.

Computer software cost recognised as assets are

amortised over their estimated useful lives.

3.10 Impairmentof nonfinancialassets

Intangible assets that have an indefinite useful life or

intangible assets not ready to use are not subject to

amortisation and are tested annually for impairment.


3. Summaryof significantaccountingpolicies(Contd..)


Assets that are subject to amortisation are reviewed

for impairment whenever events or changes in

circumstances indicate that the carrying amount may

not be recoverable. An impairment loss is recognised

for the amount by which the asset’s carrying amount

exceeds its recoverable amount. The recoverable

amount is the higher of an asset’s fair value less costs

of disposal and value in use. For the purposes of

assessing impairment, assets are grouped at the lowest

levels for which there are largely independent cash

inflows (cash-generating units). Prior impairments of

non-financial assets (other than goodwill) are

reviewed for possible reversal at each reporting date.

3.11 Financialassets

3.11.1 Classification

The Group classifies its financial assets those

to be measured subsequently at fair value,

and those to be measured at amortised cost.

The classification depends on the entity’s

business model for managing the financial

assets and the contractual terms of the cash

flows. For assets measured at fair value, gains

and losses will either be recorded in profit or

loss or OCI. For investments in equity

instruments that are not held for trading, this

will depend on whether the group has made

an irrevocable election at the time of initial

recognition to account for the equity

investment at fair value through OCI.

(a) Financialassetatamortizedcost

Receivables are non-derivative financial

assets with fixed or determinable payments

that are not quoted in an active market. They

are included in current assets, except for

maturities greater than 12 months after the

end of the reporting period. These are

classified as non-current assets. The Group’s

financial assets at amortized cost comprise

‘trade and other receivables’ and ‘cash and

cash equivalents’ in the statement of financial

position.

3.11.2 Recognition, measurement and

derecognition

Regular purchases and sales of financial

assets are recognised on the date on which

the group commits to purchase or sell the

asset. At initial recognition, the group

measures a financial asset at its fair value plus,

in the case of a financial asset not at fair value

through profit or loss (FVPL), transaction

costs that are directly attributable to the

acquisition of the financial asset. Transaction

costs of financial assets carried at FVPL are

expensed in profit or loss. Financial assets are

derecognised when the rights to receive cash

flows from the investment in financial assets

have expired or have been transferred and

the group has transferred substantially all

risks and rewards of ownership. Loans and

receivables are subsequently carried at

amortised cost using the effective interest

method. Financial assets are derecognised

when the rights to receive cash flows from the

financial assets have expired or have been

transferred and the group has transferred

substantially all the risks and rewards of

ownership.

3.11.3 Impairmentof financialassets

From 1 April 2018, the group assesses on a

forward looking basis the expected credit

losses associated with its financial assets

carried at amortised cost. The impairment

methodology applied depends on whether

there has been a significant increase in credit

risk.

For trade receivables, the group applies the

simplified approach permitted by SLFRS 9,

which requires expected lifetime losses to be

recognised from initial recognition of the

receivables, see note 5(b) for further details.


3. Summaryof significantaccountingpolicies(Contd..)3.10 Impairmentof nonfinancialassets(Contd..)


3.11.4 Prioryearaccountingpolicies

T he g roup has app l i ed SLFRS 9

retrospectively, but has elected not to restate

comparative information. As a result, the

comparative information provided continues

to be accounted for in accordance with the

group’s previous accounting policy. group

classified its financial assets in the financial

position at fair value through profit or loss,

loans and receivables, held-to-maturity

investments, and available-for-sale financial

assets.

The classification depended on the purpose

for which the investments were acquired.

Management determined the classification

of its investments at initial recognition and,

in the case of assets classified as held-to-

maturity, re-evaluated this designation at the

end of each reporting period. Subsequent to

the initial recognition, loans and receivables

and held-to-maturity investments were

carried at amortised cost using the effective

interest method.

3.12 Tradereceivables

Trade receivables are amounts due from customers

for merchandise sold in the ordinary course of

business. If collection is expected in one year or less

(or in the normal operating cycle of the business if

longer), they are classified as current assets. If not,

they are presented as non-current assets.

Trade receivables are recognised initially at fair value

and subsequently measured at amortised cost using

the effective interest method, less provision for

impairment.

3.13 Cashandcashequivalents

Cash and cash equivalents includes cash in hand,

deposits held with banks where original maturities

of at three months or less banks and bank overdrafts.

Bank overdrafts are shown within borrowings in

current liabilities on the statement of financial

position.

For the purposes of the cash flow statement, cash

and cash equivalents comprise cash in hand and at

bank net of bank overdrafts.

3.14Statedcapital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of

new ordinary shares or options are shown in equity

as a deduction, net of tax, from the proceeds.

3.15Tradepayables

‘Trade payables are obligations to pay for goods or

services that have been acquired in the ordinary

course of business from suppliers. Accounts payable

are classified as current liabilities if payment is due

within one year or less (or in the normal operating

cycle of the business if longer). If not, they are

presented as non-current liabilities.

Trade payables are recognised initially at fair value

and subsequently measured at amortised cost using

the effective interest method.

3.16 Currentanddeferredincometax

The tax expense for the year comprise current tax

and deferred tax. Tax is recognised in the statement

of comprehensive income except for the extent that

it relates to items recognised in other comprehensive

or directly in equity. The charge for current tax is

based on the results for the year as adjusted for

disallowable items calculated on the basis of the tax

laws enacted at the statement of financial position

date.

Management periodically evaluates positions taken

in tax returns with respect to situations in which

applicable tax regulation is subject to interpretation.

It establishes provisions here appropriate on the basis

of amounts expected to be paid to the tax

authorities.


3. Summaryof significantaccountingpolicies(Contd..)


Deferred income tax is recognised, using the liability

method, on temporary differences arising between

the tax bases of assets and liabilities and their

carrying amounts in the financial statements.

However, the deferred income tax is not accounted

for if it arises from initial recognition of an asset or

liability in a transaction other than a business

combination that at the time of the transaction affects

neither accounting nor taxable profit or loss. Deferred

income tax is determined using tax rates that have

been enacted or substantially enacted by the

statement of financial position date and are expected

to apply when the related deferred income tax asset

is realised or the deferred income tax liability is

settled.

Deferred income tax assets are recognised only to

the extent that it is probable that future taxable profit

will be available against which the temporary

differences can be utilised.

Deferred income tax assets and liabilities are offset

when there is a legally enforceable right to offset

current tax assets against current tax liabilities and

when the deferred income taxes assets and liabilities

relate to income taxes levied by the same taxation

authority on either the taxable entity or different

taxable entities where there is an intention to settle

the balances on a net basis.

3.17Borrowings

Borrowings are recognised initially at fair value, net

of transaction costs incurred. Borrowings are

subsequently carried at amortised cost; any difference

between the proceeds (net of transaction costs) and

the redemption value is recognised in the income

statement over the period of the borrowings using

the effective interest method.

Borrowings are classified as current liabilities unless

the group has an unconditional right to defer

settlement of the liability for at least 12 months after

the reporting period.

General and specific borrowing costs directly

attributable to the acquisition, construction or

production of qualifying assets, which are assets that

necessarily take a substantial period of time to get

ready for their intended use or sale, are added to the

cost of those assets, until such time as the assets are

substantially ready for their intended use or sale.

Investment income earned on the temporary

investment of specific borrowings pending their

expenditure on qualifying assets is deducted from the

borrowing costs eligible for capitalisation. All other

borrowing costs are recognised in profit or loss in the

period in which they are incurred.

3.18 Provisions

Provisions are recognised when the Group has a

present legal or constructive obligation as a result of

past events, it is probable that an outflow of resources

embodying economic benefits will be required to

settle the obligation, and a reliable estimate of the

amount of the obligation can be made.

Provisions are measured at the present value of

management’s best estimate of the expenditure

required to settle the present obligation at the end of

the reporting period. The discount rate used to

determine the present value is a pre-tax rate that

reflects current market assessments of the time value

of money and the risks specific to the liability. The

increase in the provision due to the passage of time

is recognised as interest expense.

3.19Employeebenefits

The Group has both defined benefit and defined

contribution plans.

(a) Definedbenefitobligations

Typically defined benefit plans define an amount of

benefit that an employee will receive on retirement,

usually dependent on one or more factors such as

age, years of service and compensation.


3. Summaryof significantaccountingpolicies(Contd..)3.16 Current and deferred income tax (Contd..)


The liability recognised in the balance sheet in respect

of defined benefit plans is the present value of the

defined benefit obligation at the end of the reporting

period. The defined benefit obligation is calculated

annually using projected unit credit method. The

present value of the defined benefit obligation is

determined by discounting the estimated future cash

outflows using the market rates on government

bonds.

The current service cost of the defined benefit plan,

recognised in the income statement in employee

benefit expense, except where included in the cost

of an asset, reflects the increase in the defined benefit

obligation resulting from employee service in the

current year, benefit changes curtailments and

settlements.

Past-service costs are recognised immediately in other

comprehensive income.

Actuarial gains and losses arising from experience

adjustments and changes in actuarial assumptions

are charged or credited to equity in other

comprehensive income in the period in which they

arise.

(b) Definedcontributionplans

All local employees of the Group, are members of

the Employees’ Provident Fund and Employees’

Trust Fund, to which their employers contribute 12%

and 3% respectively of such employees’ basic or

consolidated wage or salary, cost of living and all

other allowances.

3.20Dividenddistribution

Dividend distribution to the Company’s shareholders

is recognised as a liability in the financial statements

in the period in which the dividends are approved by

the Company’s shareholders.

3.21Revenuerecognition

(a)Saleof goods

Revenue from contracts with customers” ,

establishes a comprehensive framework for

determining whether, how much and when

revenue is recognised. The Group recognises

when a customer obtains control of the goods

or services. Judgement is used to determine the

timing of transfer of control - at a point in time

or over time.

Revenue from the sale of goods is recognised at

the point in time when control of the goods is

transferred to the customer, usually on delivery

of the goods. Sales are measured at fair value of

the consideration received or receivable

excluding amounts collected on behalf of third

parties (e.g. Sales Taxes) and variable

consideration (e.g. discounts and rebates).

(b)Interestincome

Interest income is recognised using the effective

interest method.

(c)Rentincome

Rent income is recognised as it accrues, unless

collectability is in doubt.

(d)Hireincome

Hire income is recognised as it accrues, unless

collectability is in doubt.

(e)Dividendincome

Dividend income is recognised when the

shareholder’s right to receive payment is

established.

3.22Basicearningspershare

Basic earnings per share is calculated by dividing:

- the profit attributable to owners of the company,

excluding any costs of servicing equity other than

ordinary shares


3. Summaryof significantaccountingpolicies(Contd..)3.19 Employeebenefits(Contd..)


- by the weighted average number of ordinary

shares outstanding during the financial year,

adjusted for bonus elements in ordinary shares

issued during the year and excluding treasury

shares.

3.23Roundingof amounts

All amounts disclosed in the financial statements and

notes have been rounded off to the nearest thousand

currency units unless otherwise stated.

4. Criticalaccountingestimatesandjudgments

(a)Definedbenefitplans-Gratuity

The present value of the gratuity obligations depends

on a number of factors that are determined on an

actuarial basis using a number of assumptions. The

assumptions used in determining the net (cost) /

income for gratuity include the discount rate,

employees turnover and salary incremental rate. Any

changes in these assumptions will impact the carrying

amount of gratuity obligations.

The Group determines the appropriate discount rate

at the end of each year. This is the interest rate that

should be used to determine the present value of

estimated future cash outflows expected to be required

to settle the gratuity obligations. In determining the

appropriate discount rate, the Group considers the

interest rates of government bonds.

(b)Incomeanddeferredtaxes

The Group is subject to income taxes in Sri Lanka.

Significant judgment is required in determining the

provision for income taxes. There are many

transactions and calculations for which the ultimate

tax determination is uncertain. The Group recognises

liabilities for anticipated tax assessment issues based

on estimates of whether additional taxes will be due.

Where the final tax outcome of these matters is

different from the amounts that were initially

recorded, such differences will impact the current and

deferred income tax assets and liabilities in the period

in which such determination is made.

The Company has incurred tax losses during past

financial years. The Company has concluded that the

deferred tax asset on tax losses will not be recoverable

from future taxable profits. See note 17.

(c) Estimatedusefullivesof property,plantsand

equipment

The Group reviews annually the estimated useful lives

of property, plant and equipment based on factors

such as business plans, strategies, expected level of

usage and future technological developments. Future

result of operations could be materially affected by

changes in these estimates brought about by changes

in the factors mentioned. A reduction in the estimated

useful lives of property, plant and equipment which

increase the recorded depreciation charge and

decrease the carrying value of property, plant and

equipment. Further details of judgements and

assumptions made are noted in note 14.

(d) Fairvalueof investmentproperty

The fair value of investment properties are determined

by using valuation techniques. Further details of

judgments and assumptions are noted in note 15.

(e) Estimateduseful lives of intangible assets

Estimated useful lives of intangible assets are disclosed

in note 3.9

(f) Impairmentof financialassets

Impairment of intangible assets are disclosed in note

3.11.3

5. Financialrisksmanagement

5.1 Financialrisksfactors

The Group’s activities expose it to a variety of

financial risks: market risk (including currency risk,

fair value interest rate risk, cash flow interest rate

risk and price risk), credit risk and liquidity risk.

The Group’s overall risk management programme

focuses on the unpredictability of financial

markets and seeks to minimise potential adverse

effects on the Group’s financial performance.


3. Summaryof significantaccountingpolicies(Contd..)3.22 Basic earnings per share (Contd..)


a) Marketrisks

(i) Interestraterisk

The Group’s interest rate risks arises from

the borrowings of the Company, subsidiary

and the joint venture. The fluctuation in the

Average Weighted Prime Lending Rate

(AWPLR) results in the effective interest rate

of the borrowings usually without a

corresponding change in the fair value. The

Group analyses the interest rate exposure on

a dynamic basis monitoring AWPLR.

ii) Pricerisks

The Company’s investment property is

exposed to market value of land and

building and the related rental market. The

Company monitors the market value on a

dynamic basis.

The joint venture is exposed to the

commodity price risk of rubber. The joint

venture monitors the price of rubber on a

dynamic basis and adjust the inventory levels

to minimize the impact.

b) Creditrisks

Credit risk arises from cash and cash

equivalents, deposits with banks and

financial institutions and outstanding

balances from customers. For banks and

financial institutions, only independently

rated parties with a minimum rating of ’A’

and ‘B’ are accepted. No independent risk

ratings are available for customers. Credit

control assess the credit quality of the

customs taking into account its financial

position, past performance and other factors.

The group applies the SLFRS 9 simplified

approach to measuring expected credit losses

which uses a lifetime expected loss allowance

for all trade receivables and contract assets.

To measure the expected credit losses, trade

receivables has been grouped based on

shared credit risk characteristics and the days

past due. The expected loss rates are based

on the payment profiles of sales over a period

of 36 month before 31 March 2019 or 1

A pr i l 2018 re spec t i ve l y and the

corresponding historical credit losses

experienced within this period. The

historical loss rates are adjusted to reflect

current and forward-looking information on

macroeconomic factors affecting the ability

of the customers to settle the receivables.

The group has identified the GDP and the

unemployment rate of the countries in

which it sells its goods and services to be the

most relevant factors, and accordingly

adjusts the historical loss rates based on

expected changes in these factors.

On that basis, the loss allowance as at 31

March 2019 and 1 April 2018 (on adoption

of SLFRS 9) was determined as nil for trade

receivables.

c) Liquidityrisks

Cash flow forecasting is performed by the

Group which monitors rolling forecasts of

the Group’s liquidity requirements to ensure

it has sufficient cash to meet operational

needs at all times. Such forecasting takes into

consideration the Group’s debt financing

plans.

The table below analyses the Groups’s /

Company’s financial liabilities into relevant

maturity groupings based on the remaining

period at the statement of financial position

date to the contractual maturity date. The

amounts disclosed in the table are the

contractual undiscounted cash flows.


5. Financial risks management (Contd..)5.1 Financial risks factors (Contd..)



(i)Group Between3 Between1 2and

Lessthan monthsand Yearand 5Years Total 3months 1Year 2Year

At31March2019 Borrowings (excluding finance - lease liabilities) 72,307 944 Nil Nil 73,251 Trade and other payable 8,864 Nil Nil Nil 8,864 (excluding statutory liabilities)

At31March2018 Borrowings (excluding finance - lease liabilities) 51,475 1,887 944 Nil 54,306 Trade and other payable 8,619 Nil Nil Nil 8,619 (excluding statutory liabilities) (ii)Company

Between3 Between1 2and Lessthan monthsand Yearand 5Years Total

3months 1Year 2Year At31March2019 Borrowings (excluding finance - lease liabilities) 72,307 Nil Nil Nil 72,307 Trade and other payable 8,572 Nil Nil Nil 8,572 (excluding statutory liabilities)

At31March2018 Borrowings(excluding finance - lease liabilities) 51,475 Nil Nil Nil 51,475 Trade and other payable 8,995 Nil Nil Nil 8,995

(excluding statutory liabilities)

5.2 Capitalmanagement

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern

in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital

structure to reduce the cost of capital.

Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is

calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current and

noncurrent borrowings’ as shown in the statement of financial position) less cash and cash equivalents. Total capital

is calculated as ‘equity’ as shown in the statement of financial position plus net debt.

The gearing ratios at 31 March 2019 and 31 March 2018 were as follows:

5. Financial risks management (Contd..)c) Liquidity risks (Contd..)



Group Company

Asat31March Asat31March

2019 2018 2019 2018

Total borrowings 73,251 54,306 72,307 51,475

Less: Cash and cash equivalent (39,438) (169,713) (38,706) (166,485)

Net cash/(debt) 33,813 (115,407) 33,601 (115,010)

Total equity 4,851,056 4,767,685 982,631 1,235,722

Totalcapital 4,884,869 4,652,278 1,016,232 1,120,712

Gearing ratio 0.01 0.00 0.03 0.00

6. Segmentingreporting

Operating segments are reported in a manner consistent with the internal reports provided to the chief operating decision

maker. The chief operating decision maker who is responsible for the allocation of resources and assessing performance of

the operating segments, has been identified as the Board of Directors.

Accordingly the group is organised in to three operating segments as follows:

(a) Local sales of tyres

(b) Vehicle hiring income

(c) Investments

5. Financial risks management (Contd..)5.2 Capital management (Contd..)


Localsales Vehicle Investments Adjustments Group of tyres hiring income Revenue Local sales 491,534 Nil Nil Nil 491,534 Hiring income Nil 4,373 Nil Nil 4,373 Value Added Tax (64,113) (570) Nil Nil (64,683)Nation Building Tax (4,274) (76) Nil Nil (4,350)Netturnover 423,147 3,727 Nil Nil 426,874 Direct expenses of production (388,142) (2,564) Nil Nil (390,706)Administrative and selling expenses (89,971) (384) Nil Nil (90,355)Net gain from fair value adjustment on investment property Nil Nil 24,000 Nil 24,000 Rent income Nil Nil 5,987 Nil 5,987 Profit on disposal of property, plant equipment 3,659 Nil Nil Nil 3,659 Other income 1,547 25 Nil Nil 1,572 Interest income 13,159 Nil Nil Nil 13,159 Interest cost (4,090) (261) Nil Nil (4,351)Dividend received from joint venture Nil Nil 159,320 (159,320) Nil Share of results of joint venture Nil Nil 494,624 Nil 494,624 Income tax expense Nil (261) Nil Nil (261)Netprofit (40,691) 282 683,931 (159,320) 484,202

Incomestatementfortheyearended31March2018 Localsales Vehicle Investments Adjustments Group of tyres hiring income Revenue Local sales 619,136 Nil Nil Nil 619,136 Hiring income Nil 4,057 Nil Nil 4,057 Value Added Tax (80,757) (529) Nil Nil (81,286)Nation Building Tax (5,384) (71) Nil Nil (5,455)Netturnover 532,995 3,457 Nil Nil 536,452 Direct expenses of production (485,027) (3,495) Nil Nil (488,522)Administrative and selling expenses (78,225) (346) Nil Nil (78,571)Net gain from fair value adjustment on investment property Nil Nil 24,000 Nil 24,000 Rent income Nil Nil 5,930 Nil 5,930 Other income 1,250 13 Nil Nil 1,263 Interest cost (4,484) (504) Nil Nil (4,988)Interest income 32,002 Nil Nil Nil 32,002 Share of results of joint venture Nil Nil 555,829 Nil 555,829 Income tax expense (5,824) (1,190) Nil Nil (7,014)Netprofit (7,313) (2,065) 585,759 Nil 576,380

6. Segmenting reporting (Contd..)


(a) Segmentalincomestatements

Incomestatementfortheyearended31March2019


Localsales Vehicle Investments Adjustments Group

of tyres hiring

income

ASSETS

Non-currentassets

Property, plant and equipment 50,089 3,180 Nil (2,565) 50,704

Investment property Nil Nil 400,000 Nil 400,000

Investments in subsidiaries Nil Nil 10 (10) Nil

Investment in joint venture Nil Nil 4,146,839 (139,607) 4,007,232

50,089 3,179 4,546,849 (142,182) 4,457,936

Currentassets

Trade and other receivables 443,029 340 Nil Nil 443,369

Income tax refund Nil 360 Nil Nil 359

Cash and cash equivalents 38,706 732 Nil Nil 39,438

481,735 1,431 Nil Nil 483,166

Totalassets 531,825 4,611 4,546,849 (142,182) 4,941,102

EQUITYANDLIABILITIES

Equityattributabletoequityholders

Stated capital 402,000 10 Nil (10) 402,000

Revaluation reserves 971 Nil 486,636 Nil 487,607

Retained earnings 579,660 3,197 3,520,597 (142,008) 3,961,449

Totalequity 982,631 3,207 4,007,233 (142,018) 4,851,056

Non-currentliabilities

Retirement benefit obligations 4,826 Nil Nil Nil 4,826

4,826 Nil Nil Nil 4,826

Currentliabilities

Trade and other payables 11,677 460 Nil (164) 11,969

Borrowings 72,307 944 Nil Nil 73,251

83,984 1,404 Nil (164) 85,220

Totalliabilities 88,810 1,404 Nil (164) 90,046

Totalequityandliabilities 1,071,441 4,611 4,007,233 (142,182) 4,941,102

(b) Segmentalfinancialposition

Statementof financialpositionasat31March2019

6. Segmenting reporting (Contd..)



Localsales Vehicle Investments Adjustments Group

of tyres hiring

income

ASSETS

Non-currentassets

Property, plant and equipment 31,007 2,245 Nil (2,565) 30,687

Intangible assets 31 15 Nil Nil 46

Deferred income tax assets Nil 261 Nil Nil 261

Investment property Nil Nil 376,000 Nil 376,000

Investments in subsidiaries Nil Nil 10 (10) Nil

Investment in joint venture Nil Nil 3,810,661 (139,607) 3,671,054

31,038 2,521 4,186,671 (142,182) 4,078,048

Currentassets

Trade and other receivables 588,091 11 Nil Nil 588,102

Income tax refund Nil 360 Nil Nil 360

Cash and cash equivalents 166,486 3,227 Nil Nil 169,713

754,577 3,598 Nil Nil 758,175

Totalassets 785,615 6,119 4,186,671 (142,182)- 4,836,223


Equityattributabletoequityholders

Stated capital 402,000 10 Nil (10) 402,000

Revaluation reserves 971 Nil 486,636 Nil 487,607

Retained earnings 832,751 2,918 3,184,418 (142,008) 3,878,079

Totalequity 1,235,722 2,928 3,671,054 (142,018) 4,767,686

Non-currentliabilities

Borrowings Nil 944 Nil Nil 944

Retirement benefit obligations 4,344 Nil Nil Nil 4,344

4,344 944 Nil Nil 5,288

Currentliabilities

Trade and other payables 9,691 360 Nil (164) 9,887

Bank overdraft 51,475 1,887 Nil Nil 53,362

61,166 2,247 Nil (164) 63,249

Totalliabilities 65,510 3,191 Nil (164) 68,537

Totalequityandliabilities 1,301,232 6,119 3,671,054 (142,182) 4,836,223

Statementof financialpositionasat31March2018

6. Segmenting reporting (Contd..)(b) Segmentalfinancialposition(Contd..)



7. Revenue

Group Company

Yearended31March Yearended31March

2019 2018 2019 2018

Local turnover 495,907 623,192 491,534 619,136

495,907 623,192 491,534 619,136

Taxes

- Value Added Tax (64,683) (81,286) (64,113) (80,757)

- Nations Building Tax (4,350) (5,454) (4,274) (5,383)

(69,033) (86,740) (68,387) (86,140)

Netturnover 426,874 536,452 423,147 532,996

8. Otheroperatingincome/(expense)

Group Company


2019 2018 2019 2018

Rent income 5,987 5,932 5,987 5,932

Profit on disposal of property, plant and equipment 3,659 Nil 3,659 Nil

Administration income 940 795 940 795

Other income 632 466 607 454

Dividend income Nil Nil 159,320 Nil

11,218 7,193 170,513 7,181

9. Expensesbynature

The following items have been charged in arriving at operating profit:

Group Company


2019 2018 2019 2018

Directors’ emoluments 11,527 12,984 11,527 12,984

Auditors’ remuneration

- Audit 726 582 470 357

- Non audit 288 232 243 232

Depreciation on property,

plant and equipment [Note 14] 4,899 2,732 4,899 2,732

Amotisation of intangible assets [Note 16] 46 50 31 33

Staff costs (Exclude Directors’ emoluments) 16,296 12,109 16,296 12,109

Management related expenses 36,050 30,306 36,050 30,306

Cost of sale 390,706 488,523 388,142 485,027

Other 20,523 20,823 20,455 20,721

481,061 568,341 478,113 564,501



(a) Staff costs

Group Company


2019 2018 2019 2018

Wages and salaries 25,567 22,665 25,567 22,665

Defined benefit obligations [Note 24] 1,024 1,304 1,024 1,304

Defined contribution plans 1,232 1,124 1,232 1,124

27,823 25,093 27,823 25,093

Classifiedas:

Directors’ emoluments 11,527 12,984 11,527 12,984

Staff costs (Exclude Directors’ emoluments) 16,296 12,109 16,296 12,109

Total 27,823 25,093 27,823 25,093

Average number of persons employed

Full time 10 10 10 10

10. Financeincomeandcosts

Group Company


2019 2018 2019 2018

(a) Interest income

- Finance income from fixed deposits 13,159 32,002 13,159 32,002 13,159 32,002 13,159 32,002 (b) Interest expense - bank borrowings 4,351 4,988 4,090 4,484 4,351 4,988 4,090 4,484 Netfinance(Income)/Cost 8,808 27,014 9,069 27,518

11. Incometaxexpense

Group Company


2019 2018 2019 2018

Current tax Nil 5,862 Nil 5,824

Deferred tax credit [Note 17] 261 1,152 Nil Nil

261 7,014 Nil 5,824

9. Expenses by nature (Contd..)



The tax on the Company’s and the Group’s profit before tax differ from the theoretical amount that would arise using the

tax rate applicable to profits of the Company and the Group as follows :

Group Company


2019 2018 2019 2018

Profit before tax 484,463 583,393 148,616 28,441

Tax calculated at the tax rate of 28% 135,650 163,351 41,612 7,964

Tax on joint venture result reported (138,495) (155,981) Nil Nil

Tax effects of:

- Income not subject to tax (13,106) (6,720) (57,716) (6,720)

- Tax on expenses not deductible for tax purposes 2,397 3,891 1,675 3,891

- Tax on expenses deductible for tax purpose (1,311) (317) (351) (317)

- Utilisation of unrecognised tax losses 15,126 4,466 14,779 4,491

- Tax losses for which no deferred income tax asset

was recognised Nil (1,676) Nil (3,485)

Taxcharge 261 7,014 Nil 5,824

Company

Current tax of the Company wholly consists of tax on interest income at the rate of 28% (2018 - 28%). No income tax

arises from trade during the year due to tax losses. Tax losses of the Company available for carry forward amounted to

Rs.350,439,892 (2018 - Rs.315,430,016) as at the reporting date. The Company did not recognise deferred income tax

assets in respect of carried forward losses.

12. Earningspershare

Basic earnings per share is calculated by dividing the net profit attributable to shareholders by the weighted average number

of ordinary shares in issue during the year.

Group Company


2019 2018 2019 2018

Net profit attributable to shareholders 484,202 576,379 148,616 22,617

Weighted average number of ordinary

shares in issue (thousands) 80,400 80,400 80,400 80,400

Earnings per share - (Rs) 6.02 7.17 1.85 0.28

11. Income tax expense (Contd..)



13. (a)Financialinstrumentbycategory

Group Company

Financialassets Asat31March Asat31March

Financialassetsatamortizedcost 2019 2018 2019 2018

Assetsasperstatementof financialposition

Trade and other receivable excluding prepayments 441,823 585,914 441,483 585,903

Cash an cash equivalent 39,438 169,713 38,706 166,485

Total 481,261 755,627 480,189 752,388

Group Company

Financialliabilities Asat31March Asat31March

Financialliabilitiesatamortizedcost 2019 2018 2019 2018

LiabilitiesasperStatementof financialposition

Borrowings (excluding finance lease liability) 73,251 54,306 72,307 51,475

Trade and other payables excluding non financial liabilities 8,864 8,619 8,572 8,995

Total 82,115 62,925 80,879 60,470

(b) Creditqualityof financialassets The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates: Tradereceivable Counter parties without external credit rating.

Group Company


2019 2018 2019 2018

Group I 226,846 174,671 226,846 174,671

Group II 169,284 373,138 169,284 373,138

396,130 547,809 396,130 547,809

Group I Up to 6 months

Group II More than 6 months

Cashatbankandshort-termbankdeposits

Group Company

Rating Asat31March Asat31March

Nameof thebank 2019 2018 2019 2018

Commercial Bank of Ceylon PLC AA 4,107 32,680 3,375 29,452

Sampath Bank PLC A+ 35,331 37,033 35,331 37,033

Union Bank of Colombo PLC BBB- Nil 100,000 Nil 100,000

39,438 169,713 38,706 166,485



Notes to the Consolidated Financial Statements (Contd..)14.

Pro

perty,p

lantan

dequipmen

t-Gro

up

Fr

eehold

Free

hold

Plant/

Motor

Total

land

buildingan

d

mac

hineryan

d

veh

icles

installation

equipmen

t

Asat31March

2017

Cos

t / V

alua

tion

14,2

76

5,2

00

2,4

16

16,

324

3

8,21

6

Acc

umul

ated

dep

reci

atio

n N

il

(270

) (1

,344

) (1

1,69

3)

(13,

307)

Netboo

kamou

nt

14,276

4,930

1,072

4,631

24,909

Yea

ren

ded

31March

2018

Ope

ning

net

boo

k ba

lanc

e 1

4,27

6

4,9

30

1,0

72

4,6

31

24,

909

A

dditi

ons

Nil

N

il

275

1

1,80

0

12,

075

D

ispo

sals-

cos

t N

il

Nil

N

il

(709

) (7

09)

A

ccum

ulat

ed d

epre

ciat

ion

rela

ted

to d

ispo

sals

Nil

N

il

Nil

640

6

40

D

epre

ciat

ion

char

ge

Nil

(1

04)

(199

) (5

,925

) (6

,228

)

Closingboo

kamou

nt

14,276

4,826

1,148

10,437

30,687

Asat31March

2018

Cos

t / V

alua

tion

14,

276

5

,200

2

,691

27,

415

4

9,58

2

Acc

umul

ated

dep

reci

atio

n N

il

(374

) (1

,543

) (1

6,97

8)

(18,

895)

Netboo

kamou

nt

14,276

4,826

1,148

10,437

30,687

Yea

ren

ded

31March

2019

Ope

ning

net

boo

k ba

lanc

e 1

4,27

6

4,8

26

1,1

48

10,

437

3

0,68

7

Add

ition

s N

il

Nil

2

55

35,

091

3

5,34

6

D

ispo

sals-

cos

t N

il

Nil

N

il

(14,

433)

(1

4,43

3)

Acc

umul

ated

dep

reci

atio

n re

late

d to

dis

posa

ls N

il

Nil

N

il

6,5

66

6,5

66

D

epre

ciat

ion

char

ge

Nil

(1

04)

(216

) (7

,143

) (7

,463

)

Closingboo

kamou

nt

14,276

4,722

1,187

30,518

50,703

Asat31March

2019

Cos

t / V

alua

tion

14,

276

5

,200

2

,946

4

8,07

3

70,

495

A

ccum

ulat

ed d

epre

ciat

ion

Nil

(4

78)

(1,7

59)

(17,

555)

(1

9,79

2)

Netboo

kamou

nt

14,276

4,722

1,187

30,518

50,703

Pr

oper

ty, p

lant

and

equ

ipm

ent i

nclu

des

fully

dep

reci

ated

ass

ets

still

in u

se, t

he c

ost o

f w

hich

am

ount

ed to

LK

R 1

2,39

9,91

2 (2

018

- LK

R 3

,071

,185

) as

at th

e da

te o

f st

ate-

men

t of

finan

cial

pos

ition

.


Notes to the Consolidated Financial Statements (Contd..)14.

Pro

perty,p

lantan

dequipmen

t-Com

pan

y

Free

hold

Free

hold

Equipmen

t

Motor

Total

land

buildingan

d

veh

icles

inst

alla

tion

Yea

ren

ded

31March

2018

Ope

ning

net

boo

k ba

lanc

e

14,

276

4

,930

1

,072

1

,388

2

1,66

6

Add

ition

s

Nil

N

il

275

1

1,80

0

12,

075

D

epre

ciat

ion

char

ge [

Not

e 9]

N

il

(104

) (1

99)

(2,4

29)

(2,7

32)

Closingboo

kamou

nt

14,276

4,826

1,148

10,759

31,009

Asat31March

2018

Cos

t / V

alua

tion

14,

276

5

,200

2

,691

1

6,23

6

38,

403

A

ccum

ulat

ed D

epre

ciat

ion

Nil

(

374)

(1

,543

) (5

,477

) (7

,394

)

Netboo

kamou

nt

14,276

4,826

1,148

10,759

31,009

Yea

ren

ded

31March

2019

Ope

ning

net

boo

k ba

lanc

e

14,

276

4

,826

1

,148

1

0,75

9

31,

009

A

dditi

ons

N

il

Nil

2

55

31,

591

3

1,84

6

Dis

posa

l - C

ost

Nil

N

il

Nil

(1

3,74

6)

(13,

746)

D

ispo

sal -

Dep

reci

atio

n

Nil

N

il

Nil

5

,879

5

,879

Dep

reci

atio

n ch

arge

[N

ote

9]

Nil

(1

04)

(216

) (4

,579

) (4

,899

)

Closingboo

kamou

nt

14,276

4,722

1,187

29,904

50,089

Asat31March

2019

Cos

t / V

alua

tion

14,2

76

5

,200

2,9

46

3

4,08

1

56,

503

A

ccum

ulat

ed D

epre

ciat

ion

Nil

(4

78)

(1,7

59)

(4,1

77)

(6,4

14)

Netboo

kamou

nt

14,276

4,722

1,187

29,904

50,089

Prop

erty

, pla

nt a

nd e

quip

men

t inc

lude

s ful

ly d

epre

ciat

ed a

sset

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GroupandCompany

The extent of free hold land and freehold building of property plant and equipment as follows:

Extent Costasat31March2019

Land and two storey building situated in No. 203/209, Land 9.8 perches 14.276 Mn

Union Place, Colombo 2. Building 3,364 sq.ft 5.2 Mn

14. Property, plant and equipment (Contd..)

15. Investmentproperty

(Company/Group)

Freeholdland Freehold

NonCurrentAssetsatfairvalue building Total

Openingbalanceat1April2017 230,200 121,800 352,000

Net gain from fair value adjustment 21,800 2,200 24,000

Closingbalanceat31March2018 252,000 124,000 376,000

Openingbalanceat1April2018 252,000 124,000 376,000

Net gain from fair value adjustment 24,900 (900) 24,000

Closingbalanceat31March2019 276,900 123,100 400,000

(i) Extent of investment property as follows as at 31 March 2019,

Extent

Land called “Philmount Estate, together with the factory Land 259 perches

and administrative buildings, situated at Nungamugoda, Kelaniya. Building 30,351 sq.ft.

(ii) Amounts recognised in profit or loss for investment property; Company/Group

Asat31March

2019 2018

Rental income 5,987 5,932

Direct operating expenses from property that generated rental income Nil 203

Direct operating expenses from property that did not generate rental income Nil 1,634

Fair value gain 24,000 24,000


FairValueof Land

An independent valuation of the land and building was performed by valuers (Arthur Perera & Company) to determine the fair

value of the land as at 31 March 2019. The following table analyses the non-financial assets carried at fair value, by valuation

method. The different levels have been defined as follows:

Land called “Philmount Estate, together with the factory and Administrative Buildings, situated at Nungamugoda, Kelaniya.

Significant Total other observable inputs (LevelII)

Rs‘000 Rs‘000

Land 276,900 276,900

Building 123,100 123,100

Fairvaluemeasurementsat31March2019 400,000 400,000

ValuationtechniquesusedtoderivelevelIIfairvalues

Fair value of land has been derived using combined approach of investment method & contract’s principle or land and building

method. Sales prices of comparable lands in close proximity are adjusted for differences in key attributes such as property size.

The most significant input into this valuation approach is price per square foot.

16. Intangibleassets

Group Company


2019 2018 2019 2018

Yearended31March

Opening net book balance 46 96 31 64

Amortisation (46) (50) (31) (31)

Closingnetbookamount Nil 46 Nil 31

At31March

Cost 201 201 134 134

Accumulated amortisation (201) (155) (134) (103)

Netbookvalue Nil 46 Nil 31

Intangible assets represent the amounts paid for acquisition of new version with license of a accounting system. Estimated

useful lives of the intangible assets is 4 years.

15. Investment property (Contd..)




17. Deferredincometaxes

The analysis of deferred tax assets and deferred tax liabilities is as follows,

Group Company

31March 31March

2019 2018 2019 2018

Deferred tax assets Nil 261 Nil Nil

Deferred tax liability Nil Nil Nil Nil

Netdeferredtaxasset Nil 261 Nil Nil

The gross movement on the deferred income tax asset for the group is as follows.

2019 2018

At 1 April 261 1,413

Credited to the income statement (261) (1,152)

At31March Nil 261

(a) The movement in deferred income tax assets and liabilities during the year for the Group.

Acceleratedtax

Deferredtaxliability depreciation

As at 1 April 2018 Nil

Credited to comprehensive income statement Nil

Asat31March2019 Nil

Deferredtaxassets Taxlosses

As at 1 April 2018 261

Released to comprehensive income statement (261)

Asat31March2019 Nil

(b) Deferred income tax asset of the company

Notes 2019 2018

Deferred tax assets 17 (i) 99,474 89,035

Deferred tax liabilities 17 (ii) (7,509) (1,673)

Net deferred tax assets 91,965 87,362

Deferred tax assets not recognised as unpredictability of future taxable profits (91,965) (87,362)

Netdeferredtaxassets Nil Nil

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against

current tax liabilities and deferred tax assets are recognised only up to the deferred tax liabilities.


(i) Deferredtaxassets

The analysis of each type of deductible temporary difference as at 31 March is as follows:

2019 2018

The balance comprises temporary differences attributable to:

Tax losses 98,123 88,320

Retirement benefit obligation 1,351 714

Totaldeferredtaxassets 99,474 89,034

(ii) Deferredtaxliabilities

The analysis of each type of deductible temporary difference as at 31 March is as follows:

2019 2018

The balance comprises temporary differences attributable to:

Property, plant and equipment 789 1,673

Capital gain - Investment property revaluation 6,720 Nil

Totaldeferredtaxliabilities 7,509 1,673

18. Investmentinjointventure

Group Company


2019 2018 2019 2018

At1April 3,671,054 2,861,105 139,607 139,607

Share of profit net of tax 494,624 555,829 Nil Nil

Share of other comprehensive income - net of tax 875 254,120 Nil Nil

Dividends received from Ceat Kelani Holding (Private) Limited (159,320) Nil Nil Nil

At31March 4,007,233 3,671,054 139,607 139,607

(a) The joint venture listed below has share capital consisting solely of ordinary shares, which is held directly by the Company. Nature of investment in joint venture 2019 and 2018.

Nameof entity Placeof business/ %of Natureof the Measurement countryof incorporation ownership relationship method Interest Ceat Kelani Holding Sri Lanka 50 Note* Equity (Private) Limited

* Investment in joint venture represents the 50% holding in Ceat Kelani Holdings (Private) Limited, a company incorporated in Sri Lanka to acquire shares of Associated Ceat (Private) Limited, Ceat Kelani International Tyres (Private) Limited and Ceat Kelani Radials (Private) Limited.

17. Deferred income taxes (Contd..)



(b) Ceat Kelani Holding (Private) Limited is a private company and there is no quoted market price available for its shares.

(c) Commitment and contingent liabilities in respect of joint venture. There are no commitment and contingent liabilities relating to the group’s interest in the joint venture. Ceat Kelani Holding (Private) Limited has following commitments and contingent liabilities.

i) Contingentliabilities The Company has given Corporate Guarantees on behalf of Associated Ceat (Pvt) Ltd on the bank facilities obtained from Indian Bank for Rs. 80 Mn & Hatton National Bank for Rs.150 Mn as at 31st March 2019. The Company has given Corporate Guarantees on behalf of Ceat Kelani Radials (Pvt) Ltd on the bank facilities obtained from HSBC for Rs. 100 Mn. The Company has given Corporate Guarantees on behalf of Ceat Kelani International Tyres (Pvt) Ltd, on the bank facilities obtained from NDB for Rs. 25 Mn, DFCC Vardhana Bank for Rs. 65 Mn, Indian Overseas Bank for Rs. 278 Mn, Indian Bank for Rs. 150 Mn and Nations Trust Bank for Rs. 230 Mn as at 31st March 2019.

ii) Financialcommitments Associated Ceat (Pvt) Ltd. and Ceat Kelani International Tyres (Pvt) Ltd. Subsidiary Companies of Ceat Kelani Holdings (Pvt) Ltd, have an annual commitment to pay royalty at 1% on sales net of taxes, discounts & incentives to Ceat Ltd India. Ceat Kelani Radials (Pvt) Ltd, Subsidiary Company of Ceat Kelani Holdings (Pvt) Ltd and Asian Tyres (Pvt) Ltd, Subsidiary of Ceat Kelani International Tyres (Pvt) Ltd have an annual commitment to pay royalty at 2% on radial tyres and 1% on Bias Tyres sales net of taxes, discounts and incentives to Ceat Ltd. - India.

iii) Capitalcommitments ‘The approximate capital expenditure contracted by Ceat Kelani International Tyres (Pvt) Ltd, for which no provision is made in the Financial Statements as at 31st March 2019 amounts to Rs. 79,000,955. Summarizedfinancialinformationforjointventure. Set out below are the summarised financial information for Ceat Kelani Holding (Private) Limited, which is accounted for using the equity method.


18. Investment in joint venture (Contd..)


Summarisedstatementof financialposition

Jointventure

Asat31March

2019 2018

Current

Cash and cash equivalents 1,199,314 1,205,495

Other current assets (excluding cash) 4,741,263 3,906,875

Total current assets 5,940,577 5,112,370

Financial liabilities (excluding trade payables) (261,034) (118,191)

Other current liabilities (including trade payables) (2,018,876) (1,482,523)

Total current liabilities (2,279,910) (1,600,714)

Non current assets 5,551,972 4,793,586

Non-current liabilities (1,198,173) (963,135)

Netassets 8,014,466 7,342,107

Summarisedstatementof comprehensiveincome.

Jointventure

Yearended31March

2019 2018

Domestic revenue 8,358,284 8,173,165

Export revenue 2,252,940 2,049,306

Totalrevenue 10,611,224 10,222,471

Cost of sales (7,603,842) (7,248,667)

Distribution / administrative cost (1,901,551) (1,714,104)

Other operating income 76,441 31,994

Finance income 158,979 134,616

Finance expense (51,020) (21,980)

Pre-taxprofitfromcontinuingoperations 1,290,231 1,404,330

Income tax expense (300,985) (292,670)

Post-taxprofitfromcontinuingoperations 989,246 1,111,660

Othercomprehensiveincome

Remeasurement of defined benefit obligations 1,862 13,670

Fair value measurement 227 101

Tax on remeasurement of defined benefit obligation (338) (3,173)

Revaluation surplus Nil 497,642

Othercomprehensiveincomefortheyear-netof tax 1,752 508,240

Totalcomprehensiveincome 990,998 1,619,900




Reconciliationof summarisedfinancialinformation Reconciliation of the summarised financial information presented to the carrying amount of its interest in the joint

venture.

Asat31March

2019 2018

Summarisedfinancialinformation

Opening net assets 1 April 7,342,107 5,722,208

Profit for the year 989,246 1,111,659

Other comprehensive income net of tax 1,752 508,240

Dividend distributed for the year (318,640) Nil

Closingnetassets 8,014,465 7,342,107

Interest in Joint Venture @ 50% 4,007,233 3,671,054

Carryingvalue 4,007,233 3,671,054

19. Investmentinsubsidiary

Company

Asat31March

2019 2018

Investment in subsidiary 10 10

The Company invested in ordinary shares of Executive Cars (Private) Limited [formerly known as KTL Executive Hire

(Private) Limited] on 1 January 2006. Executive Cars (Private) Limited is considered as a wholly owned subsidiary of the

Company.

20. Tradeandotherreceivables

Group Company

31March 31March

2019 2018 2019 2018

Trade receivables

- Related company 396,130 547,809 396,130 547,809

[See (a) below and Note 31 (iii)]

Prepayments 1,546 2,190 1,546 2,190

Receivable from related parties (non trade) 30,615 15,549 30,615 15,549

Other receivables and 15,078 22,554 14,738 22,545

deposits [ See (b) below]

443,369 588,102 443,029 588,093

(a) Trade receivables of the Company consist of receivables from Wheels (Private) Limited, Power Wheels (Private)

Limited Hercules Motor Company Limited and Tyre World (Private) Limited which are related parties.

(b) Other receivables of the Company includes VAT receivable Rs 2,484,296 (2018 - Rs 4,895,777), other advances Rs

37,438,706 (2018 - Rs 17,248,840) and Economic Service Charge receivable Rs. 4,852,017 (2018 - Rs.2,682,694).





21. Cashandcashequivalents

Group Company

31March 31March

2019 2018 2019 2018

Cash at bank and in hand 11,499 44,659 10,767 41,431

Fixed deposits maintain within 3 months 27,939 125,054 27,939 125,054

39,438 169,713 38,706 166,485

Cash and cash equivalents include the following for the purposes of the statement of cash flows.

Cash and bank balances 39,438 169,713 38,706 166,485

Bank overdrafts [Note 23] (72,307) (51,475) (72,307) (51,475)

(32,869) 118,238 (33,601) 115,010

22. Tradeandotherpayables

Group Company

31March 31March

2019 2018 2019 2018

Accrued expenses 11,749 9,727 11,677 9,694

Other payables 220 160 Nil Nil

11,969 9,887 11,677 9,694

Accrued expenses of the Company includes unclaimed dividend payable Rs 7,822,419 (2018 - Rs 7,822,419) and NBT

payable Rs. 274,703 (2018 - Rs 334,757).

23. Borrowings

Group Company

31March 31March

2019 2018 2019 2018

Current

Bank overdrafts [Note 21] 72,307 51,475 72,307 51,475

Bank borrowings 944 1,887 Nil Nil

73,251 53,362 72,307 51,475

Non-current

Bank borrowings Nil 944 Nil Nil

Nil 944 Nil Nil

Totalborrowings 73,251 54,306 72,307 51,475



a) Bank borrowings of the Group are secured as follows:

i) ExecutiveCars(Private)Limited

Lender Rateof Balanceasat Termsof Security Interest 31March2019 repaymentper (Rs‘000) month(Rs‘000)

Commercial Bank AWPLR + 1.5% 944 157 Mortgage has executed

of Ceylon PLC over the vehicles purchased

944

* AWPLR - Average Weighted Prime Lending Rate

The bank overdrafts of the Company are secured by investment properties and bear interest at AWPLR+1.5%.

24. Retirementbenefitobligations

The amounts recognised in the balance sheet are determined as follows:

Group Company

31March 31March

2019 2018 2019 2018

Present value of unfunded obligation 4,826 4,344 4,826 4,344

LiabilityintheStatementof FinancialPosition 4,826 4,344 4,826 4,344

The movement in the defined benefit obligation over the year is as follows:

Group Company

31March 31March

2019 2018 2019 2018

At 1 April 4,344 1,793 4344 1,793

Current service costs 564 535 564 535

Interest costs 460 315 460 315

Actuarial (gain) / loss recognised

in other comprehensive income (293) 545 (293) 545

Under provision Nil 1,156 Nil 1,156

Benefit paid during the year (249) Nil (249) Nil

At31March 4,826 4,344 4,826 4,344

23 Borrowings (Contd..)



The amounts recognised in the income statement are as follows:

Group Company

31March 31March

2019 2018 2019 2018

Current service cost 564 535 564 535

Interest cost 460 315 460 315

Under provision Nil 454 Nil 454

Costincludedinthestaff costs[Note9(a)] 1,024 1,304 1,024 1,304

Actuarial (gain) / loss recognised

in other comprehensive income (293) 545 (293) 545

Under provision Nil 702 Nil 702

(293) 1,247 (293) 1,247

Totalcost 731 2,551 731 2,551

The principal actuarial assumptions used were as follows:

Group Company

31March 31March

2019 2018 2019 2018

Discount rate 11.26% 10% 11.26% 11%

Future salary increases 10% 10% 10% 10%

Retiring age 70 years 63 - 70 years 70 years 63 - 70 years

The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is as follows:

Impactformchangeinassumption

ChangeinIncreaseinassumption(Rs)Decreaseinassumption(Rs)

assumption Group Company Group Company

Discount rate per annum 1% (538) (538) 625 625

Annual salary increment rate 1% 626 626 (548) (548)

25. Commitmentsandcontingentliabilities. There were no any commitments and contingent liabilities relating to the Company as at 31 March 2019. The commitments and contingent liabilities in relation to the group’s interest in the joint venture is disclosed in Note18.

26. Statedcapital Company Numberof Ordinary ordinary shares shares Rs Atthebeginningandendof theyear 80,400 402,000

24. Retirementbenefitobligations(Contd..)



27. Revaluationreserves

Group Company

31March 31March

2019 2018 2019 2018

Revaluation reserves of the company 971 971 971 971

Revaluation reserves of Joint venture 486,636 486,636 Nil Nil

Atendof year 487,607 487,607 971 971

Group

Revaluation increments are recognised in other comprehensive income and accumulated as a separate component of equity

in the property, plant and equipment revaluation reserve.

28. Dividendpershare

Group Company

31March 31March

2019 2018 2019 2018

Firstinterim Dividend declared to shareholders 201,000 201,000 201,000 201,000 Number of shares in issue (thousands) 80,400 80,400 80,400 80,400 Dividends per share - (Rs) 2.50 2.50 2.50 2.50

Secondinterim Dividend declared to shareholders 201,000 Nil 201,000 Nil Number of shares in issue (thousands) 80,400 Nil 80,400 Nil Dividends per share - (Rs) 2.50 Nil 2.50 Nil

Totaldividenddeclaredtoshareholders 402,000 201,000 402,000 201,000

Dividend pay out ratio 83% 35% 270% 889%

The Company pays dividends to its shareholders out of the dividends received from its joint venture, Ceat Kelani Holdings.

During the financial year 2018/19 the Company has paid dividends amounting to Rs 402,000,000 out of the dividends

recevied from its joint venture.



29. Cashusedinoperations

Reconciliation of profit before tax to cash generated from / (used in) operations:

Group Company

31March 31March

2019 2018 2019 2018

Profit before tax 484,463 583,393 148,616 28,441 Adjustmentsfor: Depreciation on property plant and equipment [Note 14] 7463 6,228 4,899 2,732 Amortisation of intangible assets [Note 16] 46 50 31 33(Profit) / loss on disposal of property, plant and equipment (3,659) Nil (3,659) Nil Gain from fair value adjustment on investment property [Note15] (24,000) (24,000) (24,000) (24,000)Net interest expense / (income) [Note 10] (8,808) (27,014) (9,069) (27,518)Share of profit from joint venture [Note 18] (494,624) (555,829) Nil Nil Dividend income Nil Nil (159,320) Nil Changes in working capital : - decrease / (increase) trade and other receivables 144,733 (200,739) 145,064 (200,731) - increase / (decrease) payables 2,082 (49) 1,983 (71)Defined benefit obligations [Note 24] 1,024 1,304 1,024 1,304 Cashusedinoperations 108,720 (216,655) 105,569 (219,810)

30. Relatedpartytransactions Details of significant related party disclosures are as follows:

Relationship&Holding% Holding% Nameof thecompany Relationshiptype 2019 2018

Silverstock Limited Immediate parent 45.91% 44.99%

Ceat Kelani Holdings (Private) Limited Joint venture 50% 50%

Executive Cars (Private) Limited Fully owned subsidiary 100% 100%

* Silverstock Limited ownership % of KTPLC has been increased from 44.99% to 45.91%% due to purchase of 745,000 ordinary shares of the company.

The directors of the company are directors of following companies with which the company had transactions in the ordinary course of business during the year.



30. Related party transactions (Contd..)

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les

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(a) Transactionandbalanceswithrelatedparties The following transactions were carried out with the related companies during the year:

Group Company Relationship 31March 31March

2019 2018 2019 2018(i) Saleof goodsandservices

Wheels (Private) Limited Affiliate 186,607 294,167 183,054 294,167 Ceat Kelani International Affiliate Tyres (Private) Limited 1,189 1,133 1,189 1,133 Hercules Motor Company Affiliate 73,993 103,170 73,993 103,170 Smart Wheels (Private) Limited Affiliate 459 Nil Nil Nil Power Wheels (Private) Limited Affiliate 175,811 115,926 175,781 115,926 Tyre World (Private) Limited Affiliate Nil 30,372 Nil 30,372 437,519 544,768 434,017 544,768

Outstanding balance arising from transactions with related companies.

Group Company 31March 31March

2019 2018 2019 2018(ii) Receivablefromrelatedparties

Wheels (Private) Limited 37 53 37 53 Silver Stock Limited 578 496 578 496 Directors 30,000 15,000 30,000 15,000 30,615 15,549 30,615 15,549

(iii) Tradereceivablefromrelatedparties Power Wheels (Private) Limited 149,634 79,804 149,634 79,804

Wheels (Private) Limited 174,237 304,547 174,237 304,547 Hercules Motor Company 72,259 131,540 72,259 131,540 Tyres Express (Private) Limited Nil 31,918 Nil 31,918 396,130 547,809 396,130 547,809

(b) Keymanagementcompensation Key management includes directors (executive and non-executive). The compensation paid or payable to key management for employee services is shown below:

Group Company 31March 31March

2019 2018 2019 2018 Salaries and other short term employee benefits 16,664 16,139 16,664 16,139 Management related expense - Directors 36,050 30,306 36,050 30,306 52,714 46,445 52,714 46,445

31. Eventsoccurredafterthereportingdate No events have occurred since the reporting date which would require adjustments to, or disclosure in the financial statements.


30. Related party transactions (Contd..)


RELATED PARTY TRANSACTIONS (Receivables) AS AT 31-03-2019

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1. STOCKExCHANGELISTING The issued Ordinery shares of Kelani Tyres PLC are listed with Colombo Stock Exchange.

2. SHAREHOLDINGASAT31STMARCH2019

2018/2019 2017/2018

No.of Holders No.of Shares % No.of Holders No.of Shares %

FROM 1 1,000 6,467 1,857,206 2.31 6,440 1,853,885 2.30

1,001 10,000 1,620 4,090,158 5.08 1,627 4,154,548 5.17

10,001 100,000 131 3,777,378 4.70 127 3,825,953 4.76

100,001 1,000,000 34 8,523,384 10.61 36 8,447,633 10.51

OVER 1,000,000 9 62,151,874 77.30 9 62,117,981 77.26

8,261 80,400,000 100.00 8,239 80,400,000 100.00 3. CATEGORIESOFSHAREHOLDERSASAT31STMARCH2019

2018/2019 2017/2018

Noof Holders No.of Shares % Noof Holders No.of Shares %

Local Individuals 7,999 25,221,426 31.37 7,971 23,708,398 29.49

Local Institutions 198 53,393,475 66.41 203 54,204,204 67.42

Foreign Individuals 61 574,379 0.71 62 551,678 0.68

Foreign Institutions 3 1,210,720 1.51 3 1,935,720 2.41

8,261 80,400,000 100 8,239 80,400,000 100

4. PUBLICSHAREHOLDINGASAT31STMARCH2019-53.42%comprisingof 8253shareholders(asat31.03.2018-54.35%-8232shareholders)

5. FLOATADJUSTEDMARKETCAPITALIZATION-Rs.1,327,202,493/30 The Company is in compliance with Option 5 of Section 7.13.1 (a) of the Listing Rules of the Colombo Stock Exchange pertaining

to minimum Public Holding.

6. SHAREVALUATION 2018/2019 (Rs.) 2017/2018 (Rs.)

Market value of Ordinery Shares 31st Mar 2019 30.90 31st Mar 2018 49.20

Highest value recorded 05th Apr. 2018 48.90 28th Apr. 2017 62.00

Lowest value recorded 11th Mar. 2019 30.00 27th Dec. 2017 42.00

Information to Shareholders and Investors


Forty Largest Shareholders as at 31 March 2019

2018/2019 2017/2018

Noof Shares %Holding Noof Shares %Holding

Silverstock Limited 36,915,523 45.915 36,170,523 44.988

Bank of Ceylon A/C Ceybank Unit Trust 8,037,911 9.997 8,037,911 9.997

Mr. N Ganarajah 6,441,465 8.012 6,441,465 8.012

Mr. M M Udeshi & Mr. H. M. Udeshi 4,072,177 5.065 4,072,177 5.065

Bank of Ceylon A/C Ceybank Century Growth Fund 1,650,706 2.053 1,636,813 2.036

Employees Provident Fund 1,553,800 1.933 1,553,800 1.933

Mr. N Pusparaj and Mrs. K. Pusparaj 1,255,279 1.561 1,255,279 1.561

Lombard Odier Darier Hentsch and CIE 1,208,800 1.503 1,933,800 2.405

Bank of Ceylon No 01 Account 1,016,213 1.264 1,016,213 1.264

Assetline Leasing Company Ltd / Don and Don Holdings Pvt Ltd 655,455 0.815 Nil Nil

Mrs. V. Saraswathi 601,907 0.749 834 0.001

Mr. S. Vasudevan 537,630 0.669 103,757 0.129

Mr. R. C. D. DE Silva 525,000 0.653 525,000 0.653

Mr. A. Tirathdas 441,227 0.549 401,653 0.500

Aruna Enterprises (Pvt) Limited 437,600 0.544 437,600 0.544

Hatton National Bank PLC / Arunasalam Sithampalam 386,000 0.480 386,000 0.480

Mr. B Pobran 350,240 0.436 350,240 0.436

Mr. G Dangampola & Mrs. N P Dangampola 341,507 0.425 341,507 0.425

Ransri Enterprises Private Limited 310,000 0.386 310,000 0.386

Mrs. N. Muljie 291,694 0.363 291,694 0.363

Mr. Z G Carimjee 234,533 0.292 234,533 0.292

Mrs. V. R. Jayasinghe 222,157 0.276 222,157 0.276

Mr. R. A. Dadlani 200,000 0.249 177,000 0.220

Mrs. S. M. Fernando 200,000 0.249 1,920 0.002

Mr. J. M. S. Brito 193,885 0.241 50,000 0.062

Asha Financial Services Limited / Mr. C. N. Pakianathan 190,200 0.237 180,632 0.225

People’s Leasing & Finance PLC/Mr. M. Z. M. Wafik 188,403 0.234 188,403 0.234

Sri Lanka Insurance Corporation Ltd - Life Fund 181,689 0.226 181,689 0.226

Sithlanka (Private) Limited 172,000 0.214 172,000 0.214

Mr. T. L. M. Imtiaz 170,795 0.212 176,396 0.219

Ms. S Durga 167,400 0.208 167,400 0.208

Mr. A. Sivapalan 150,000 0.187 150,000 0.187

People’s Leasing & Finance PLC/HI Line Trading (Pvt) Ltd 150,000 0.187 199,018 0.248

Kalday (Pvt) Limited 149,760 0.186 149,760 0.186

Mr R. Gautam 142,500 0.177 121,500 0.151

The Ceylon Chamber of Commerce A/C No. 2 140,999 0.175 140,999 0.175

Mr S. Abishek 138,000 0.172 7,500 0.009

Mr. M M Udeshi & Mrs. A. A. Merchant 125,000 0.155 Nil Nil

Mrs. Z. M. Adamally 117,027 0.146 117,027 0.146

Mr. S. Ramesh 105,000 0.131 105,000 0.131

Mr. P. Rathnayaka 105,000 0.131 105,000 0.131


Performance Highlights

GROUP COMPANY (InvestmentinJVAccountedforon

EquityMethod

2018/19 2017/18 2016/17 2015/16 2014/15 2018/19 2017/18 2016/17 2015/16 2014/15 (Restated)

(amountsinSriLankaRupeesthousands)

GrossSales(afterdiscounts)

Local 495,907 623,192 528,652 392,929 547,289 491,534 619,136 523,067 385,727 538,711

TradingProfitability

Net Sales 426,874 536,452 461,680 351,076 484,798 423,147 532,996 456,846 344,027 477,302

Cost of Sales (390,706) (488,523) (418,368) (317,557) (441,942) (388,142) (485,027) (418,368) (317,557) (441,942)

Gross Profit 36,168 47,929 43,312 33,519 42,856 35,005 47,969 38,478 26,470 35,560

OtherOperatingIncome

Rent Income 5,987 5,932 5,881 3,430 3,095 5,987 5,932 5,881 3,430 3,095

Dividend Income - - - - - 159,320 - 821,900 251,000 202,500

Others 5,231 1,261 1,987 3,057 1,740 5,206 1,249 1,167 917 591

Net gain from fair value adjustment

on Investment Property 24,000 24,000 36,250 15,276 49,250 24,000 24,000 36,250 15,276 49,250

Expenditure

Distribution cost - - - (13,901) (17,689) - - - (13,901) (17,689)

Administrative Expenditure (90,355) (78,571) (73,144) (64,779) (57,400) (89,971) (78,227) (68,465) (58,371) (50,950)

Other Operating Expenses - - (8,200) - - - - (8,200) - -

Finance (Cost)/Income 8,808 27,014 (597) (2,397) (4,991) 9,069 27,518 243 (1,266) (3,531)

Share of results of joint venture 494,624 555,829 644,677 805,036 750,195 - - - - -

NetProfit(aftertax) 484,202 576,380 649,193 777,994 768,570 148,616 22,617 826,481 222,924 218,401

FinancialPosition(Rs.’000)

Market value per share as at

31 March Rs. 30.90 49.20 55.00 64.00 78.00 30.90 49.20 55.00 64.00 78.00


Financial Review of the Group

2018/2019 2017/2018 2016/2017 2015/2016 2014/2015

Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000

Sales 426,874 536,452 461,680 351,076 484,798

GrossProfit 36,168 47,929 43,312 33,519 42,856

OperatingProfitBeforeTax&interest 475,655 556,380 650,763 781,638 772,047

(with share of results of joint venture)

ProfitAfterTaxation 484,202 576,380 649,193 777,994 768,570

ShareCapital&Reserves

Stated Capital 402,000 402,000 402,000 402,000 402,000

Revaluation & other reserve 487,607 487,607 238,786 238,786 237,815

Accumulated Profit/ (losses) 3,961,449 3,878,079 3,498,647 3,033,892 2,372,410

Shareholders’Funds 4,851,056 4,767,686 4,139,433 3,674,678 3,012,225

Assets&(Liabilities)

Current Assets 483,166 758,175 952,691 323,111 361,682

Current Liabilities (85,220) (63,249) (48,157) (48,351) (178,259)

Net Current Assets 397,946 694,926 904,534 274,760 183,423

NonCurrentAssets 4,457,936 4,078,048 3,239,523 3,407,014 2,838,694

Non Current Liabilities (4,826) (5,288) (4,624) (7,096) (9,892)

4,851,056 4,767,686 4,139,433 3,674,678 3,012,225

RatioAnalysis

Gross Profit Margine 8% 9% 9% 10% 9%

Earnings per Share(Rs) 6.02 7.17 8.07 9.68 9.56

Net Assets per Share(Rs) 60.34 59.30 51.49 45.70 37.47

Assets Uitilization -(Times) 0.10 0.13 0.14 0.10 0.17

Current Ratio (Times) 5.67 11.99 19.78 6.68 2.03

Bank Borrowings as a % of Total Assets 0% 0% 0% 0% 5%

Gearing Ratio 0.01 0 0 0 0.2


Consolidation Analysis

Statementof ComprehensiveIncome

Company EC Group TwelveMonths TwelveMonths TwelveMonths ended ended ended 31st Mar. 2019 31st Mar. 2019 31st Mar. 2019

Sales 423,146,621 3,726,750 426,873,371

Cost of Sales (388,142,350) (2,564,198) (390,706,548)

Gross Profit 35,004,271 1,162,552 36,166,823

Other Operating Income/(expense) 170,512,638 23,605 11,216,278

Net gain from fair value adjustment 24,000,000 Nil 24,000,000

on Investment Property

Administrative Expenses (85,040,373) (384,093) (85,424,466)

Depreciation (4,929,469) Nil (4,929,469)

OperatingProfit 139,546,067 802,064 (18,970,834)

Finance Income/(Costs) 9,069,290 (260,919) 8,808,371

Shareof resultsof jointventure Nill Nill 494,623,412

Profitbeforetax 148,616,357 541,145 484,460,949

Income Tax expense Nil (260,989) (260,989)

ProfitfromOrdineryactivities 148,616,357 280,156 484,199,960

OtherComprehensiveIncome

Remeasurement of defined benefit obligation 293,822 Nil 293,822

Share of other comprehensive income from joint venture Nil Nil 875,048

TotalComprehensiveIncomefortheyear 148,910,179 280,156 485,368,830

Basic earnings per share - Rs. 1.85 280.16 6.02


Statementof financialposition

Company EC Group TwelveMonths TwelveMonths TwelveMonths ended ended ended 31st Mar. 2019 31st Mar. 2019 31st Mar. 2019 ASSETS Non-CurrentAssets

Property, Plant & Equipment 50,087,933 3,179,566 50,702,411

Investment Property 400,000,000 Nil 400,000,000

Investment in Joint Venture 139,606,988 Nil 4,007,233,248

Investment in Subsidiary 10,000 Nil Nil

589,704,921 3,179,566 4,457,935,659

CurrentAssets

Trade and Other Receivables 443,029,885 340,291 443,370,176

Income Tax Receivables Nil 358,842 358,843

Cash and Cash Equivalent 38,705,141 732,144 39,437,285

481,735,026 1,431,277 483,166,304

TotalAssets 1,071,439,947 4,610,843 4,941,101,963


CapitalandReserves

Stated Capital 402,000,000 10,000 402,000,000

Revaluation and Other Reserves 970,825 Nil 487,606,727

Retained Earnings/(Accumulated Losses) 579,659,664 3,197,222 3,961,447,835

982,630,489 3,207,222 4,851,054,562

Non-CurrentLiabilities

Defined Benefit Obligations 4,825,677 Nil 4,825,677

4,825,677 Nil 4,825,677

CurrentLiabilities

Trade and Other Payables 11,677,370 460,000 11,971,691

Borrowings Nil 943,623 943,623

Bank Overdraft 72,306,411 Nil 72,306,411

83,983,781 1,403,623 85,221,725

TotalLiabilities 88,809,458 1,403,623 90,047,401

TotalEquityandLiabilities 1,071,439,947 4,610,843 4,941,101,963

Net Asset value per Share - Rs. 12.22 3,207.22 60.34

Consolidation Analysis


To Employees as remunaration

To providers of funds as interest

To state as taxes

Retained in the business

60%

27%

2%

11%

Statement of Value Added

2018/2019 % 2017/2018 %

Turnover 491,534 193.63% 619,136 421%

Other Income 207,672 81.81% 63,183 43%

Cost of Material & Services Purchased (445,360) -175.44% (535,396) -364%

253,846 100% 146,923 100%

Distributedasfollows

To Employess as remuneration 27,823 10.96% 25,093 17.08%

To providers of funds as interest 4,090 1.61% 4,484 3.05%

To State as taxes 68,387 26.94% 91,964 62.59%

To Transactions with Owners of the Group 402,000 158.36% 201,000 136.81%

Retainedinthebusiness

Depriciation 4,930 1.94% 2,765 1.88%

Reserves 148,616 58.55% 22,617 15.39%

Dividend paid (out of dividends received) (402,000) -158.36% (201,000) -136.81%

253,846 100% 146,923 100%


JOINT VENTURE

PERFORMANCE

HIGHLIGHTS


From left to right: Mr. Rohan Tilak Fernando – Managing Director Kelani Tyres PLC and Executive Director CEAT

Sri Lanka Group, Mr. Chanaka De Silva – Chairman Kelani Tyres PLC and CEAT Sri Lanka Group and Mr. Ravi

Dadlani –MD/CEO CEAT Sri Lanka.

Launch of Noise Vibration Handling (NVH)Improved Radial Tyres



2018/19 2017/18 2016/17 2015/16 2014/15

Production (MT) 16,074 17,122 15,200 15,211 15,440

Total Sales (MT) 16,481 16,563 15,575 15,488 15,924

Domestic Sales 7,700,342 7,587,732 7,692,735 6,763,707 7,016,628

Export Sales 2,252,940 2,049,307 1,473,528 2,398,209 2,415,996

Total Sales 9,953,282 9,637,039 9,166,264 9,161,916 9,432,623

Cost of Sales (7,603,842) (7,248,667) (6,072,683) (5,689,023) (6,254,402)

Gross Profit 2,349,440 2,388,371 3,093,581 3,472,893 3,178,222

Distribution/Administrative Cost (1,243,608) (1,128,672) (1,470,360) (1,464,723) (1,243,460)

Finance Income / Cost (net) 107,959 112,636 196,354 84,002 4,031

Other Operating Income 76,441 31,993 41,472 18,617 26,511

PBT 1,290,232 1,404,329 1,861,046 2,110,790 1,965,303

Taxation (300,985) (292,670) (571,692) (500,718) (464,913)

PAT 989,247 1,111,658 1,289,355 1,610,072 1,500,391

PBDT 1,643,764 1,721,653 2,150,501 2,379,703 2,174,235

Summarised Comprehensive Income StatementCeat Kelani Holdings (Pvt) Ltd - Consolidated



31-03-2019 31-03-2018 31-03-2017 31-03-2016 31-03-2015

Non-Current Assets 5,551,972 4,793,586 3,977,458 3,733,475 3,229,753

Current Assets 5,940,577 5,170,803 4,228,784 4,201,023 3,735,631

TotalAssets 11,492,549 9,964,389 8,206,242 7,934,498 6,965,384

Capital and Reserves 8,014,466 7,342,110 5,722,212 6,045,745 4,930,490

Non-Current Liabilities 1,198,173 963,135 720,890 605,846 514,087

Current Liabilities 2,279,910 1,659,144 1,763,140 1,282,907 1,520,807

TotalEquity&Liabilities 11,492,549 9,964,389 8,206,242 7,934,498 6,965,384

Summarised Financial PositionCeat Kelani Holdings (Pvt) Ltd - Consolidated


Performance Highlights - Joint Venture

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Notice of Meeting

NOTICE IS HEREBY GIVEN that the Twenty Fifth (25th) Annual General Meeting of Kelani Tyres PLC will be held at the Capri Club, No. 62, Dharmapala Mawatha, Colombo 3, on Wednesday 28th, August 2019 at 10.00 am for the following purposes;

1. To receive and consider the Annual Report of the Board of Directors on the affairs of the Company and the Statement of Accounts for the year ended 31st March 2019 and the Report of the Auditors thereon.

2. To pass the Ordinary Resolution set out below to re-appoint Mr R C D De Silva who is 77 years of age, in pursuance of the provisions of the Companies Act, No.7 of 2007, as a Director of the Company:

“IT IS HEREBY RESOLVED THAT the age limit stipulated in Section 210 of the Companies Act, No.07 of 2007 shall not apply to Mr R C D De Silva who is 77 years of age and that he be and is hereby re-appointed a Director of the Company in terms of Section 211 of the Companies Act, No.7 of 2007.”

3. To re-elect Ms. S. S. Jayatilaka who retires by rotation in terms of Articles 84 and 85 of the Articles of Association, as a Director of the Company.

4. To re-appoint Messrs. PricewaterhouseCoopers, Chartered Accountants, as the Auditors of the Company and to authorize the Directors to determine their remuneration.

5. To authorize the Directors to determine donations for the year ending 31st March 2020 and up to the date of the next Annual General Meeting.

By Order of the BoardKELANI TYRES PLC

PWCORPORATESECRETARIAL(PVT)LTDDirectors / Secretaries

22nd July 2019Colombo

Notes: 1. A shareholder entitled to attend and vote at the above Meeting is entitled to appoint a Proxy to attend, speak and vote on behalf of him/her.

2. A Proxy need not be a shareholder of the Company. 3. A Form of Proxy is enclosed for this purpose. 4. The completed Form of Proxy must be deposited at the Registered Office of the Company, P O Box 8, Nungamugoda,

Kelaniya by 10.00 am on 26th August 2019.


Form of Proxy

I/We*…….………………….….................................................(holder of NIC No………………………..) of…………………

………………………………………………………………………………………………………………………………………

being a shareholder/s* of KELANI TYRES PLC hereby appoint …………………….......………………………………………

…………..………………………………………of……………..…………………………………………………………………

….....…………or failing him*;

Mr Ruwanpura Chanaka Dharmajith De Silva of Colombo or failing him*Mr Rohan Thilak Fernando of Colombo or failing him*Mr Tuduwage Bevan Perera of Colombo or failing him*Mr Don Soshan Kamantha Amarasekera of Colombo or failing him*Ms Samalee Saroja Jayatilaka of Colombo or failing her*Mr Eraj Triantha Fernando of Colombo or failing him*Mr Rajinda Priyanjit Weerasooriya of Colombo*

as my/our *proxy to represent me/us* to speak on my /our behalf and to vote as indicated hereunder for me/us* on my/our* behalf at the Twenty Fifth (25th) Annual General Meeting of the Company to be held at Capri Club No. 62, Dharmapala Mawatha, Colombo 3, on Wednesday 28th, August 2019 at 10.00 am and at any adjournment thereof and at every poll which may be taken in consequence thereof. For Against

1. To pass the Ordinary Resolution set out under item 2 of the Notice of Meeting to re-appoint Mr R C D De Silva who is 77 years of age, as a Director of the Company.

2. To re-elect Ms S S Jayatilaka, who retires by rotation in terms of Articles 84 and 85 of the Articles of Association, as a Director.

3. To re-appoint Messrs. PricewaterhouseCoopers, Chartered Accountants, as the Auditors of the Company and to authorize the Directors to determine their remuneration.

4. To authorize the Directors to determine donations for the year ending 31st March 2020 and up to the date of the next Annual General Meeting.

In witness my/our* hand this .................. day of .......................... Two Thousand and Nineteen.

................................................Signature of Shareholder/s

*Please delete what is inapplicable.

Note: Instructions as to completion appear on the reverse hereof.


Instructions as to Completion

1. Kindly perfect the Form of Proxy by filling in legibly your Full Name, Address and the National Identity Card Number

and by signing in the space provided and filing in the date of signature.

2. The Proxy shall –

(a) In the case of an individual be signed by the shareholder or by his attorney, and if signed by an attorney, a notarially

certified copy of the Power of Attorney should be attached to the completed Proxy if it has not already been registered

with the Company.

(b) In the case of a company or corporate / statutory body either be under its Common Seal or signed by its Attorney or

by an Officer on behalf of the Company or corporate / statutory body in accordance with its Articles of Association

or the Constitution or the Statute. (as applicable)

3. If you wish to appoint a person other than the Chairman or a Director of the Company as your Proxy, please insert the

relevant details in the space provided.

4. Please indicate with an ‘X’ in the space provided how your Proxy is to vote on the resolution. If no indication is given, the

Proxy in his discretion will vote as he thinks fit.

5. The completed Form of Proxy should be deposited at the Registered Office of the Company, P.O. Box 8, Nungamugoda,

Kelaniya, by 10.00 a.m. on 26th August 2019.


Please bring this Attendance Slip and your National Identity Card when attending the Twenty Fifth (25th) Annual General

Meeting to be held at Capri Club No. 62, Dharmapala Mawatha, Colombo 3, on Wednesday 28th, August 2019 at 10.00 am.

Signature of Shareholder .....................................................................................................

Shareholder’s Full Name .....................................................................................................

Shareholder’s NIC Number .....................................................................................................

Number of Shares .....................................................................................................

Signature of Proxy Holder .....................................................................................................

(If applicable)

Proxy Holder’s Full Name .....................................................................................................

Proxy Holder’s NIC Number .....................................................................................................

Attendance Slip

contents · 2019-08-02 · mr. ranjitha s. jayasekera - general manager mr. prasanna lenaduwa -...

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