Jat holdings (pvt) ltd annual report 2014-15 lowres (2)

A brave new world

JAT Holdings (Pvt) Ltd Annual Report 2014 /15

JAT Holdings (Pvt) LtdNo: 351, Pannipitiya Road,Thalawathugoda,Sri Lanka.

JAT Holdings (Pvt) Ltd

Annual Report 2014 /15

Contents

Our MissionTo be the Preferred Supplier in the South Asian Region for Leading Brands in the Furnishing and Finishing Industries.

Our Vision 2015• To be the preferred customer of leading suppliers in the industry.

• Achieve a group turnover of Rs. 5 billion by 2015.

• Achieve a net profit (after tax) of 15% of turnover.

• Establish distributors in new markets and convert existing intermediaries to form joint ventures with the Company (Distributors’ 5/JV3).

• Be among the top 20 “Employers of Choice” in Sri Lanka.

• Be the principal brand of choice in the coating industry.

• Be renowned as the “best source of information” in the coating industry.

• Certify 10,000 professionals in the coating industry.

Our ValuesOur valued Employees at JAT are required to encompass four essential values in order to achieve our Mission and Vision:• To possess in-depth knowledge of the entire business.

• Complete and augment Customer satisfaction.

• Attain and achieve leadership at all levels.

• Spearhead continuous improvement and innovation.

Performance at a Glance 02 About Us 06 Our Brands 08 Chairman’s Message 12 Managing Director’s Message 14Board of Directors 16 Executive Directors 18 Senior Management 20 Operational Review 24 Awards 34 Financial Review 36Corporate Social Responsibility 38 Our People 39 Corporate Governance 42 Report of the Audit Committee 45Report of the Remuneration Committee 46 Statement of Directors Responsibilities 47 Annual Report of the Board of Directors 48

Financial ReportsIndependent Auditors' Report 53 Statement of Profit or Loss and other Comprehensive Income 54 Statement of Financial Position 55Statement of Changes in Equity 56 Statement of Cash Flow 57 Notes to the Financial Statements 59 Shareholder Information 985 Years Summary 99 Our Branch Network 100 Notice of Meeting 101 Notes 102 Form of Proxy 103 Corporate Information IBC

Corporate Information

Registered OfficeJAT Holdings (Pvt) Ltd.,No: 351, Pannipitiya Road,Thalawathugoda, Sri Lanka.Phone: +94 11 – 4407700Fax: +94 11 – 2773793Email: [email protected] Site: www.jatholdings.com

Date of Incorporation1st July 1993

Board of DirectorsDr. S. Selliah - ChairmanMr. Aelian Gunawardene - Managing DirectorMr. Jehan Amaratunga - Independent DirectorMr. Indika Chandrasekera - Director OperationsMr. S. Sivasubramaniam - Director FinanceMr. Lakmal Perera - Director Commercial

Audit CommitteeMr. Jehan Amaratunga - ChairmanDr. S. Selliah

Remuneration CommitteeDr. S. Selliah - ChairmanMr. Jehan Amaratunga

BankersCommercial Bank PLCThe Hongkong and Shanghai Banking Corporation LtdHatton National Bank PLCNational Development Bank PLC

AuditorsErnst & YoungChartered AccountantsNo 622-B,201, De Sarams Place,Colombo 10.

SecretariesRNH Holdings (Pvt) Ltd.Kotte Road,Kotte.

Produced by Copyline (Pvt) Ltd Photography by Prishan Pandithage Printed by Gunaratne Offset Ltd


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JAT Holdings (Pvt) Ltd • A brave new world

In a competitive world which is relentlessly fast paced and espoused with innovative advancements and progressiveness JAT Holdings stands at the zenith of the furnishing and finishing sector. Since our inception in 1993 JAT Holdings has built unequivocal brand equity, chiseling a reputation as a dynamic, eclectic, service and customer oriented corporate venture that augers unparalleled quality interlaced with pristine innovation.

Brands Finance Lanka further augmented the credibility of our portfolio by crowning JAT as one of the “Top 10 Strongest Conglomerate Brands”. The year under financial review has been a spectacular one with our aggressive disposition to acquire excellence through passion and perfection, mixed with our workforce’s unrelenting spirit and our steadfast vision to always excel, persevere and innovate.

It is apt to deduce that JAT spearheads the furnishing and finishing industry as a pivotal force synonymous with chic grandeur and eponymous quality.

It’s truly a brave new frontier. A brave new world.

A brave new world

Annual Report 2014 /15JAT Holdings (Pvt) Ltd • A brave new world

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Performance at a Glance

Year Ended 31st March 2015 2014 /2015 2013 /2014 Change Rs.'000 Rs.'000 %

Operating ResultsRevenue Local Turnover 2,694,100,951 2,404,395,454 12 Export turnover 852,064,164 588,221,878 45Gross Profit 1,280,756,588 986,202,300 30Net Finance Cost (30,818,974) (36,489,142) (16)Profit Before Tax 639,905,861 445,120,312 44Profit for the Year 541,632,242 390,897,961 39

Financial PositionNon Current Assets 608,647,991 468,784,282 30Current Assets 2,478,369,884 2,106,372,795 18Total Assets 3,087,017,875 2,575,157,077 20Total Equity 1,829,679,270 1,489,362,113 23Non Current Liabilities 36,403,725 33,088,183 10Current Liabilities 1,220,934,880 1,052,706,781 16Total Equity & Liabilities 3,087,017,875 2,575,157,077 20

Financial IndicatorsReturn on Equity (%) 30 26 13Return on Total Assets (%) 18 15 16Gross Profit Ratio (%) 36 33 10Net Profit Before Tax Ratio (%) 18 15 21Current Ratio (Times) 2.03 2.00 1Liquidity Ratio (Times) 1.44 1.23 17Gearing (%) 0.48 1.0 (52)


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38.56% Net Profit Growth

29.60%Return on Average Equity

19.88% Growth of Assets

18.50% Growth of Revenue

Revenue

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Profit After Tax

11 12 13 14 150

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Assets

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About Us


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JAT Holdings (Pvt) Ltd., since its inception in 1993 embodied the credo of facilitating total timber solutions to a large and eclectic clientele – be it corporate or individual – to always deliver immaculately while getting the right finish first.

JAT ventured into the corporate world with the primary objective of providing state of the art, innovative and cutting edge solutions to uplift the standards of the furniture and finishing industry. We grasped at our very beginning how important an impeccable finish really is to compliment the end result.

Consequent to successfully establishing ourselves in the timber coating market as a pristine and pivotal force to be reckoned with, the Company expanded its product offering to include a more comprehensive range of products to satisfy the requirements and needs of a diverse and expanding Clientele Islandwide and overseas.

JAT has striven perpetually to offer a multifarious and intricately varied product catalogue catering to a clientele with requirements ranging from a wider spectrum of surfaces to a plethora of construction needs.

Our current Product Portfolio includes Decorative Domestic and Industrial Emulsion, Exterior Wall and Enamel Paints, Maintainers, Putties and Plasters, Mineral Fiber or Steel Ceilings, Timber Flooring and Decking, Office Seating and Desking, Carpeting, Abrasives and Paint Brushes.

As our endeavor ensues and we expand globally - signing agreements with renowned corporate entities in the region - it is a tenet we hold dear with incomprehensible esteem to etch a success story that will shape into a true and bountiful legacy. JAT has successfully ventured beyond borders, shattering paradigms and defying convention while always evolving and spearheading innovation with epic grandeur.

It truly is a frontier of fresh challenges and remarkable goals, more importantly it is a Brave New World that JAT is proud of, standing at the zenith of the furniture and finishing sector as unrivalled connoisseurs.

JAT head office


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Our Brands

Sayerlack is the flagship brand distributed by JAT. Initiated in 1954, Sayerlack, based in Italy has consistently provided the most innovative and highest quality wood finishers to the industry. Commitment to research and development of new technologies has led to the brand being recognised as the largest producer of wood coatings in the world.

Sayerlack is the pioneer in water based coatings and now offers a wider range of products including polyurethane and nitro cellular lacquers with scratch, heat and chemical resistance properties. Sayerlack is represented in 83 countries as the global leader of the segment and we at JAT is the second largest distributor in the export market.

Another invaluable internationally renowned brand represented by us is Herman Miller, recognised as the pinnacle of prestige in seating and office desking. Herman Miller today, over a 100 years since its inception, is an innovative business with a commitment to social responsibility. The ergonomic seating and desking designed to support and improve posture is a highlight factor of Herman Miller with a 12 year unconditional warranty on every product.

The legendary Eames Lounge design produced by Herman Miller is on show at the University of Modern Art, a reflection of the distinct caliber that is unique to its products. Herman Miller was cited by Fortune within the 100 best companies to work for and among the most admired.

JAT distributes the entire range in the local market. Aeron, Eame's Lounge and Ottoman, Embody, Sayl, Mirra and Abak desking Solutions to name a few.


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Our Sri Lankan subsidiary, Brush Master produces a range of premium brushes for all applications and is completely handcrafted using DuPont Tynex filaments by experienced brush makers.

The innovative technology of DuPont Tynex filaments is designed to pick up and hold the required amount of paint in order to provide flawless strokes and make cutting and lining work perfect. The filaments are appropriately tipped and flagged to release paint evenly and smoothly onto the surface with little effort.

Crown Paints is a British paint maker with a long drawn history which can be traced back to the late 1850s. The brand has been associated with royalty in the United Kingdom and is recognised by a royal warrant granted by Her Majesty the Queen.

Possessing a comprehensive colour palette and a highly innovative product range, Crown introduced the revolutionary breathe easy technology along with innovative additions to their product range in the form of anti-bacterial, fire-proof and quick-dry paints to the world.

Permoglaze Paints Limited was incorporated in 1960 in Darwen, the United Kingdom. The impressive variety of paint available in this range ensures that you will always find exactly what you are looking for, from interior and exterior wall finishes in various colors to primers, wood finishes and floor paints.

Priding themselves for its superior product range, fast and reliable service combined with an excellent level of quality, makes Permoglaze the ideal paint choice of the professional.


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Our Brands contd.

For over 80 years, Gossen has thrived on innovation. In the 1960s, Gossen became the first company in North America to make cellular PVC products for the building industry. Today, you will find Gossen’s high performance, low maintenance products on six continents; supplying customers with Decking, Railing, Moldings, Millwork, Trim boards, Sheets and more. Gossen products are beautiful, sustainable and easy to maintain.

Armstrong World Industries, Inc. is a global leader in the design and manufacture of floors, ceilings and cabinets. In 2010, Armstrong's consolidated net sales totaled approximately US$2.8 billion.

Based in Lancaster, USA, Armstrong operates 31 plants in seven countries and has approximately 9,300 employees worldwide.

Armstrong markets the most extensive portfolio of residential and commercial floor products available – hardwood interior and exterior decking, laminate, linoleum, vinyl sheet and tile, ceramic and Bio Based Tile® – under the brand names Armstrong®, Bruce® and Robbins®.


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Borma Wachs, based in Italy, is considered a specialist in wood care with a pledge to offer customers only the best in their services and products which include putties, maintainers, marble, stone, terra cotta and timber cleaning agents.

With a strong focus on three key aspects, the Borma Wachs credo is a fine balance of flexibility, reliability and quality; a principle which has served them well to be a leading player in the international industry.

Norton, the world’s premium abrasive brand, offers a complete range of high performance products designed to perform in any abrasive application in all industrial markets.

As the technology leader, Norton sits at the forefront of the industry offering highly engineered value-adding abrasive solutions. Each year, Norton makes substantial investments in R&D helping to generate innovative ideas that aim to revolutionise abrasives.

This strong commitment to innovation ensures that exciting new products are continuously introduced, offering substantial benefits to customers by helping to improve process productivity.


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Chairman’s Message

JAT Holdings (Pvt) Ltd., has steadfastly carved a sound reputation as a dynamic, diverse, service and customer oriented corporate entity that augers unparalleled quality interlaced with pristine innovation. In a world of rapid progression, in an industry that gears itself for innovative change, JAT has built exceptional brand equity for itself, never compromising its tenet to excel in its business ventures while growing from strength to strength, across the gamut of its operations as a vital cognizant force in the furnishing and furniture sector.

Therefore it is with great esteem that I am happy to present to you, on behalf of the Board of Directors, the Annual Report and Annual Audited Accounts for the year ended 31st March 2015. It is with pleasure that I welcome you to the 2nd Annual General meeting of JAT Holdings (Pvt) Ltd.

It is apt to deduce that the year under review has been one that has been proven

"It is apt to deduce that the year under review has been one that has been proven successful and fruitful in every sense."

successful and fruitful in every sense. This report depicts that the Company concluded a successful year and recorded an impressive and steady performance for the year 2014/15. The Company recorded impressive revenue of 3.5 billion rupees in comparison to the revenue of 3 billion rupees of the previous year. This projects a growth in real terms of around 18% in revenue for the year 2014/15 when compared to our prior year’s achievements.

Your Company also recorded a healthy gross profit of 1.2 billion rupees, which was a 30% increase year on year, posting a healthy profit after tax of 541 million rupees compared to the 390 million of the previous year. This represents a 39% increase in net profits when compared to the statistics of the year previously under review.

While always setting its eyes on the best brands, the Company has risen as the market leader for world-class water based

wood coatings “SAYERLACK” from Italy and other timber coating solutions in the local market. Sayerlack product sales have been showing a steady increase in the local market and have established considerable brand credibility and an unmatched presence, complementing our penchant for immaculate execution while encompassing our core values to achieve visibility with unparalleled finesse in the country. This product has depicted healthy growth in the export market. The export turnover recorded an impressive 45% increase during the year under review when compared to the previous year. The Company has secured new channels of entrepreneurship and avenues of promising business from other important export markets in addition to its current exports.

Your Company continues to focus on our other flagship products such as Permoglaze, Herman Miller, Brush Master and


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Armstrong, which now are established and renowned brand names in the market.

JAT during the previous year’s tenure set in motion the required infrastructure and facility locally, to produce and market Permoglaze paints. Permoglaze is a recognised and respected brand in the Sri Lankan paint industry and the Company solidified the brand’s presence across the gamut of the country within a short period of time. The brand sports a truly versatile range of products under its wing, catering to the local market. Some of the new product range introduced this year in addition to the interior and exterior decorative paint range are the Permoglaze wall putty, Permoglaze roofing paint, and the Permoglaze crack bridging wall filler.

The Company has also secured the agency and signed a licensing agreement for the manufacture and sale of the world-class paint brand “Crown” from the United Kingdom, aspiring to launch this renowned brand in the latter part of 2015. These two brands of decorative paints will help the Company to cater to different segments in the industry across the board, and to every part of the nation.

JAT continues to invest its capital on its expansion drive in relation to factory capacity, machinery and buildings, in order to set up the required infrastructure and facility for manufacturing operations and related processes of all these monumental brands. We always nestle the future in mind and with a view of increasing the available capacity that is currently in place, the Company incorporated extra factory space in Kahatuduwa while acquiring a new land in Horana; as sites for setting up promising manufacturing plants. JAT also meticulously reviews its manufacturing process to attain higher efficiency and to accentuate

productivity. During the year under review automation of packing related to water base products was also achieved, depicting greater efficacy and value to this respective area of operation.

I am pleased to inform you that the Company is migrating towards a new ERP system, which we think will become operational by the latter part of the year. The ERP we believe will provide the organization with an integrated view of core business processes, which will reap a myriad of benefits.

By perpetually keeping in line with the best practices, it is significant that the Company financials are presented this year as per the SLFRS standards. Your Company has put in place many processes and practices, which I am sure, would enhance the intrinsic value of the company and ultimately augment Shareholder value in equal proportions. Your Company continues to be governed and guided by the code of best practices with regards to corporate governance. We have ensured by keeping in line with the Company policy on Shareholder return, that a dividend of cents 43 was declared to the Shareholders by the Company during the year.

While focusing on the core business, the Company will emphasize on rationalising our product portfolio and viewing new business opportunities that are complementary in nature. The Company is heedful and very conscious of being socially responsible at every turn and juncture. The project saw the light of day last year, when we embarked on working towards reducing maternal mortality in collaboration with the Sri Lanka College of Obstetricians and Gynecologists, an endeavor that we continue to support throughout this year as well. Although there is minimal generation of

waste from the factories, always responsible and vitally cognizant, the Company set up a wastewater treatment plant, which is now operational, much to the satisfaction of all our Stakeholders.

It is appropriate that I thank the Managing Director for his immense cooperation extended to me and the Board at all times, and for successfully steering this company to the zenith of our respective industry with incredible determination and splendid dynamism. Finally let me, on behalf of the Board of Directors thank the Management Team and all our Staff for their sincere support, relentless spirit to achieve greatness and hard work in ascertaining positive results and ensuring such incredible growth during the year under review. While we expect their continued cooperation, I also wish to thank the Members of the Board for their valuable insight in striving to achieve excellence, for their support extended to me at all times and faith in this Company’s operations. I also wish to thank our Bankers, our Business Partners, our Overseas Principals, Intermediaries, Retailers and our distinguished Clientele for their unbridled loyalty, continued support and for the immeasurable trust placed in the Company. Finally in this brave new world we should be pragmatic and au courant of all our achievements; that they are but a collective effort embodied by a unrelenting team that share a common vision for greatness although the honor is ours to be such a prestigious face, a true innovator and dynamic leader in the furnishing and finishing industry.

Dr. S. SelliahChairman

30 May 2015


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Innovation… a dynamic disposition… a grand vision shaped into reality… the attitude to soar above and reach untapped and unchartered territory as a true industry leader and a face synonymous with astonishing quality and a fervent relentlessness yet to be rivaled.

Our passion to attain perfection, amalgamated with our steadfast vision and fantastic workforce’s emphasis to persevere and innovate has positioned us as a remarkable corporate entity to the zenith of the furniture and finishing landscape.

It is therefore with great pride that I evaluate the significant growth that we have experienced over the years since our inception in 1993. It goes without saying that I am equally and extremely proud of what we have accomplished,

Managing Director’s Message

"Let our loyal and diverse clientele bear testimony to that fact that attaining perfection and an immaculate finish lies as the bedrock of etching each and every milestone."

let our loyal and diverse clientele bear testimony to that fact that attaining perfection and an immaculate finish lies as the bedrock of etching each and every milestone.

Despite numerous achievements, my excitement is paramount in relation to your Company’s stringent outlook to carve out an equally promising future. JAT has successfully metamorphosed from being a small Colombo based company to evolve into a respected private limited liability company today, providing employment to over 250 individuals.

We have never shunned our focus from those humble beginnings to where we stand at present as a flagship entity of deep respect and greater renown, recognised islandwide and globally as the

most reliable supplier and undisputed leader in timber coatings in Sri Lanka, Bangladesh , Maldives, India and Seychelles.

Our success must also be attributed to the support rendered by our trusted advocates, affiliating ourselves with multi-national companies; Sayerlack, Herman Miller, Crown, Permoglaze, Brush Master, Armstrong, Borma Wachs, Norton – Saint Gobain and Nature. The aforesaid monikers are prime market leaders in their respective fields, and we confidently move forward to continue providing dynamic and efficient services of the highest caliber to our customers.

We have grown steadily, recognizing that the only lasting competitive advantage is supreme quality at an affordable cost. With customer satisfaction as


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our prime focus within the corporate and retail sphere, it is hardly surprising that we have managed to spearhead a revolutionary role as the market leader.

The fact that we have always remained cognizant, safeguarding and emphasising on our development with sedulous social and environmental concerns in mind is yet another component of our success story. We at JAT continuously focus on attention to detail to ensure better quality by utilising improved manufacturing processes, resulting in an excellent service each and every time.

I wish to draw attention to one such accolade of being crowned one of Sri Lanka’s top conglomerates after over two decades; a remarkable and notable feat. This is our first time winning a ranking on the Brands Finance registry and we are enthralled to be ranked next to some of Sri Lanka’s leading conglomerates. Brands Finance is a well-respected, independent consultancy that has been in operation for almost a decade and has performed hundreds of brand valuations and we are proud to be included in their ranking.

I take this opportunity to thank our Chairman for his unstinted guidance and support throughout the year, the Board members and all Members of my vigilant and efficient team, who have contributed their skills, hearts and minds to assist JAT on its ever-evolving journey of progress and development. I offer my sincere gratitude to our faithful and ever increasing Customer Base, Stakeholders and Intermediaries for their loyalty and support throughout the years. It is my belief that we will persist in our endeavors to surpass all expectations and be a world leader in our chosen field of expertise with unfathomable dedication, precise attention to detail and a focal commitment to quality and service that we will always continue to display, in frontiers new and traditional… in this brave new world.

Aelian GunawardeneManaging Director

30 May 2015


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Board of Directors

1. Dr. S. Selliah - Chairman

2. Aelian Gunawardene - Managing Director

3. Jehan Prasanna Amaratunga - Independent Director

4. Somasundaram Sivasubramaniam - Director Finance

Treasury and Commercial

5. Lakmal Perera - Commercial Director

6. Indika Chandrasekera - Director Operations

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Dr. S. Selliah (MBBS, M.Phil)

Chairman

Dr. S. Selliah was appointed to the Board of JAT Holdings (Pvt) Ltd., in February 2014, and is the current Chairman of the Company. Dr. Selliah holds a MBBS Degree and a Master’s Degree (M.Phil). With over 23 years of experience in diverse fields which include manufacturing, healthcare, plantation, logistics, packaging and retail, Dr. Selliah’s passion to guarantee JAT excels and performs exceptionally is paramount in the Company achieving sustainability and solidarity.

Dr. Selliah is currently the Deputy Chairman of Asiri Hospital PLC, Asiri Surgical Hospital PLC and Central Hospitals Private Ltd. He is a Director of Lanka Tiles PLC, HNB Assurance PLC, Softlogic Holdings PLC, ODEL PLC, Lanka Walltiles PLC, Lanka Ceramic PLC, Horana Plantation PLC and ACL Cables PLC. Dr. Selliah is also the Chairman of Cleanco Lanka Pvt Ltd., while serving on the Remuneration Committee and Audit Committee of some of the corporate entities listed above.


Mr. Aelian Gunawardene possesses over two decades of experience in the Management and Marketing stratosphere. Mr. Aelian Gunawardene has a Diploma in Marketing Management from the Chartered Institute of Marketing UK and remains a focal asset in the Company, pioneering new innovations and steering JAT towards unchartered

terrain, while increasing market share and helping build unequivocal brand equity while JAT expands and evolves into a colossal force in the furniture and finishing industry.

Jehan Prasanna Amaratunga Independent Director

Mr. Jehan Prasanna Amaratunga is the Executive Deputy Chairman of MTD Walkers PLC, Sri Lanka. He is a Fellow Member of The Institute of Chartered Accountants of Sri Lanka and a Fellow Member of the Chartered Institute of Management Accountants, UK.

Mr. Amaratunga was awarded the ‘First in Order of Merit’ Prize at the final examination of the Institute of Chartered Accountants of Sri Lanka. He currently serves as a Director of People’s Bank, People’s Leasing & Finance PLC and JAT Holdings (Private) Limited. He is also the Chairman of People’s Insurance Limited and a Member of the Council of the University of Colombo. He Counts over 25 years of experience as a connoisseur of Finance and Management. Mr. Amaratunga has served as a Consultant and Director to a number of Corporations and Private Business entities. At the National Conference of the Institute of Chartered Accountants of Sri Lanka, he presented a paper titled “Value for Money Accounting” which is one of the many notable achievements that stand out in an illustrious and exceptional career. He was also a member of the Governing Council of the Institute of Chartered Accountants of Sri Lanka.

Somasundaram SivasubramaniamDirector Finance Treasury and Commercial

Mr. Sivasubramaniam is a trusted and valued asset of JAT Holdings (Pvt) Ltd. He is an associate Member of the Chartered Accountants of Sri Lanka and possesses 16 years of hands-on experience in the finance field.

Lakmal Perera Commercial Director

Mr. Lakmal Perera offers his skill set and knowledge to JAT Holdings (Pvt) Ltd., sporting 17 years experience in the areas of Management, Imports and Exports. Mr. Perera holds a Diploma in Banking, Finance and Management.

Indika ChandrasekeraDirector Operations

Mr. Indika Chandrasekera is no stranger to the JAT family having been part and parcel of our operations for 17 years. Mr. Chandrasekera’s considerable experience in local manufacturing and sales has proved vital in our operations.


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Executive Directors

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See page 17 for the profile.

Joyce Gunawardene Director Promotions

With 8 years experience in the field of Advertising and Promotions, Ms. Joyce Gunawardene has a B.Sc Degree in Psychology from the University of NSW Australia.

Indika ChandrasekeraDirector Operations


Wasantha Gunaratne Director Technical

Mr. Wasantha Guneratne with 15 years experience at JAT Holdings in Sales, Marketing and Technical Training has become a face synonymous with quality and stringent standards. He has received extensive training from our principals in Italy and continues to expend this knowledge to all our customers in the Subcontinent.

Somasundaram SivasubramaniamDirector Finance Treasury and Commercial


Lakmal PereraCommercial Director


Hiranthi Goonawardhana Director Finance

Hiranthi Goonawardhana is an associate member of the Institute of Chartered Accountants, Sri Lanka. She possesses 14 years experience in the field of Finance, with a Degree in B.Sc Business Administration from the University of Sri Jayewardenepura.

Surani Sahabandu Director Sales & Marketing

Surani Sahabandu has garnered over 14 years of working experience, with a decade of expertise specifically in the fields of Sales & Marketing. She has a BSc (First Class) University of Colombo, an MBA (Post Graduate Institute of Management, University of Sri Jayawardenepura) and is CIMA (passed finalist) qualified.

Rizna Dilshard Head of Finance

Rizna Dilshard was appointed to the Management of JAT Holdings (Pvt) Ltd on 1st April 2015. She is a Fellow member of the Chartered Institute of Management Accountants (CIMA) UK and counts a monumental 20 years’ experience in the field of Finance and Management in Sri Lanka.

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Senior Management

Seated Left – RightLamal Perera – Director CommercialSomasundaram Sivasubramaniam – Director Finance Treasury and Commercial Joyce Gunawardene – Director PromotionWasantha Gunaratne – Director Technical & Head of Bangladesh Sales and Marketing Aelian Gunawardene – Managing Director Indika Chandrasekera – Director OperationsHiranthi Goonawardhana – Director Finance Rizna Dilshard – Head of Finance Surani Sahabandu – Director Sales & Marketing


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Eranda Dandeniya – Technical ManagerSusil Rajapakse – General Manager Administration Augustus Pious – Technical Manager

Back row left – RightDharmajith Rubasinghe – Manager Investigation & RecoveriesRajesh Ariyarathne – Technical Manager Dharmendra – General Manager – Brush Master Gavin Vandort – General Manager Projects

Standing Right – LeftChaminda Weerasekera – Sales ManagerRichard Gunawardene – Asst. Brand ManagerCharith Peramune – General Manager - FactorMaithri Vithanage – National Sales Manager Nirosha Thawalampitiya – General Manager – Commercial Chaminda Gulawita – Sales & Technical Manager Waruna Salgado – Finance Manager Nash Nashad – Country Head – India Devika Gallage – Business Development Manager


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Operational Review

For a company that pioneered some of the country's and this region's most advanced finishing and furnishing solutions, this year has seen JAT Holdings continue its extraordinary journey. Etching pathways into a brave new world where our visionary leadership in the industry, innovative outlook and unwavering focus on quality remains the bedrock of our fundamentals, the year's performance both qualitative and quantitative is undoubtedly one that should be lauded. And lauded we were when, among a host of accolades, JAT gained the lofty crown of being among the Top 10 Strongest Conglomerate Brands in the country. This surely gives us impetus to strengthen our gains, build on our achievements, exploit the emerging opportunities and expand our horizons. This is the reason we remain at the zenith in our industry and the raison d'etre we will continue to augment that status.

Observations on the global construction industryThere has been much riding on the construction industry globally given the constantly evolving face of infrastructure development, which in turn has permeating impacts on multiple areas of growth, including in communities and in the macro sense, national development. This has spurred countries in all demographics to continue investing in various modes of construction, spearheading immense improvement and development in the quality and quantity of construction ventures, which also gives value addition to any country's key performance indicators. In fact, the global construction industry is expected to reach an estimated value of US

$10,388.6 billion by 2019 with the major drivers being government spending, increasing population, high per capita income and GDP growth. Increasing urbanization, easy credit availability and rising consumer spending will also possibly boost the construction industry. Strong economic growth in developing nations including China, India and the Middle East is expected to add fillip to this.

Sri Lankan Operating EnvironmentSri Lanka's growth trajectories for 2014 was posted at 7.4%, showcasing the immense resilience and dynamism the country has been experiencing in the last five years. While the growth in itself did not meet the expectations projected at the beginning of the year, the fact that it remained well on par with regional counterparts and above global growth is surely a commendable feature, given the external volatility that has been experienced in key trade and commercial hubs. The Sri Lankan economy was driven by consumption expenditure, although it was investments, particularly

in construction that added impetus to the economy's expansion observed in 2014. Construction of infrastructure remained a key focus in the aggressive development agenda pursued by the State, given that it creates a robust foundation for the sustained and rapid economic growth planned for the country. This would also be the foundation to propel inclusive growth and environmental sustainability.

The construction sub-sector which comes under the industry sector, did post significant results for end 2014, growing 20.2% over last year's 14.4%. This growth stems from the increased public sector investment observed in development activities. This includes mega infrastructure projects, promotion of permanent housing from temporary shelters and private sector involvement which amounted to a 22.3% increase in credit granted to the private sector by commercial banks for construction activities. Credit granted for personal housing by commercial banks also increased by 28.7%, compared to a dismal 9.1% the year prior.

JAT gained the lofty crown of being among the Top 10 Strongest Conglomerate Brands in the country. This surely gives us impetus to strengthen our gains, build on our achievements, exploit the emerging opportunities and expand our horizons.


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Besides government led projects, Sri Lanka has been fortunate to have a collective of global investors adding fillip to large scale housing infrastructure in Sri Lanka. Taking advantage of the numerous incentives provided to facilitate these projects, with some envisaged to operate as Public-Private Partnerships, these projects would target the demand available for upscale housing widely prevalent in and around the metropolis. Phase II of the Southern Expressway, Phase I and Phase II of the Colombo Outer Circular Highway, the Northern Railway Line and Multi-purpose Deduru Oya Reservoir Project were some of the major government investments which were in progress in 2014, while large-scale private construction activities including hotel projects and apartment complexes also contributed to the growth detailed in the construction subsector.

As JAT has been propagating throughout our entire philosophy, there has always remained a dire need to improve the quality of housing in the country.

The brick and mortar structures constructed for the most part need continued supervision and monitoring to ensure compliance, not only with good construction practices, but also to weather and climatic change and vagaries, besides environmental compliance. The year saw renewed focus on the availability of housing aligned with the 'House Ownership for All by 2020' unveiled under the National Housing Policy, which also pays due application to the improvement in quality standards. Under this umbrella, the two key projects that are currently being focused upon to ensure a better standard and quality milieu are the Urban Regeneration Project under the aegis of the Urban Development Authority and the Janasevana National Housing and Settlement Development Operation driven by the Ministry of Construction, Engineering Services, Housing and Common Amenities.

Entering a Brave New WorldThe JAT formula for success is simple; we believe in pushing boundaries in innovation and walking the talk in compliance and quality standards. We add superior levels of customer service into this formula, which has surely been the driving force in ensuring that the brave new world we have entered into has enabled us to showcase double digit growth in all our business categories. Market share has continued to rise, as has brand value and equity, all of which point towards JAT etching a sustainable path of growth.

It is pertinent to note here that JAT's sales and marketing premise has always been sound, a definite advantage in the consistent growth we have observed. The investment on brand building has been intense and intended to build long term relationships with our Stakeholders, spurring confidence and loyalty among Customers. Short term spurts of discounts or such germane initiatives are not part of our marketing strategy. Urging top of mind recall is an imperative and therefore, each campaign is worked on ensuring that brand image, brand value, brand promise and brand ethics are well evidenced, under the umbrella of catchy phrases and taglines.

The host of accolades we have collated during the year is testament to our strong brand, unwavering innovative stance and constantly raising the bar. Being named among Sri Lanka's top ten Strongest Conglomerate Brands by Brand Finance Lanka, attests to the strong brand we have built, the positive public perception that surrounds our brand and the fact that

Warehouse


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JAT shares equal space among some of the country's large and well established blue chip conglomerates, some with a history of over a century. The Silver Award won at the National Business Excellence Awards and the Silver Award for Industrial Excellence presented by the Sri Lanka Chamber of Small Industries, prove the consistency we have espoused in growing a sustainable and ethical business and the emphasis we place on permeating quality, standards and best practices into the industry we operate in.

The overarching accent on innovation which forms the backbone to our business is a permeating one. Not just in innovating products and services, but it is a mindset that extends to the concepts used in marketing and promotions as well. Winning a prestigious Effie Award in 2013 for Sayerlack was surely a highlight in our marketing endeavours, while being presented continuous laurels for the design and innovation of our stalls including our stalls at the Hotel Show and the Sri Lanka Institute of Architects Trade Exhibition has been exciting. From a product perspective, Brush Master gained kudos at the Halal World Awards in 2012, when it won the title of Most Innovative Product, stamping a strong presence in its highly competitive product category.

Ours is a non-compromising stance as well, articulated in our corporate philosophy to, 'Get the right finish, first'. The connotations embedded in this statement pushes us to be a team that works on getting things right the first time, as in our business, we cannot be complacent or experiment. In a brave new world, we must work as an entity that believes in ourselves

and our products, knowing full well that everything we present to our Stakeholders is superior and constructed on quality, ethics, transparency and accountability. Working with an immensely talented team which is intent on carrying our mission of becoming the preferred supplier in the South Asian region for leading brands in the furnishing and finishing industries, the professionalism we espouse in everything we do has been instrumental to our phenomenal success this year, given that we have always presented solutions beyond our customer expectations.

Innovation continues at the foreThe extensive portfolio of finishing and furnishing we possess is primarily driven on a platform of innovation. But our mindset is not to simply present products to the market, but rather to add value to each of these through total solutions and experiences. JAT has always been associated with innovation and progress, continuing as a champion in pioneering

pathways that would continually uplift the industry on par with global expectations.

Representing the uniqueness of our product philosophy, the JAT Tech Centers, with its interactive use of high-end technology and unique experiential milieu, are now at the fore of fostering and nurturing an initiative that would position the industry as an internationally acclaimed one. The Tech Centers use a series of proactive interventions driven by our team through to the dealer and then cascaded to the Customer, the Brand and Product, to ensure that the JAT portfolio becomes strongly associated with the End Customer.

The state-of-art JAT Tech Centers are located in key cities around the country, where our highly trained team imparts their expertise and knowledge through advice and training on a wide array of subjects pertaining to modern exterior and interior applications for commercial and individual requirements. Each center is contemporary in design, equipped

Operational Review contd.

JAT R&D facility


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with high-end technology that provides apt solutions for complex furnishing and finishing queries. Our highly trained team has also developed an innate ability to offer solutions that are futuristic yet practical, well ahead of its time. This experiential center offers total solutions encompassing project consultancy, product recommendations, maintenance, budgeting, site visits and product delivery. It even customises technical training on wood maintenance, wood finishing and innovative colour applications where necessary.

In fact, JAT has always stressed the importance of uplifting industry standards and this has permeated to a keen enthusiasm in developing prevalent skills. Given that the JAT Tech Centers are the only facility in Sri Lanka equipped with state of the art technology and a highly trained team that can provide training on both wood finishing and paint applications aligned with international standards, we are indeed proud to conduct training and development

programmes for local contractors, builders and consumers from around the country. The ultimate goal being pursued through this technical training is in creating a group of highly skilled and knowledgeable technical experts, whose application of our training modalities will surely create benchmarks within the industry, developing it on par with international standards.

The Tech Centers also use the concept of innovative colour applications to customise colour preferences and

requirements. Global paint giants Crown and Permoglaze are strong partners within our paint portfolio and is a boon to the solutions we offer for paint include colour matching, paint application methods, spray painting methods and decorative paint applications and even customised industry requirements for decorative paints, weather coatings, interior emulsion paints, anti-corrosive paints, enamels and a wide range of floor and ceiling paints.

New Product DevelopmentR&D is the bedrock to our progress as it gives our unique brand of innovation the drive to pioneer new paths in our product portfolio. Our R&D laboratory remains the most sophisticated in the country, being equipped with technology and knowledge on par with Crown Laboratories in the UK. Armed with an enthusiasm to constantly push boundaries, JAT has earned the reputation of launching a host of new products each year, including introducing some of the most prestigious and renowned brands in the world.

JAT has always been associated with innovation and progress, continuing as a champion in pioneering pathways that would continually uplift the industry on par with global expectations.

JAT Factory Production


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Given below are some of our firsts and pioneering products introduced last year:

• Coffee-Proof Wood Coating: A product that can withstand even the most highly pervasive coffee stain, Coffee Proof is the first white waterborne coating capable of resisting the most stubborn stains and sets the benchmark high in the wood coating industry.

• Sayerlack H2NO: A first for the world, this super-hydrophobic water repellent coating developed by Sherwin Williams Italy is an invisible coating and forms the ideal solution for wood protection

• Sayerlack Water Based Glass Coatings: Another of our unique product offerings given that all glass coatings available on the market are solvent-based, is a water based product range available in varied designs and pigments designed to deliver optimum performance, being easy to apply is non-toxic and safe on any glass.

• Fire Retardant Wood and Wall Coatings: The combination of uncompromising safety and high-end finishes makes this range unique.

• Sancora: Textured decorative wall paints.

• UV Coating: Introduced for the first time in Sri Lanka, Bangladesh and the Maldives, this instant drying coating is subjected to drying under UV lights adding strength and durability.

• Ergonomic Furniture: The pioneers in introducing ergonomically designed furniture for home and office through the globally renowned Herman Miller brand, this year JAT introduced a monitor arm onto which the monitor can be fixed, reducing physical discomfort during long hours at work.

• Bamboo Decking: Adding a creative touch to exteriors, the bamboo decks are devoid of the inherent problems that timber has, including shrinking, cracking and perishing.

• Gossen Synthetic Decking: Also for outdoor use, this is a 100% synthetic timber product that can withstand the vagaries of the weather.

Our manufacturing plants too continue to gain impetus, aligned with our dynamic R&D focus. Having ensured that our

manufacturing processes have gained the requisite international accreditation, we also established a waste water treatment plant that would add value to the ISO 14001 accreditation we possess for Environmental Management Systems. The SLS certification we possess is higher in compliance demands than prevalent British standards. The Company has expanded and invested on high capacity equipment for approximately Rs. 100 million, including adding a completely new line for emulsion, putty and filler lines and packaging lines. We intend to add more automation to the packaging lines in the future as this is a labour intensive process. The state of the art manufacturing facility and laboratory enables us to produce most products manufactured by Crown in the UK.

The prestige we have earned and the brand recognition we have gained from our Stakeholders in Sri Lanka has seen us provide finishing and furnishing to some exceptional projects in the country. Our prowess is embedded in the fact that we have been associated with an expansive gamut of buildings, some of which are icons in the historical annals of this country, contemporary architectural masterpieces, public and private sector institutions, places of religious worship and diplomatic missions. From the historic National Museum and Mount Lavinia Hotel, to the newly restored Arcade Independence Square, to the President’s Office, Ministries of Justice and Health, The British Council in both Colombo and Jaffna, to the corporate headquarters of Aitken Spence, Hayleys, Nikini Automation, Ansell Lanka, Haycarb, BT Options, DSI, DCSL and



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Packwell Lanka, HSBC both in Sri Lanka and the Maldives, the retail spaces of Rocell, the US Embassy, WHO, USAID, IFC, JAIC Hilton, MIT Campus and the Koneswaram Kovil in Trincomalee have all gained the creative artistry of JAT finishes.

Presence in the RegionWith our mission of ensuring that we become the preferred supplier in the South Asian region, JAT has been strategically expanding our presence, which in fact has seen added impetus this year and a very successful quantitative and qualitative performance as well.

The milestone achieved in our overseas ventures was in entering the Indian market which now adds to our presence in Bangladesh, Seychelles and the Maldives as well. Based in Bangalore, we represent Sayerlack, the prestigious paint brand owned by Sherwin Williams which is the second largest paint company and the largest wood coating company in the world. A feature that adds to our confidence is the fact that this global giant believes in a Sri Lankan company's ability and competence to push its brand in a massive highly competitive market like India. We compete with nearly fifty international competitors, some of them

worldwide giants, but we do believe we posses, not only a pioneering product portfolio but also a visionary strategy to work on the pragmatic blueprint we have already conceptualised, to be successful in this challenging market. We intend growing by at least 200% in India in the next year, positioning a team that will be well trained and honed to exploit opportunities that are prevalent in this burgeoning market.

Bangladesh is one of our more successful markets, having a well-etched presence in that country for over a decade, despite it being a price sensitive one. Being the market leaders in wood finishing products in Bangladesh, JAT is now perceived as a corporate steward that can be relied on for high quality, best practices and above board marketing strategies. This has led us to be held in high esteem within that market and proactively give leadership to numerous initiatives. In celebrating twenty years of market leadership, JAT is this year partnering with Futurex to sponsor the international woodworking exhibition, which will be titled under the JAT banner as the JAT International Woodworking Exhibition to be held in June. JAT has previously been a firm partner in the JAT Sri Lanka Wood Expo, both times it was held and takes pride in the fact that Bangladesh now considers JAT a primary partner in its national events, which certainly is a prestige we intend honing.

The strong position we have etched in the resort-centered Maldives market is in water based lacquer. While the financial performance has remained average, this is one market we will be focusing on in the next few years with the intention of growing our market share, positioning

The milestone achieved in our overseas ventures was in entering the Indian market which now adds to our presence in Bangladesh, Seychelles and the Maldives as well.


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other apt products that are related to this market as well.

The Seychelles too is a growing market holding much promise. This was evident when JAT showcased its premier Sayerlack product range at the Food and Hotel Seychelles 2014 Exhibition and Culinary Challenge held in November 2014, joining over 100 companies from the Seychelles, South Africa, Singapore and the UAE. Given that this country too is a resort-driven market, our focus will be similar to that of the Maldives, based on introducing a germane product portfolio that will add value to market requirements.

Ensuing ChallengesWhile the macro environment has had a semblance of buoyancy, it must be noted that the industry itself doesn't always work on a level playing field. JAT has always prided itself on being an ethical, accountable, transparent company that believes strongly in governance and compliance. We

have maintained a culture of going beyond compliance and have always relied on recognised certifications and accreditation to position our products as being those of high quality. Each of our certification and accreditations are well earned and presented by reputed international and Sri Lankan certifications entities. Unfortunately, an increasingly alarming feature we have been observing permeating the industry is the misrepresentation of standards and accreditations, which does have a negative impact on quality perceptions in the market.

Similarly, there is also a blatant disregard for compliance with taxation and other regulatory diktats. This allows some organisations to gain an unfair financial advantage, as the market is price sensitive, which doesn't augur well for the sustainability of the industry. Unethical marketing practices, undercutting and unfair leeway for some, pushes the industry into a quagmire, which will surely see repercussions

soon. We have also been lobbying for the reduction in taxation levels on raw materials pertaining to the industry, as it adds considerable expenditure to companies who are operating ethically and above board in an open market, which will also heralds an improvement in packaging quality.

From an internal perspective, JAT has been working on uplifting the competencies, skills and abilities of our team. Staff retention tends to be a significant challenge across the industry and hence, the concerted efforts we have infused to ensure that our team takes ownership for the forward journey of our Company has been fruitful. We believe that our team has the dynamism to spur our growth, creating benchmarks that will be pioneering features in the industry, while also cascading their knowledge and skills for the upliftment of the industry.

Looking AheadWe look forward to an exciting year ahead as we continue etching our presence in this brand new world. While our focus on India will take the lead in our overseas expansion, we are also pursuing possibilities in Nepal, Bhutan and Pakistan in the immediate future. There are also plans to penetrate within Sri Lanka further, strategically locating our presence in areas that have high growth capacity. We will be re-looking at our product portfolio and consolidating it in the next year, concentrating more on expanding market share by expanding our presence. Product development therefore will be maintained on a focused platform of expansion and growth.

Award winning exhibition stall



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We believe that our team has the dynamism to spur our growth, creating benchmarks that will be pioneering features in the industry, while also cascading their knowledge and skills for the upliftment of the industry.

A new ERP solution will be implemented across the Group, enabling interlinking of all functions, processes and systems. Maximising on technology, sales will be automated with our sales teams being equipped with palmtop PDAs to ensure that information will be relayed in real time and decision making will be efficient, speedy and timely.

The JAT Business Enterprise Group will be established in the coming year, using our newly revamped website which will soon become a reality. The JAT BEG will enable Stakeholders to log into the site to access technical data sheets and costings on their own. Our interaction with social media too will gain added impetus.

Our CSR initiative launched during the year is also progressing well. Our commitment to reduce maternal deaths in Sri Lanka and the resultant negativities that have destructive impacts in the aftermath that such deaths leave in their wake, saw JAT infuse a firm commitment of a Rs 30 million in a state of the art JAT Training and Simulation Center.

This project, in collaboration with the Sri Lanka College of Obstetricians and Gynecologists also intends to educate and empower other Stakeholders in that equation. The project is being funded through sales generated from Permoglaze. The foundation stone for the Center was laid and construction is now well underway, with completion billed in 2015.

We have articulated our immediate plans for the future but do have a pragmatic strategy that will ensure our consistent performance, both qualitatively and quantitatively. Within a strong framework of innovation, quality and entrepreneurial spirit, we intend to hone the strengths we have thus far, while bridging the gaps we observe by using our futuristic outlook to maintain a strong and stable business. Our existence in a brand new

world and our success in this milieu depends entirely on how JAT continues to position ourselves, in exploiting business opportunities that emerge and in using those opportunities to grow our business sustainably. This we believe is the apt formula for consistent stable growth, with focus on the Stakeholders around us and a need to continually raising the bar in both industry and national standards.

Aerial view of JAT factory at Kahathudwa.


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Awards

Effie Awards 2013 "Sayerlack — Take Care of Them All" - In the Household Supplies and Services Category for an innovative Sayerlack Campaign.

Sri Lanka Institute of Architects Trade Exhibition 2009 — Most Innovative Trade Stall

Sri Lanka Institute of Architects Trade Exhibition 2013 - Most Innovative & Informative Trade Stall.

Hotel Show 2010 - Most Innovative Stall HALAL WORLD AWARDS 2012 - Most Innovative Product (For Brush Master Paint Brushes)


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JAT Holdings included in top ten ‘Strongest Conglomerate Brands’ - JAT Holdings was recently included on the Brands Finance Lanka top ten ‘Strongest Conglomerate Brands’ ranking. Coming in at number 9 and ranked alongside companies such as John Keels Holdings, Hayley’s and Aitken Spence, the recognition is JAT’s first on the ranking and comes on the heels of yet another highly successful corporate season.

CNCI Achiever Awards 2014 – (The Ceylon National Chamber of Industries) National Merit Award under the Large Industries category.

National Business Excellence Awards 2014 - Runners Up - awarded the Silver Award in the Trading category at the National Business Excellence Awards 2014.


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Overall Company Performance - Turnover and ProfitThe Company achieved a Profit before Tax of Rs. 640 million and a profit after tax of Rs. 542 million a remarkable achievement. The Company’s strategy of focusing on new product lines whilst concentrating on the core businesses,and focusing on improved margins is the main contributor for this excellent performance.

The profit recorded is the highest in the history of the Company. Company's turnover grew by 18%, from Rs. 3 billion to Rs. 3.5 Billion with revenue generated from wood coating product range being the largest contributor followed by the export turnover. Gross profit increased from 33% to 36%. The reduction in the Company's finance cost by 13% from Rs. 38 million to Rs. 33 million contributed to the growth in profitability.

Export Sales 23%Wood Coatings 62%Decorative Paints 7%Business Development Projects 4%Brush Master 2%Income from Projects 2%

Financial Review

Company's profit before tax amounted to Rs. 640 million as compared to Rs. 445 million last year. Following the growth in the profit before tax, the Company's tax expense increased to Rs. 98 million. Company profit after tax grew by 39% to Rs. 542 million during the year under review.

Cost of Sales and Operating Expense AnalysisThe cost of sales of the Group increased from Rs. 2 billion in the financial year 2013/14 to Rs. 2.26 billion during the year under review, growing 13%, and absorbing 64% of Group Revenue. The increase in cost of sales by 13%, well below the average turnover increase of 18% recorded for the period, reiterates the Company's ability to manage the product portfolio whilst controlling costs efficiently.

Administration costs of the Company was Rs. 232 million during the year under review, absorbing 6% of the company’s revenue.

The company’s selling and distribution costs, which include advertising and promotional costs as well as commissions paid on sales volumes, escalated by 7.5% to reach Rs. 401 million during the year, accounting for 11% of the total revenue.

In cumulative terms, the administration and distribution costs, along with the cost of sales, comprised 81% of the company’s revenue during the financial year 2014/2015.

Finance cost to the Company during 2014/2015 was Rs. 33 million compared to the cost of Rs. 38 million reported in the previous year. The reduction of finance cost by 13%, in the light of the business growing is a remarkable achievement. The main factors that contributed to this achievement is constant monitoring of work-in-capital investments, healthy margins maintained and attractive borrowing rates negotiated with the lending institutions.

Cost of sales 77%Admin cost 8%S&D cost 14%Finance 1%

Profit from OperationsThe gross profit of the Company for the financial year 2014/15 was Rs. 1.2 billion, compared to Rs. 1 billion reported in the previous financial year. Gross profit margins amounted to 36% against a prior year of 33%, the improvement in margins being the efficient management of product portfolio and cost management.

Other non-operating income for the year was recorded Rs. 22 million which was an increase of 31% compared to the previous year.


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Net profit before tax reported during the year amounted to Rs. 640 million against the prior year of Rs. 445 million, a remarkable achievement. Projected income tax payment for 2014/2015 is Rs. 98 million against a payment of Rs. 54 million in the prior year. Overall net profit after tax is Rs. 542 million against last year is performance of Rs. 390 million which displays a remarkable growth of 39% which is a constant improvement over the years.

11 12 13 14 150

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Rs. Mn

TaxationThe Company’s income tax payable increased by Rs. 44 million to reach 98 million in 2015. The effective tax rate for the year ended 31st March 2015 was 15% compared to 12% in the previous year. The increase was largely due to increased profit levels and tax holiday on concession for rubber based manufacture being expired by 2014.

Shareholder FundsThe Company’s main source of capital continued to be the retained earnings which stood at Rs. 1.2 billion at the end of the financial year. Total Shareholder funds amounted to Rs. 1.8 billion against the prior year standing of Rs. 1.5 billion which reported a 23% improvement.

Fixed AssetsNet book value of fixed assets amounts Rs. 598 million which mainly consists of Land amounting to 165 million, Building Rs. 198 million and motor vehicles Rs. 45 million. The Company in line with its expansion program invested in plant, vehicle fleet and buildings during the financial year.

Financial RisksThe financial risks associated with the Company are discussed in detail under Financial Risk Management objectives and policies under Notes to the Financial Statement on page 95 of note 26.


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In our Company’s quest to thrive as a valid, vital and valuable corporate entity and with our focus on increasing Stakeholder value, JAT has always been a patron of believing the age-old adage that one must give as much as one receives. We have always steered ourselves towards new frontiers with our eyes, ears and hearts in the right place, with a mission to uplift the livelihoods of the under privileged social strata in the country, to enhance the work conditions of our employee base and offer society a chance to augment their lives.

Your Company took calculated measures in an attempt to further reduce maternal deaths in Sri Lanka. JAT continues with its multifaceted Corporate Social Responsibility project, going for zero. In this noble gesture to prevent maternal deaths during pregnancy from occurring, JAT Holdings commenced development of the estimated Rs. 30 million state-of-the-art JAT Training and Simulation Centre set up under the auspices of the College of Obstetricians & Gynecologists of Sri Lanka (SLCOG) at Model Farm Road, Colombo 8. The JAT Training and Simulation Centre is scheduled to open in August 2015.

Sri Lanka’s maternal mortality rate of 35 for every 100,000 live births (CIA World Fact Book) compared to most other developing nations is highly commendable; we cannot rest on these laurels but must endeavor to reduce it to zero. Sri Lanka is almost unique in that we investigate every maternal death with meticulous precision. We have learnt from these investigations that a sizeable number of these deaths are preventable.

The JAT Training and Simulation Centre will be equipped with the latest robotic mannequins from USA, with the purpose of utilising the aforesaid equipment to train labor and delivery teams on how to react in high-risk situations that could transpire sporadically and spontaneously in a work environment.

Recognising maternal and fetal distress is an important skill every care provider must have therefore, the most advanced simulations should facilitate learning using real diagnostic medical equipment. The robotic mannequins support the widest range of medical diagnostic equipment of any tether-less maternal and neonatal

simulator. She blinks, breathes, and gives birth. She can simulate low and high-risk deliveries with an endless variation of clinical presentations and can do so with precise repeatability. The patented fetal delivery system with its powerful control software and a library of preprogrammed scenarios is also equipped with a fetal monitor, ECG monitor, defibrillator, pulse oximeter and an automatic blood pressure monitor device. Care providers can set-up and operate real equipment, interpret critical information and follow protocols just as they would in real clinical situations. This avails improved performance in specific situations and gains valuable hands-on experience.

In the real world no two labors are the same. Every delivery is unique. Nature is unpredictable. Care providers must be ready to ensure the safety of the mother and baby in any situation.

At JAT we believe that every mother is precious and priceless and therefore the loss of even one mother is a price too high to bear.

Corporate Social Responsibility

JAT Training and Simulation Centre


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Our People

The JAT TeamJAT’s stringent work ethic and collective vision to attain exceptional renown in the finishing and furniture industry, is shaped into reality by our relentless workforce.

Our JAT family incorporates team players with a spirit of progression, competent personnel that are experienced and skilled, inculcating our value system, embodying our vision and equipped with the technical knowledge and wizardry to be on par with the industry’s finest.

Needless to say our workforce is our most valued asset. Led by a dynamic, cognizant Board of Directors at the helm, our workforce fosters JAT’s core values, which include an all-encompassing knowledge of the entire operational process, complete customer orientation with a penchant to achieve maximum satisfaction with overwhelming finesse. JAT encourages leadership at all levels and nurtures within its framework the requisite to ascertain continuous improvement in all aspects of the business. We leave no stones unturned!

We have soared to the apex of the industry as the undisputed leader in the wood coating industry in Sri Lanka, Maldives and Bangladesh. Our success is owed at large to an array of supporting factors that comprise of the Company ensuring breathtaking quality, unconditional grace, facilitating a diverse and comprehensive range of products complemented by a vibrant sales team which is experienced, vigilant, sedulous and motivated to provide excellent technical support services.

Our team is truly empowered to address any situation by incorporating meticulous monitoring and controlling systems to ensure the application of the strictest quality control standards in keeping with ISO regulations at all times.

Our corporate culture is one that provides JAT’s treasured Stakeholders with ample opportunities to execute their goals with steadfast responsibility, unfathomable integrity and mesmerising creativity, while evolving as individuals and a team, accentuating their careers working with passion and purpose to ensure our business thrives. These measures have enabled us to expand our list of satisfied customers and to be an astoundingly dynamic Company of international repute further building brand equity and reaching promising, unchartered terrain.

Technical Training for Staff

HSBC Boardroom


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Corporate Governance

The Board of Directors of JAT Holdings (Pvt) Limited are cognizant and consistent, constantly focused and take responsibility to maintain the highest standards of Corporate Governance, to ensure the integrity, accountability and transparency of all transactions, whilst emphasising equal importance on business performance in order to ensure value creation. The Company has formulated its Corporate Governance policies and practices to ensure that the Company is focused on its responsibilities to its Stakeholders. The Company Stakeholders include Shareholders, Employees, Customers, and Suppliers.

This statement sets out the Corporate Governance policies, practices and processes adopted by the Board.

Corporate Governance Principle Detail

The Board CompositionThe Board comprises of six Directors that includes 04 (Four) Executive Directors and 02 (Two) Non-Executive Directors. The Board has an appropriate balance of skills, experience and independence to manage its duties and responsibilities effectively.

All the Directors are professional who have a wealth of knowledge in the field of management, marketing and finance.

The table below displays the attendance of Directors at Board and Committee Meetings held during the year

Name of Director Board Meeting

Audit Committee

Meeting

Remuneration Committee

Meeting

Dr. S. Selliah 6/6 5/5 2/2

Aelian Gunawardene 6/6 - -

Jehan. P. Amaratunga 6/6 5/5 2/2

Indika Chandrasekara 6/6 - -

Somasundaram Sivasubramanium 6/6 - -

Lakmal Perera 6/6 - -

The Responsibilities of the Board• Formulate, implement and monitor strategy.

• Internal Control and Risk Management.

• Compliance with laws, regulations and ethical standards.

• Ensure that all Stakeholder interests are considered in corporate decisions.

• Approval of budgets and corporate plans.


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Directors Obtaining Independent Professional AdviceIn performing their duties the Directors are permitted to seek independent professional advice from external parties when necessary.

Director TrainingThe Directors are provided with adequate training for continuous development. Advice is sought from external parties when there are major changes affecting the Company.

The Board has delegated responsibilities to 2 Board Subcommittees which operate with clearly defined terms.

a. Audit Committee The Committee is powered to examine any matters relating to the financial affairs of the Company including external and internal audits.Responsibilities of the Committee:• The preparation, presentation and adequacy of disclosures in the quarterly and annual

financial statements of the Company, in accordance with the Sri Lanka Accounting Standards.

• Ensure the Company complies with financial reporting requirements.

• Ensure the Company’s Internal Control and Risk Management are adequate to manage and mitigate the risks that may occur in day to day operations of the Company.

• Ensure structured internal audit verifications are conducted and recommendations implemented.

• Assess the independence and performance of the External Auditors and make recommendations to the Board on the appointment /re-appointment of External Auditors.

The Committee is composed of two independent directors. The Committee is headed by Mr. Jehan Amaratunga a Fellow Member of the Institute of Chartered Accountants of Sri Lanka and a Fellow Member of the Chartered Institute of Management Accountants UK. Dr. Sivakumar Selliah represents the Committee as a Member.

The Committee met 5 times during the year under review.


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Corporate Governance Report contd.


b. Remuneration Committee The Remuneration Committee is responsible for formulating:• The Policy on remuneration for the Executive Staff.

• Specific remuneration package for the Executive Directors.

• Periodic reviews to ensure that the remunerations are in line with the market conditions.

The Remuneration Committee consists of Dr.Sivakumar Selliah as the Head of the Committee and Mr. Jehan Amaratunga as a Member. The Managing Director Mr.Aelian Gunawardene is invited to join in the deliberations as and when required.

Internal Control Managing Internal ControlThe Board has formulated and implemented comprehensive internal control systems to safeguard the assets of the Company and ensures that comprehensive records are maintained.

Clear guidelines of reporting and limits of authority have been established for operations. Annual budgets are prepared and approved by the Board at the commencement of the financial year. The Board monitors the monthly performance of the Company through monthly management meetings.

Reviewing the Effectiveness of Internal ControlThe effectiveness of the Internal Control system is periodically reviewed by the Audit Committee and reported to the Board. The Internal Audit function is outsourced to Ernst & Young advisory services.


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Report of the Audit Committee

JAT Holdings (Private) Limited operates by national best practice guidelines and has appointed the Audit Committee in line with the Listing Rules of the Colombo Stock Exchange. The Audit Committee assists the Board to improve the existing system of operation to be more transparent.

The committee confirms to the best of their knowledge that the functions of the Audit Committee are in accordance with the requirements under the Listing Rules of the Colombo Stock Exchange for the purpose of adhering to best practices. The Committee has reviewed internal control systems of all areas and recommendations received are submitted to the Board for Implementation.

CompositionThe Committee appointed by the Board Of Directors consists of two Independent Directors. The Committee is headed by Mr.Jehan Amaratunga, a member of the Institute of Chartered Accountants of Sri Lanka. Mr. Sivakumar Selliah Who represents the Committee as a member.

MeetingsThere were 5 meetings of the Committee during the year under review.

Functions of the Committee• The preparation, presentation and adequacy of disclosures in the quarterly and annual financial

statements of the Company, in accordance with the Sri Lanka Accounting Standards.

• Ensure the Company’s compliance with financial reporting requirements.

• Ensure the Company’s Internal Control and Risk Management are adequate to manage and mitigate the risks that may occur in the day to day operations of the Company.

• Ensure structured internal audit verifications are conducted and recommendations implemented.

• Assess the independence and performance of the External Auditors and make recommendations to the Board on the appointment /re-appointment of External Auditors.

The Managing Director and Director Finance on request assists the Committee at these meetings to formulate the recommendation.

Thanking you.Best regards,

Jehan AmaratungaChairman – Audit Committee

30 May 2015


46

The Remuneration Committee, reporting to the Board of Directors, consists of two Independent Directors; Dr. S. Selliah and Mr. J. Amaratunga. The Managing Director Mr. Aelian Gunawardene attends these meetings on invitation to participate in the deliberations.

The Committee is chaired by Dr. S. Selliah. The Committee met on two occasions during the financial year.

The Remuneration Committee has reviewed and recommended the following to the Board of Directors:

1. The Policy on remuneration for the Executive Staff.

2. Specific Remuneration package for the Executive Directors.

3. Periodic reviews to ensure that the remunerations are in line with market conditions.

In a highly competitive environment retaining and attracting High Profile Executives is a key challenge faced by the Company. In this context, the Committee has taken into consideration competition, market information and business performance in declaring the overall remuneration policy for the Company.

Dr. S. SelliahChairman- Remuneration Committee

30 May 2015

Report of the Remuneration Committee


47


The Directors are responsible under the Companies Act No: 7 of 2007, to ensure compliances of the requirements set out therein to prepare financial statements for each financial year giving true and fair view of the state of the affairs of the Company as at the balance sheet date and the profit of the Company for the financial year.

Considering the present financial position of the Company and the forecasts for the next year, the Directors have adopted the going concern basis for the preparation of these financial statements.

The Directors accept the responsibility for the integrity and objectivity of the financial statements presented. The Directors confirm that the financial statements have been prepared;

1. Using appropriate accounting policies which have been and applied in a consistent manner, and material departures, if any have been disclosed and explained: and

2. Presented in accordance with the Sri Lankan Accounting Standards; and that

3. Reasonable and prudent judgments and estimates have been made so that the form and substance of transactions are properly reflected. And

4. Provides the information required by and otherwise comply with the Companies Act.

The Directors are responsible for the proper management of the resources of the Company hence the internal control system has been designed and implemented to obtain reasonable assurance that the company is protected from undue risks and fraud. The Directors are satisfied that the control procedures are operated effectively during the year.

The Directors are required to prepare the financial statements and to provide the Auditors with every opportunity to take whatever steps and undertake whatever inspections that maybe considered being appropriate to enable them to give their audit opinion.

The Directors are of the view that they have duly discharged their responsibilities as set out in this statement.

Compliance ReportThe Directors confirm that to the best of their knowledge belief that all statutory payments in relation to regulatory and statutory authorities that were due in respect of the Company and its Subsidiaries as at the balance sheet date have been duly paid where relevantly provided for.

By Order of the Board,JAT Holdings (Pvt) Ltd

RHN Holdings (Private) LimitedSecretaries to the Company

30 May 2015

Statement of Directors Responsibilities


48

The Directors of JAT Holdings (Pvt) Limited have pleasure in presenting their report together with the financial statements for the financial year 2014/2015. The financial statements were, approved by the Audit Committee at the meeting held on 30th May 2015.

Principle Activities and ReviewThe company conducts its business operations in a highly ethical manner focusing on it vision and values.

The Company indulges in the operation of Manufacturing and Distribution. The Company manufactures decorative paints and distributes islandwide, whilst it trades in the business of wood coatings, furnishing and wood based solutions locally and internationally in the South Asian region.

The Company is presently the market leader for Sayerlack wood coatings and wood based solutions in the country. The Company is strongly concentrating on the export market too which is rapidly growing in volumes whilst also concentrating on their other flagship products such as Herman Miller, Permoglaze, Armstrong, Gossen and Brush Master which are world class products of the Sri Lankan market.

Expansions and Future DevelopmentsThe Company intends to grow in terms of acquisitions and forming strategic alliances when appropriate opportunities arise.

RevenueRevenue of the Company for the financial year amounted Rs. 3.5 billion, with turnover from the wood coating product range to the local market being the highest contributor, followed by revenue generated to export market.

TaxationIt is the Company’s policy to provide for deferred taxation on all expected timing differences. The provision for current taxation is computed according to the Inland Revenue act number 10 of 2006 and amendment there to.

Property Plant and EquipmentCapital expenditure of property, plant and equipment incurred during the year under review amounted to Rs. 205 million. Information pertaining to this is given in page 74 in note 4.1 to the financial statements. Land is included in the financial statements at lower of cost re-valuation. The value of property stated in the financial statements is not in excess of the market value.

Share CapitalThe total issued and paid up share capital of the Company amounted to Rs. 628 million as at 31st March 2015.

ReservesThe total reserves of the Company have increased to Rs. 1.2 billion as at 31st March 2015 from Rs. 860 million as at 31st March 2014. The detailed movement in reserves is shown in the statement of changes in equity, on page 56 of this report.

Major ShareholdersThe major Shareholders and the percentage held by each of them as at 31st March 2015 is given in page 98 under shareholder information.

DirectorsThe names of the Directors who served during the year are given in page 16 under the caption “Board of Directors”.

Directors ShareholdingThe shareholding of Directors as at end of the period is given in page number 98 of this report.

Environmental ProtectionThe Company has not engaged in any activities, which are detrimental or hazardous to the environment.

Statutory PaymentsThe Directors to the best of their knowledge and belief are satisfied that all statutory dues owing to the Government and employees have been made as due.

Events Subsequent to the Balance Sheet DateThere have been no material events that need to be adjusted in the financial statements subsequent to the balance sheet date.

Corporate Governance and Internal ControlThe practice operational in relation to Corporate governance and internal control in the Company is set out in page 42 of this report.

Annual Report of the Board of Directors


49


Directors Responsibility to Financial StatementsThe Directors responsibility for the financial reporting of the Company is set out in page 47 of this report.

Going ConcernThe Board of Directors is satisfied that the Company has adequate resources to continue its operation in the foreseeable future. Accordingly the financial statements are prepared on the principle of going concern.

Annual General MeetingThe Annual General Meeting will be held at the registered office of the company, No 351, Pannipitiya Road, Thalawathugoda on 16th July 2015 at 4.00 p.m. The notice of the Annual General Meeting is on page 101 of this report.

AuditorsM/s Ernst & Young Chartered accountants were the External auditors of the Company for the financial year 2014/2015.

By Order of the BoardJAT Holdings (Pvt) Ltd

RHN Holdings (Private) LimitedSecretaries to the Company

30 May 2015

52

Financial ReportsIndependent Auditors' Report 53 Statement of Profit or Loss and other Comprehensive Income 54Statement of Financial Position 55 Statement of Changes in Equity 56 Statement of Cash Flow 57Notes to the Financial Statements 59

53


Independent Auditors' Report

MPDC/DM/DM

INDEPENDENT AUDITOR’S REPORTTO THE SHAREHOLDERS OF JAT HOLDINGS (PRIVATE) LTD

Report on the Financial StatementsWe have audited the accompanying financial statements of JAT Holdings (Pvt) Ltd, (“the Company”), and the consolidated financial statements of the Company and its subsidiaries (“Group”), which comprise the statement of financial position as at March 31, 2015, and the statement of profit or loss and other comprehensive income, statement of changes in equity and, cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information. The Financial Statements of the Company as at 31 March 2014 and for the year then ended were audited by another auditor whose report dated 31 July 2014 expressed an unqualified opinion on such financial statements.

Board’s Responsibility for the Financial StatementsThe Board of Directors (“Board”) is responsible for the preparation of these financial statements that give a true and fair view in accordance with Sri Lanka Accounting Standards and for such internal control as the Board determines necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial statements that give a true and fair view 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board, as well as evaluating the overall presentation of the financial statements.

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

OpinionIn our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as at March 31, 2015, and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

Report on Other Legal and Regulatory RequirementsAs required by Section 163(2) of the Companies Act No. 7 of 2007, we state the following:

a) The basis of opinion and scope and limitations of the audit are as stated above.

b) In our opinion : 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.

The financial statements of the Company give a true and fair view of the financial position as at 31 March 2015, and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards, and

The financial statements of the Company and the group comply with the requirements of Section 151 and 153 of the Companies Act No. 07 of 2007.

30 May 2015Colombo

54


Group CompanyYear Ended 31 March 2015 Note 2015 2015 2014 Rs. Rs. Rs.

Revenue 16 3,546,165,115 3,539,403,115 2,992,617,332Cost of Sales (2,265,408,527) (2,260,576,932) (2,006,415,032)Gross Profit 1,280,756,588 1,278,826,183 986,202,300Other Income 17 22,624,612 22,624,612 17,263,328Selling and Distribution Costs (400,682,833) (400,347,058) (373,234,405)Administrative Expenses (231,973,533) (227,352,514) (148,621,769)Finance Cost 18 (33,310,188) (33,310,166) (38,101,305)Finance Income 19 2,491,214 2,491,214 1,612,163Profit Before Tax 20 639,905,861 642,932,272 445,120,312Income Tax Expense 21 (98,273,619) (99,121,014) (54,222,351)Profit For The Year 541,632,242 543,811,258 390,897,961

Earning Per Share - Basic 1.22 1.23 0.88

Other Comprehensive IncomeOther Comprehensive income not to be reclassified to profit or loss in subsequent periodsActuarial Gains/(Losses) On Defined Benefit Plans - Net Of Tax Effect (1,642,884) (1,642,884) 1,535,347Total Comprehensive Income 539,989,358 542,168,374 392,433,308

The Accounting Policies and Notes on pages 59 to 97 form an integral part of these financial statements.

Statement of Profit or Loss and other Comprehensive Income

55


Group CompanyAs at 31 March 2015 Note 2015 2015 2014 2013 Rs. Rs. Rs. Rs.

ASSETSNon-Current AssetsProperty, Plant and Equipment 4 598,750,044 598,531,585 459,713,230 362,104,556Intangible Assets 5 1,550,552 1,550,552 1,571,052 3,133,518Investment In Subsidiary 6 - 1,000,000 - -Deferred Tax Asset 21.2 847,395 - - -Biological Assets 6.1 7,500,000 7,500,000 7,500,000 5,625,000 608,647,991 608,582,137 468,784,282 370,863,074

Current AssetsInventories 7 721,088,442 721,088,442 808,737,674 348,719,709Trade and Other Receivables 8 1,345,863,115 1,345,833,115 1,028,357,256 652,338,728Advances and Prepayments 111,793,630 111,793,630 107,324,792 12,692,952Amount Due From Related Parties 9 201,686,846 203,700,745 123,700,974 62,877,396Other Financial Assets 10 144,150 144,150 330 -Cash and Bank Balances 15 97,793,702 97,473,218 38,251,774 60,678,919 2,478,369,885 2,480,033,299 2,106,372,795 1,137,307,705Total Assets 3,087,017,876 3,088,615,437 2,575,157,077 1,508,170,779

Equity And LiabilitiesCapital and ReservesStated Capital 11 628,770,000 628,770,000 628,770,000 900,000Retained Earnings 1,200,909,271 1,203,088,287 860,592,113 580,208,805Total Equity 1,829,679,271 1,831,858,287 1,489,362,113 581,108,805

Non-Current LiabilitiesInterest Bearing Loans and Borrowings 13 8,739,473 8,739,473 14,965,627 24,215,162Retirement Benefit Obligation 12 23,019,385 23,019,385 16,624,393 14,658,069Deferred Tax Liability 21.2 4,644,867 4,644,867 1,498,163 2,435,183 36,403,725 36,403,725 33,088,183 41,308,414

Current LiabilitiesTrade and Other Payables 14 711,260,403 710,678,948 601,176,582 355,316,460Amount Due to Related Parties - - - 324,404,103Interest Bearing Loans and Borrowings 13 461,613,993 461,613,993 411,634,333 181,876,416Income Tax Payable 48,060,485 48,060,485 39,895,866 24,156,581 1,220,934,880 1,220,353,425 1,052,706,781 885,753,560Total Equity and Liabilities 3,087,017,876 3,088,615,437 2,575,157,077 1,508,170,779

These financial statements are in compliance with the requirements of the Companies Act No. 07 of 2007.

H. C. J. GoonawardhanaDirector Finance Reporting and Controlling

The Board of Directors the responsible for the preparation and presentation of these Financial Statements. Signed for and on behalf of the Board by:

Aelian Gunawardene S. SivasubramaniamManaging Director Director Finance Treasury and Commercial The Accounting Policies and Notes on pages 59 to 97 form an integral part of these financial statements.

30 May 2015Colombo

Statement of Financial Position

56


Year Ended 31 March 2015Group Stated Capital Retained Earnings Total Rs. Rs. Rs. Balance as at 01st April 2013 900,000 584,047,678 584,947,678 Adjustments On The Transition Date (3,838,873) (3,838,873)Balance as at 01 April 2013 900,000 580,208,805 581,108,805

Shares Issued During The Year 627,870,000 - 627,870,000 Profit For The Year - 392,433,308 392,433,308 Dividend 2012/13 - (39,150,000) (39,150,000)Interim Dividend 2013/14 - (72,900,000) (72,900,000)Balance as at 31st March 2014 628,770,000 860,592,113 1,489,362,113

Profit For The Year - 541,632,242 541,632,242 Other Comprehensive Income - (1,642,884) (1,642,884)Total Comprehensive income - 539,989,358 539,989,358Dividend 2013/14 - (88,743,200) (88,743,200)Interim Dividend 2014/15 - (110,929,000) (110,929,000)Balance as at 31st March 2015 628,770,000 1,200,909,271 1,829,679,271

Year Ended 31 March 2015Company Stated Capital Retained Earnings Total Rs. Rs. Rs.

Balance as at 01st April 2013 900,000 584,047,678 584,947,678Adjustments On The Transition Date (3,838,873) (3,838,873)Balance as at 01 April 2013 900,000 580,208,805 581,108,805

Shares Issued During The Year 627,870,000 - 627,870,000Profit For The Year - 392,433,308 392,433,308Dividend 2012/13 - (39,150,000) (39,150,000)Interim Dividend 2013/14 - (72,900,000) (72,900,000)Balance as at 31st March 2014 628,770,000 860,592,113 1,489,362,113

Profit for the year - 543,811,258 543,811,258Other Comprehensive Income - (1,642,884) (1,642,884)Total Comprehensive income - 542,168,374 542,168,374Dividend 2013/14 - (88,743,200) (88,743,200)Interim Dividend 2014/15 - (110,929,000) (110,929,000)Balance as at 31st March 2015 628,770,000 1,203,088,287 1,831,858,287


Statement of Changes in Equity

57



Cash Flows From / (Used in) Operating ActivitiesProfit Before Tax 639,905,861 642,932,272 445,120,312

Adjustments for,Depreciation 4.2 48,694,500 48,664,909 26,863,792Amortisation For Intangible Assets 5 735,904 735,904 1,562,466Provision For Defined Benefit Plans 12 4,324,838 4,324,838 3,501,672Inventory Write off 15,612,990 15,612,990 3,814,819Disposal (Gain)/Loss on PPE (479,101) (479,101) (338,870)Bad Debt Provision 6,000,000 6,000,000 13,779,116Finance Income (2,491,214) (2,491,214) (1,612,163)Write Back Of Long Term Investment Provision - - (1,875,000)Finance Costs 18 33,310,188 33,310,166 38,101,305Operating Loss Before Working Capital Changes 745,613,966 748,610,764 528,917,451

(Increase) / Decrease In Inventories 72,036,242 72,036,242 (463,832,784)(Increase) / Decrease In Trade and Other Receivables (321,014,645) (320,984,645) (386,482,476)(Increase) / Decrease In Amount Due From Related Parties (77,985,872) (79,999,771) (57,335,410)(Increase)/Decrease In Advances & Prepayments (4,468,838) (4,468,838) (94,631,840)Increase / (Decrease) In Amount Due to Related Parties - - (313,054,490)Increase / (Decrease) In Trade & Other Payables 110,083,821 109,502,366 234,510,509Cash Generated From Operations 524,264,675 524,696,119 (551,909,041)

Tax Paid (87,170,793) (87,170,793) (41,123,085)Gratuity Paid (211,630) (211,630) -Finance Costs Paid (33,310,188) (33,310,166) (38,101,305)Net Cash From/(Used In) Operating Activities 403,572,063 404,003,529 (631,133,431)

Statement of Cash Flow

58



Cash Flows From / (Used in) Investing ActivitiesAcquisition of Property, Plant and Equipment (184,934,691) (184,686,641) (124,552,291)Acquisition of Intangible Assets (715,405) (715,405) -Proceeds From PPE Disposal 1,900,000 1,900,000 1,225,000Investment In Subsidiary - (1,000,000) -Investment In Equity Shares (143,820) (143,820) -Net Cash Flows Used in Investing Activities (183,893,915) (184,645,865) (123,327,291)

Cash Flows from Financing ActivitiesIssue of Shares - - 627,870,000Loan Obtained During The Year - - 20,000,000Net Increase Of Import Loan 9,696,761 9,696,761 131,469,733Bank Loan Repayments (13,400,208) (13,400,208) (9,233,458)Lease Rentals Paid (10,382,443) (10,382,443) (11,847,412)Dividends Paid (199,672,200) (199,672,200) (112,050,000)Net Cash Flows From Financing Activities (213,758,090) (213,758,090) 646,208,863

Net Decrease in Cash and Cash Equivalents 5,920,054 5,599,571 (108,251,859)

Cash & Cash Equivalents At The Beginning Of The Year 15 (69,926,116) (69,926,116) 41,814,241Cash & Cash Equivalents At The End Of The Year 15 (64,006,062) (64,326,546) (69,926,116)


Statement of Cash Flow contd.

59


Notes to the Financial Statements

1. CORPORATE INFORMATION1.1 GeneralJAT Holdings (Private) Limited is a limited liability company incorporated and domiciled in Sri Lanka. The registered office of the Company is located at No. 351, Pannipitiya Road, Thalawathugoda.

1.2 Principal activities and nature of operationsDuring the year, principal activities of the Group as follows.

JAT Holdings (Private) Limited-Company were to carry on a business of importers, exporters, agents, distributors, manufacturers, representatives, international traders, suppliers of and dealers in chemicals and chemical products, furniture, electrical and electrical goods, local produce and products.

Esteem Plantations (Private) Limited - Company carries on the business of managing plantations.

1.3 Parent of the companyJAT Holdings (Private) Limited, does not have an identifiable parent of its own.

1.4 Date of authorisation for issueThe Financial Statement of JAT Holdings (Private) Limited for year ended 31 March 2015 was authorised for issue in accordance with a resolution of the Board of Directors dated 30 May 2015. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES2.1 Statement of ComplianceThe Consolidated Financial Statements of the Group have been prepared in accordance with the Sri Lanka Accounting Standards (“SLFRS”) as issued by the Institute of Chartered Accountants of Sri Lanka.

The preparation and presentation of these financial statements are in compliance with the requirements of the Companies Act No.07 of 2007.

2.1.1 Basis of preparation and adoption of SLAS (SLFRS and LKAS) effective for the financial period beginning on or after 01 April 2013

The Financial Statements of the Company and the Group have been prepared in accordance with Sri Lanka Accounting Standards comprising SLFRS and LKAS (hereafter "SLFRS"), as issued by the Institute of Chartered Accountants of Sri Lanka.

The Group prepared its Financial Statements from the financial period beginning 01 April 2012 to financial period ended 31 March 2014 the Company prepared its financial statements in accordance with SLFRS for SMEs.

These Financial Statements for the year ended 31 March 2015 are the first, the Group has prepared in accordance with SLFRS effective for the periods beginning on or after 01 April 2013.

The Company/Group has consistently applied the accounting policies used in preparation of its opening the SLFRS Statement of Financial Position as at 01 April 2013 through all periods presented, as if these policies had always been in effect.

Note 3 discloses the impact of the transition to SLFRS on the Company's and Group’s reported financial position and performance including the nature and effect of significant changes in accounting policies from those used in the Company's and Group’s Financial Statements for the year ended 31 March 2013 prepared accordance with SLFRS for SMEs.

The financial statements of the Company and the Group have been prepared on a historical cost basis, unless otherwise indicated.

2.1.2 Basis of measurementThe financial statements of the Company have been prepared on a historical cost basis and presented in Sri Lankan Rupees (Rs), except when otherwise indicated.

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2.1.3 Going concernWhen preparing financial statements, Management has made assessments of the ability of the constituents of the Company to continue as going concern, taking into account all available information about the future, including intentions of curtailment of business, as decided by the Board.

2.2 Summary of Significant Accounting Policies2.2.1 Basis of ConsolidationThe consolidated financial statements comprise of the financial statements of the Group and its Subsidiaries as at 31 March 2015. The financial statements of the Subsidiaries are prepared in compliance with the Group’s accounting policies unless stated otherwise.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue 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, using consistent accounting policies. All intra-group balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full.

SubsidiariesSubsidiaries are those enterprises controlled by the Parent. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee)

Exposure, or rights, to variable returns from its involvement with the investee.

The ability to use its power over the investee to affect its returns

Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when

the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

The contractual arrangement with the other vote holders of the investee

Rights arising from other contractual arrangements.

The Group’s voting rights and potential voting rights.

Subsidiaries are fully consolidated from the date of acquisition or incorporation, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

The financial statements of the Subsidiaries are prepared for the same reporting period as the parent Company, which is 12 months ending 31 March, using consistent accounting policies.

2.2.2 Foreign currency translationThe Financial Statements are presented in Sri Lankan Rupees, which is the Group’s functional and presentation currency.

Transactions in foreign currencies are initially recorded by the Group/Company at the functional currency spot rate ruling at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the reporting date. Differences arising on settlement or translation of monetary items are recognised in profit or loss.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. The gain or loss arising on translation of non-monetary measured at fair value is treated in line with the recognition of gain or loss on change in fair value in the item (i.e.,

Notes to the Financial Statements contd.

61


the translation differences on items whose fair value gain or loss is recognised in other comprehensive income (OCI) or profit or loss are also recognised in OCI or profit or loss, respectively).

2.3 Taxation2.3.1 Current Income TaxCurrent income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Group operates and generates taxable income.

Current income taxes relating to items recognised directly in Other Comprehensive Income are also recognised in Other Comprehensive Income and not in the Income Statement. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

a) Deferred TaxDeferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised for all taxable temporary differences, except:

• Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

• In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax

losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:

• Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

• In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Current tax and deferred tax relating to items recognised directly in statement of other comprehensive income are also recognised in statement of other comprehensive income and not in the statement of profit or loss.

Deferred tax assets and liabilities are set off if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

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b) Sales TaxRevenues, expenses and assets are recognised net of the amount of sales tax, except:

• Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable.

• Receivables and payables are stated with the amount of sales tax included. The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

2.3.2 Borrowing CostsBorrowing costs are recognised as an expense in the period in which they are incurred, except to the extent where borrowing costs that are directly attributable to the acquisition, construction, or production of an asset that takes a substantial period of time to get ready for its intended use or sale, are capitalised as part of that asset.

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

2.3.3 LeasesThe determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date, whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement.

Group as a lesseeFinance leases which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as

to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the income statement.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Operating lease payments are recognised as an operating expense in the income statement on a straight-line basis over the lease term.

2.3.4 Events occurring after the Reporting PeriodThe materiality of the events occurring after the reporting date is considered and appropriate adjustments or disclosures are made in the Financial Statements.

2.4 Assets and Bases of Their ValuationAssets classified as current assets in the Statement of Financial Position are cash and those which are expected to be realised in cash during the normal operating cycle of the Company’s business or within one year from the reporting date.

Assets other than current assets are those which the Company intends to hold beyond a period of one year from the reporting date.

2.4.1 Property, plant and equipmentProperty, plant and equipment is initially stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing parts of the property, plant and equipment if the recognition criteria are met. When significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them accordingly. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in the income statement as incurred.


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Depreciation is calculated on a reducing balance basis over the useful life of the assets.

The depreciation rates for the current and comparative periods are as follows.

Buildings 6.67% -10%Office Equipment 15%Furniture and Fittings 15%Motor Vehicles 25%Stores Equipment 25%Air Conditioner 12.5%Cash Box 20%Computer Hardware 25%Communication Equipment 25%Sign Board 20%Steel Racks 20%Electrical Fittings 16%Plant and Machinery 25%Lab Equipment 15%Factory Equipment 15%

An item of Property, Plant and Equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognising of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset is derecognised.

The asset's residual values, useful lives and methods of depreciation are reviewed, and adjusted if appropriate, at each financial year end.

Capital expenditure incurred in relation to fixed assets which are not completed as at the reporting date are shown as capital work-in-progress and is stated at cost. On completion, the related assets are transferred to property, plant and equipment. Depreciation on capital work-in-progress commences when the assets are ready for their intended use.

2.4.2 Intangible AssetsIntangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any

accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in the income statement in the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed to be either finite or indefinite.

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the income statement in the expense category consistent with the function of the intangible asset.

2.4.3 InventoriesInventories are valued at the lower of cost and net realisable value, after making due allowances for obsolete and slow moving items. Net realisable value is the price at which inventories can be sold in the ordinary course of business less the estimated cost of completion and the estimated cost necessary to make the sale.

The cost incurred in bringing inventories to its present location and condition is accounted using the following cost formulae:-

Finished goods and work-in-progress

Finished goodsAt the cost of direct materials, direct labor and an appropriate portion of factory overhead.

Work- In- ProgressPortion of manufacturing overheads based on normal operating capacity

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Raw materialsAt purchase cost on weighted average cost basis.

Goods in transitAt actual cost

2.4.4 Financial InstrumentsFinancial AssetsInitial Recognition and MeasurementFinancial assets within the scope of LKAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company determines the classification of its financial assets at initial recognition.

All financial assets are recognised initially at fair value plus, in the case of assets not at fair value through profit or loss, directly attributable transaction costs.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.

The Company’s financial assets include cash and short-term deposits, loans, trade and other receivables. Accordingly the Company financial assets have been classified as Loans and Receivables.

Subsequent MeasurementThe subsequent measurement of financial assets depends on their classification:

a) Trade and Other receivablesTrade and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are intitally recognised at fair value plus any directly attributable transaction cost. After initial measurement, such financial assets are subsequently measured

at amortised cost using the effective interest rate method (EIR), less impairment. The losses arising from impairment are recognised in the profit or loss as a part of administration costs.

DerecognitionA financial asset (or, where applicable a part of a financial asset or part of a Company of similar financial assets) is derecognised when:

• The rights to receive cash flows from the asset have expired • The Company has transferred its rights to receive cash flows

from the asset or has assumed an obligation to pay the received cash flows in full.

Financial Assets carried at Amortised CostFor financial assets carried at amortised cost, the Company first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Company determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a Company of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognized are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred).

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the statement of comprehensive income. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised; the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to the statement of comprehensive income.


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Impairment of Financial AssetsThe Company assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. A financial is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the Company of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a Company of debtors is experiencing significant financial difficulty, default or delinquency in payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

2.4.5 Financial LiabilitiesInitial Recognition and MeasurementFinancial liabilities within the scope of LKAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings, carried at amortised cost. This includes directly attributable transaction costs.

The Company’s financial liabilities include trade and other payables, bank overdrafts and loans and borrowings.

Accordingly Company financial liabilities have been classifieds and loans and borrowings.

Subsequent MeasurementThe measurement of financial liabilities depends on their classification:

a) Loans and BorrowingsAfter initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the

statement of comprehensive income when the liabilities are derecognised as well as through the effective interest rate method (EIR) amortisation process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the statement of comprehensive income.

DerecognitionA financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

2.4.6 Cash and cash equivalentsCash and cash equivalents are cash in hand, demand deposits and short-term highly liquid investments, readily convertible to known amounts of cash and subject to insignificant risk of changes in value.

For the purpose of cash flow statement, cash and cash equivalents consist of cash in hand and deposits in banks net of outstanding bank overdrafts. Investments with short maturities i.e. three months or less from the date of acquisition are also treated as cash equivalents.

2.5 Impairment of Non-Financial AssetsThe Company assesses at each reporting date whether there is any objective evidence that a non-financial asset or a group of non-financial assets is impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the group of non-financial asset’s recoverable amount.

An asset's recoverable amount is the higher of an asset's or cash generating unit's fair value less costs to sell or its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of non-financial assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

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2.6 Liabilities and ProvisionsLiabilities classified as current liabilities in the Statement of Financial Position are those obligations payable on demand or within one year from the reporting date. Items classified as non-current liabilities are those obligations which become payable beyond a period of one year from the reporting date. All known liabilities have been accounted for in preparing these Financial Statements. Provisions and liabilities are recognised when the Company has a legal or constructive obligation as a result of past events and it is probable that an outflow of economic benefits will be required to settle the obligation.

2.7 Retirement Benefit Obligationsa) Defined Contribution Plans – Employees’ Provident Fund

& Employees’ Trust FundEmployees are eligible for Employees’ Provident Fund Contributions and Employees’ Trust Fund Contributions in line with the respective statutes and regulations in Sri Lanka. The Company contributes 12 % and 3% of gross emoluments of employees to the Employees’ Provident Fund and Employees’ Trust Fund respectively.

Defined Benefit Plan – GratuityA defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The defined benefit is calculated by independent actuaries. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related liability.

The present value of the defined benefit obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. Key assumptions used in determining the defined retirement benefit obligations are given in Note 12. Any changes in these assumptions will impact the carrying amount of defined benefit obligations.

The gratuity liability is not funded.

2.8 Capital Commitments and ContingenciesAll material capital commitments and contingent liabilities which exist as at the reporting date are disclosed in the respective notes to the Financial Statements.

2.9 Statement Of Profit Or Loss2.9.1 RevenueRevenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The Group assesses its revenue arrangements against specific criteria in order to determine if it is acting as a principal or agent. The following specific recognition criteria must also be met before revenue is recognised:

a) Sale of GoodsRevenue from the sale of goods is recognised when the significant risk and rewards of ownership of the goods have passed to buyer with the Company retaining neither continuing managerial involvement to the degree usually associated with ownership, nor an effective control over the goods sold.

b) Rendering of ServicesRevenue from rendering of services is recognised in the accounting period in which the services are rendered or performed.

c) Interest IncomeFor all financial instruments measured at amortised cost and interest bearing financial assets classified as available for sale, interest income or expense is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in finance income in the income statement.


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d) DividendsDividend income is recognised when the Shareholder's right to receive payment is established’.

e) Rental IncomeRental income is recognised on an accrual basis.

f) Gains and LossesNet gains and losses of a revenue nature on the disposal of Property, Plant & Equipment and other non-current assets including investments are accounted for in the income statement, after deducting from proceeds on disposal, the carrying amount of the assets and related selling expenses.

Gains and losses arising from activities incidental to the main revenue generating activities and those arising from a group of similar transactions which are not material, are aggregated, reported and presented on a net basis.

g) Other IncomeOther income is recognised on an accrual basis.

2.9.2 Expenditure RecognitionThe expenses are recognised on an accrual basis. All expenditure incurred in the ordinary course of business and in maintaining the Property, Plant & Equipment in a state of efficiency has been charged to income in arriving at the profit for the year.

For the purpose of presentation of the statement of profit or loss, the Directors are of the opinion that “function of expenses” method presents fairly the elements of the Company’s performance, and hence such presentation method is adopted.

2.10 Related Party DisclosuresDisclosures are made in respect of related party transactions in accordance with LKAS 24.

2.11 Fair Value MeasurementThe Company measures financial instruments such as investment in equity instruments, and non-financial assets such as Biological assets, Land, at fair value at each reporting date. Fair value related disclosures for financial instruments and non-financial assets that are measured at fair value or where fair values are disclosed are summarised in the following notes:

Disclosures for valuation methods, significant estimates and assumptions Notes 2.12Investment in unquoted equity shares Note 10.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• In the principal market for the asset or liability or • In the absence of a principal market, in the most

advantageous market for the asset or liability

The principal or the most advantageous market must be accessible by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

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All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

• Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

• Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

External valuers are involved for valuation of significant assets, such as Land. Involvement of external values is decided upon annually by the Management after discussion with and approval by the Company’s Audit Committee. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. The Management decides, after discussions with the Company’s external valuers, which valuation techniques and inputs to use for each case.

At each reporting date, the Management analyses the movements in the values of assets and liabilities which are required to be remeasured or re-assessed as per the Company’s accounting policies. For this analysis, the Management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.

The Management presents the valuation results to the Audit Committee and the Company’s Independent Auditors. This includes a discussion of the major assumptions used in the valuations.

The Management, in conjunction with the Company’s external valuers, also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

2.12 Critical Accounting Estimates And JudgmentsThe preparation of financial statements in conformity with Sri Lanka Accounting Standards requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.

The estimates and underlying assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Estimates/Judgments made by management in the application of Sri Lanka Accounting Standards that have a significant effect on the financial statements are mentioned below.

Policy NoteProperty, plant & equipment 2.4.1 4Valuation and depreciation 2.4.1 4Impairment of assets 2.4.4 8Employee benefit liabilities 2.7.1 12


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2.13 Current Versus Non-Current ClassificationThe Company presents assets and liabilities in the statement of financial position based on current/non-current classification. An asset as current when it is:

• Expected to be realised or intended to sold or consumed in normal operating cycle

• Held primarily for the purpose of trading • Expected to be realised within twelve months after the

reporting period Or • Cash or cash equivalent unless restricted from being

exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when:

• It is expected to be settled in a normal operating cycle. • It is held primarily for the purpose of trading. • It is due to be settled within twelve months after the

reporting period Or • There is no unconditional right to defer the settlement of the

liability for at least twelve months after the reporting period.

The Company classifies all other liabilities as non-current.

2.14 First - Time Adoption of SLFRSThese financial statements, for the year ended 31 March 2015, are the first the Company has prepared in accordance with SLFRS. From the financial period beginning 01 April 2012 to financial period ended 31 March 2014, the Company prepared its financial statements in accordance with SLFRS for SMEs. Accordingly, the Company has prepared financial statements which comply with SLFRS applicable for periods ending on or after 31 March 2015, together with the comparative period data as at and for the year ended 31 March 2014, as described in the accounting policies. In preparing these financial statements, the Group’s opening statement of financial position was prepared as at 1 April 2013, the Group’s date of transition to SLFRS.

2.15 Effect of Sri Lanka Accounting Standards Issued But Not Yet Effective:

The standards and amendments and interpretations that are issued but not yet effective up to the date of issuance of the Company's financial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective.

(i) SLFRS 9 - Financial Instruments: Classification and Measurement

SLFRS 9, as issued reflects the first phase of work on replacement of LKAS 39 and applies to classification and measurement of financial assets and liabilities.

This standard was originally effective for annual periods commencing on or after 01 January 2015. However the effective date has been deferred subsequently.

(ii) SLFRS 14 - Regulatory Deferral Accounts

The scope of this standard is limited to first-time adopters of SLFRS that already recognise regulatory deferral account balances in their financial statements. Consequently, the financial statements of rate regulated entities that already apply SLFRS, or that do not otherwise recognise such balances, will not be affected by this standard. This standard is effective for the annual periods beginning on or after 01 January 2016.

(iii) SLFRS 15 -Revenue from Contracts with Customers

SLFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including LKAS 18 Revenue, LKAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes. This standard is effective for the annual periods beginning on or after 01 January 2017.

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(iv) Amendments to LKAS 16-Property,Plant and Equipment and LKAS 41-Agriculture

Amendments to LKAS 41 and LKAS 16 have been issued in Sri Lanka on 21 April 2015, and to be effective from 01 January 2016.

The amendments define a bearer plant and include bearer plants within the scope of LKAS 16. A bearer plant is defined as a living plant that is used in the production or supply of agricultural produce, is expected to bear produce for more than one period and has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales. Previously, bearer plants were not defined and bearer plants related to agricultural activity were included within the scope of LKAS 41. Bearer plants are used solely to grow produce. The only significant future economic benefits from bearer plants arise from selling the agricultural produce that they create the operation is similar to that of manufacturing.

Accordingly, the amendments require bearer plants to be accounted for as property, plant and equipment and included within the scope of LKAS 16, instead of LKAS 41. The produce growing on bearer plants will remain within the scope of LKAS 41. Entities are required to apply the amendments for annual periods beginning on or after 1 January 2016. Earlier application is permitted.

This amendment to LKAS 41 and LKAS 16 has significant impact on the financial statements of the Company.

Except for the effect of amendments to the LKAS 16 and LKAS 41, None of these new standards and interpretations are expected to have a material effect on the Financial Statements of the Company. Pending the detailed review of such standards and interpretations, the extent of the impact has not been determined by the management.


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3. EXPLANATIONS TO THE TRANSITION OF SLFRSTo comply with the SLFRS 1, the company provides explanations to the transition to SLFRS from SLAS. The explanations include brief descriptions about the background of the change and a quantification of change. This also includes reconciliation of Company's equity as at the date of transition 1 April, 2013 and end of latest reported period for year ended 31 March, 2014. Reconciliation also includes for the total comprehensive income for the financial year ended 31 March, 2014.

Reconciliation of equity as at 1 April 2013 (date of transition to SLFRS's)Company Effect of SLAS Transition to SLFRS/LKAS 1 April 2013 SLFRS/LKAS 1 April 2013 Rs. Rs. Rs.

AssetsNon-current assetsProperty, Plant & Equipment 362,104,556 - 362,104,556Intangible Assets 3,133,518 - 3,133,518Long Term Investments 5,625,000 - 5,625,000Inventories 348,719,709 - 348,719,709Trade & Other Receivables 655,441,284 (3,102,556) 652,338,728 1,375,024,067 (3,102,556) 1,371,921,511

Amounts Due From Related Parties 62,877,396 - 62,877,396Advances And Prepayments 12,692,952 - 12,692,952Short Term Investments 10,426,147 - 10,426,147Cash & Cash Equivalents 50,252,772 - 50,252,772 136,249,267 - 136,249,267Total assets 1,511,273,334 (3,102,556) 1,508,170,779

Finance Lease Obligation 11,622,322 - 11,622,322Employee Benefits 14,047,935 610,134 14,658,069Long Term Loan 12,466,656 - 12,466,656Deferred Tax Liability 2,435,183 - 2,435,183Finance Lease Obligation 11,755,592 - 11,755,592Current Portion Of Long Term Loan 3,400,008 - 3,400,008Trade & Other Payables 442,255,796 126,184 442,381,980 497,983,492 736,317 498,719,809

Advance Received From Directors 52,432,900 - 52,432,900Amounts Due To Related Parties 332,888,005 - 332,888,005Income Tax Payable 24,156,581 - 24,156,581Bank Overdrafts 18,864,678 - 18,864,678 428,342,164 - 428,342,164

Stated capital 900,000 - 900,000Retained earnings 584,047,678 (3,838,873) 580,208,804 584,947,678 (3,838,873) 581,108,805Total Liability 1,511,273,334 (3,102,556) 1,508,170,779

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3. EXPLANATIONS TO THE TRANSITION OF SLFRS (Contd.)Reconciliation of equity as at 31 March 2014Company Effect of SLAS Transition to SLFRS / LKAS 31 March 2014 SLFRS/LKAS 31 March 2014 Rs. Rs. Rs.

AssetsProperty, plant and equipment 459,713,230 - 459,713,230Intangible assets 1,571,052 - 1,571,052Long term investments 7,500,000 - 7,500,000Inventories 808,737,675 - 808,737,675Trade and other receivables 1,049,949,538 (21,592,285) 1,028,357,253 2,327,471,494 (21,592,285) 2,305,879,209

Amounts due from related parties 123,701,304 - 123,701,304Advances and prepayments 107,324,792 - 107,324,792Short term investments 11,423,450 - 11,423,450Cash and cash equivalents 26,828,324 - 26,828,324 269,277,871 - 269,277,871Total Assets 2,596,749,365 (21,592,285) 2,575,157,077

LiabilitiesFinance lease obligation 2,589,179 - 2,589,179Employee benefits 19,107,871 (2,483,478) 16,624,393Long term loan 12,376,448 - 12,376,448Deferred tax liability 1,714,366 (216,203) 1,498,163Finance lease obligation 9,747,631 - 9,747,631Current portion of long term loan 13,400,208 - 13,400,208Trade and other payables 863,469,643 (1,817,972) 861,651,671Amounts due to related parties 19,833,515 - 19,833,515Income tax payable 39,895,867 - 39,895,867Bank overdrafts 108,177,891 - 108,177,891 1,090,312,618 (4,517,653) 1,085,794,965

Stated capital 628,770,000 - 628,770,000Retained earnings 877,666,746 (17,074,632) 860,592,113 1,506,436,746 (17,074,632) 1,489,362,113 2,596,749,364 (21,592,285) 2,575,157,077


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Reconciliation of total comprehensive income for the year ended 31 March 2014 Effect of SLAS Transition to SLFRS / LKAS 31 March 2014 SLFRS/LKAS 31 March 2014 Rs. Rs. Rs. Revenue 3,005,383,991 (12,766,659) 2,992,617,332Cost of sales (2,006,415,031) - (2,006,415,031) - - -Other income 17,263,328 - 17,263,328Administrative expenses (140,237,443) - (140,237,443)Distribution expenses (350,709,241) - (350,709,241)Post-employment benefits (5,059,935) 1,558,264 (3,501,671)Rent Expense (5,068,271) 470,843 (4,597,428)Provision for doubtful debts (9,529,358) (4,249,758) (13,779,116)Finance income 1,612,163 - 1,612,163Finance costs (47,132,580) - (47,132,580)Tax expense (54,438,555) - (54,438,555)Deferred tax expense - 216,203 216,203 - - 390,897,961Actuarial gain - 1,535,347 1,535,347 - - 392,433,308 Notes to the reconciliation of equity of the Company as at 1 April 2013 and 31 March 2014 and total comprehensive income for the year ended 31 March 2014.

Company A Trade Receivable- Impairment Of Trade Receivable As part of the SLFRS transition the Company evaluated the Trade receiveble recorded in the Group's financial statements and Company has identified provision for doubtful debtors of Rs.3,102,556/-. Therefore the remeasurement in this regard resulted in the carrying amount of trade Receivable reduced by Rs. 3,102,556/- which has been recognised directly in Equity under the provisions of SLFRS 1.

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4. PROPERTY, PLANT AND EQUIPMENT4.1 Gross Carrying AmountsGroup Balance Additions Disposals/ Balance As at Transfers As at 01.04.2014 31.03.2015At Cost Rs. Rs. Rs. Rs.

FreeholdLand 158,984,600 6,300,000 - 165,284,600Office and Factory Building 111,179,683 117,531,504 - 228,711,188Office Equipment 6,382,455 7,085,467 - 13,467,923Computers 5,009,607 4,024,620 - 9,034,227Furniture and Fittings 7,690,894 3,283,355 - 10,974,249Motor Vehicles 35,331,648 21,037,231 (3,800,000) 52,568,880Store Equipment 6,041,435 545,250 - 6,586,684Sign Boards 2,363,300 79,800 - 2,443,100Factory Equipment 19,125,610 12,574,809 - 31,700,419Lab Equipment 10,031,199 4,417,243 - 14,448,442Plant and Machinery 6,640,283 24,495,765 - 31,136,048 368,780,714 201,375,045 (3,800,000) 566,355,759

LeasholdMotor Vehicles 12,188,976 4,217,576 - 16,406,552Plant and Machinery 18,375,000 - - 18,375,000 30,563,976 4,217,576 - 34,781,552Total Value of Depreciable Assets 399,344,690 205,592,621 (3,800,000) 601,137,311

In the Course of ConstructionCapital Work in Progress 103,135,068 86,694,659 (103,135,067) 86,694,660 103,135,068 86,694,659 (103,135,067) 86,694,660Total Gross Carrying Amount 502,479,758 292,287,280 (106,935,067) 687,831,970


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4.2 Depreciation Balance Charge for Disposals Balance As at the year Transfers As at 01.04.2014 31.03.2015At Cost Rs. Rs. Rs. Rs.

FreeholdOffice and Factory Building 13,573,855 17,516,621 - 31,090,476Office Equipment 1,580,000 1,083,010 - 2,663,011Computers 1,233,502 1,520,433 - 2,753,935Furniture and Fittings 2,355,096 973,101 - 3,328,197Motor Vehicles 7,539,633 9,904,498 (2,379,101) 15,065,030Store Equipment 1,744,171 1,153,696 - 2,897,867Sign Boards 563,333 373,439 - 936,772Factory Equipment 1,543,166 3,638,871 - 5,182,037Lab Equipment 1,145,416 1,576,149 - 2,721,564Plant and Machinery 1,627,338 4,738,992 - 6,366,330 32,905,509 42,478,810 (2,379,101) 73,005,219

LeasholdMotor Vehicles 5,279,854 2,767,231 - 8,047,085Plant and Machinery 4,581,164 3,448,459 - 8,029,623 9,861,018 6,215,690 - 16,076,708Total Depreciation 42,766,528 48,694,500 (2,379,101) 89,081,927

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4. PROPERTY, PLANT AND EQUIPMENT (Contd.)4.3 Net Book Values 2015 2014Group Rs. Rs

FreholdLand 165,284,600 158,984,600Office and Factory Building 197,620,712 97,605,828Office Equipment 10,804,912 4,802,455Computers 6,280,292 3,776,105Furniture and Fittings 7,646,052 5,335,798Motor Vehicles 37,503,850 27,792,015Store Equipment 3,688,817 4,297,264Sign Boards 1,506,328 1,799,967Factory Equipment 26,518,382 17,582,444Lab Equipment 11,726,877 8,885,783Plant and Machinery 24,769,718 5,012,945 493,350,540 335,875,205

Leas holdMotor Vehicles 8,359,468 6,909,122Plant and Machinery 10,345,377 13,793,836 18,704,844 20,702,958In the Course of ConstructionCapital Work in Progress 86,694,660 103,135,068 86,694,660 103,135,068 598,750,044 459,713,230

4.4 During the financial year, the Group acquired Property, Plant and Equipment to the aggregate value of Rs. 189,152,213/-. Cash payments amounting to Rs. 184,934,691/- were made during the year for purchase of Property, Plant and Equipment.


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4.1.a Gross Carrying AmountsCompany Balance Additions Disposals/ Balance Additions Disposals/ Balance As at Transfers As at Transfers As atAt Cost 01.04.2013 31.03.2014 31.03.2015 Rs. Rs. Rs. Rs. Rs. Rs. Rs.

FreeholdLand 158,984,600 - - 158,984,600 6,300,000 - 165,284,600Office and Factory Building 89,071,988 22,107,695 - 111,179,683 117,531,504 - 228,711,188Office Equipment 5,479,145 903,310 - 6,382,455 7,067,217 - 13,449,673Computers 2,399,200 2,610,407 - 5,009,607 4,024,620 - 9,034,227Furniture and Fittings 7,075,645 615,249 - 7,690,894 3,283,355 - 10,974,249Motor Vehicles 16,710,962 20,620,686 (2,000,000) 35,331,648 21,037,231 (3,800,000) 52,568,880Store Equipment 5,881,660 159,775 - 6,041,435 545,250 - 6,586,684Sign Boards 2,233,300 130,000 - 2,363,300 - - 2,363,300Factory Equipment 1,595,735 17,529,875 - 19,125,610 12,574,809 - 31,700,419Lab Equipment 1,195,008 8,836,191 - 10,031,199 4,417,243 - 14,448,442Plant and Machinery 5,253,808 1,386,475 - 6,640,283 24,345,765 - 30,986,048 295,881,051 74,899,663 (2,000,000) 368,780,714 201,126,995 (3,800,000) 566,107,709

LeasholdMotor Vehicles 11,069,776 1,119,200 - 12,188,976 4,217,576 - 16,406,552Plant and Machinery 18,375,000 - - 18,375,000 - - 18,375,000 29,444,776 1,119,200 - 30,563,976 4,217,576 - 34,781,552Total Value of Depreciable Assets 325,325,827 76,018,863 (2,000,000) 399,344,690 205,344,571 (3,800,000) 600,889,261

In the Course of ConstructionCapital Work in Progress 53,795,334 49,339,734 - 103,135,068 86,694,659 (103,135,067) 86,694,660 53,795,334 49,339,734 - 103,135,068 86,694,659 (103,135,067) 86,694,660Total Gross Carrying Amount 379,121,161 125,358,597 (2,000,000) 502,479,758 292,039,230 (106,935,067) 687,583,920

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4. PROPERTY, PLANT AND EQUIPMENT (Contd.)4.2.a Depreciation Balance Charge for Disposals Balance Charge for Disposals Balance As at the year Transfers As at the year Transfers As at 01.04.2013 31.03.2014 31.03.2015At Cost Rs. Rs. Rs. Rs. Rs. Rs. Rs.

FreeholdOffice and Factory Building 7,247,660 6,326,195 - 13,573,855 17,516,621 - 31,090,476Office Equipment 809,040 770,960 - 1,580,000 1,080,870 - 2,660,871Computers 473,792 759,710 - 1,233,502 1,520,433 - 2,753,935Furniture and Fittings 1,490,543 864,553 - 2,355,096 973,101 - 3,328,197Motor Vehicles 2,900,643 5,752,860 (1,113,870) 7,539,633 9,904,498 (2,379,101) 15,065,030Store Equipment 343,641 1,400,530 - 1,744,171 1,153,696 - 2,897,867Sign Boards 105,773 457,560 - 563,333 359,993 - 923,326Factory Equipment 325,901 1,217,265 - 1,543,166 3,638,871 - 5,182,037Lab Equipment 152,307 993,109 - 1,145,416 1,576,149 - 2,721,564Plant and Machinery - 1,627,338 - 1,627,338 4,724,986 - 6,352,324 13,849,300 20,170,079 (1,113,870) 32,905,509 42,449,219 (2,379,101) 72,975,627

LeasholdMotor Vehicles 3,167,305 2,112,549 - 5,279,854 2,767,231 - 8,047,085Plant and Machinery - 4,581,164 - 4,581,164 3,448,459 - 8,029,623 3,167,305 6,693,713 - 9,861,018 6,215,690 - 16,076,708Total Depreciation 17,016,605 26,863,792 (1,113,870) 42,766,528 48,664,909 (2,379,101) 89,052,335


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Company 2015 2014 2013 Rs. Rs. Rs.

FreeholdLand 165,284,600 158,984,600 158,984,600Office and Factory Building 197,620,712 97,605,828 81,824,328Office Equipment 10,788,802 4,802,455 4,670,105Computers 6,280,292 3,776,105 1,925,408Furniture and Fittings 7,646,052 5,335,798 5,585,102Motor Vehicles 37,503,850 27,792,015 13,810,319Store Equipment 3,688,817 4,297,264 5,538,019Sign Boards 1,439,974 1,799,967 2,127,527Factory Equipment 26,518,382 17,582,444 1,269,834Lab Equipment 11,726,877 8,885,783 1,042,701Plant and Machinery 24,633,723 5,012,945 5,253,808 493,132,081 335,875,205 282,031,751

LeasholdMotor Vehicles 8,359,468 6,909,122 7,902,471Plant and Machinery 10,345,377 13,793,836 18,375,000 18,704,844 20,702,958 26,277,471In the Course of ConstructionCapital Work in Progress 86,694,660 103,135,068 53,795,334 86,694,660 103,135,068 53,795,334Total carrying amount of Property, Plant and Equipment 598,531,585 459,713,230 362,104,556

4.4 During the financial year, the Company acquired Property, Plant and Equipment to the aggregate value of Rs. 188,904,163/- (2014 - Rs. 125,358,596/-). Cash payments amounting to Rs. 184,686,641/- (2014 - Rs. 124,552,291/-) were made during the year for purchase of Property, Plant and Equipment.

5. INTANGIBLE ASSETSGroup 2015 Rs.

5.a.1 Computer Software5.a.1.1 CostAs at 1 April 5,522,994Additions/Transfer 715,405As at 31 March 6,238,399

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5. INTANGIBLE ASSETS (Contd.)5.a.1.2 Amortisation 2015 Rs.

As at 1 April 3,951,942Amortisation during the year 735,904As at 31 March 4,687,846

5.a.1.3 Carrying Value 2015 Rs.

As at 31 March 2015 1,550,552

5.1 Computer Software5.1.1 CostCompany

As at 1 April 5,522,994 5,522,994 3,955,550Additions/Transfer 715,405 - 1,567,444As at 31 March 6,238,399 5,522,994 5,522,994

5.1.2 Amortization 2015 2014 2013 Rs. Rs. Rs.

As at 1 April 3,951,942 2,389,476 76,068Amortisation during the year 735,904 1,562,466 2,313,408As at 31 March 4,687,846 3,951,942 2,389,476

5.1.3 Carrying Value 2015 2014 2013 Rs. Rs. Rs.

As at 31 March 2015 1,550,552 1,571,052 3,133,518


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6. INVESTMENT IN SUBSIDIARY Company 2015 2014 2013 Rs. Rs. Rs.

Esteem Plantations (Pvt) Ltd 1,000,000 - - 1,000,000 - -

6.1 Biological Assets Group Company 2015 2015 2014 2013 Rs. Rs. Rs. Rs.

Investment in Touch wood 7,500,000 7,500,000 7,500,000 5,625,000 7,500,000 7,500,000 7,500,000 5,625,000

7. INVENTORIES Group Company 2015 2015 2014 2013 Rs. Rs. Rs. Rs.

Raw Materials 238,765,872 238,765,872 342,215,836 68,874,145Goods In Transit 87,335,165 87,335,165 132,554,383 66,738,092Work in Progress 5,585,340 5,585,340 16,000,210 2,376,871Finished Goods 389,402,065 389,402,065 317,967,245 210,730,601 721,088,442 721,088,442 808,737,674 348,719,709

8. TRADE AND OTHER RECEIVABLES Group Company 2015 2015 2014 2013 Rs. Rs. Rs. Rs.

Trade Receivables (8.1) 1,329,541,227 1,329,541,227 1,011,103,950 643,433,269Other Receivables 16,321,888 16,291,888 17,253,306 8,905,459 1,345,863,115 1,345,833,115 1,028,357,256 652,338,728

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8. TRADE AND OTHER RECEIVABLES (Contd.)8.1 Trade Receivables Group Company 2015 2015 2014 2013 Rs. Rs. Rs. Rs.

Trade Debtors - Local 1,197,983,135 1,197,983,135 871,686,736 584,548,502Less - Provision for doubtful debtors (8.2) (49,545,005) (49,545,005) (20,065,276) (9,846,599) 1,148,438,130 1,148,438,130 851,621,460 574,701,903Project Debtors 102,841,807 102,841,807 98,970,692 33,246,683Export Debtors 77,961,290 77,961,290 60,511,798 35,484,683Amount Receivable From Director 300,000 300,000 - - 1,329,541,227 1,329,541,227 1,011,103,950 643,433,269

8.2 Provision for doubtful debtors Group Company 2015 2015 2014 2013 Rs. Rs. Rs. Rs.

Balance at the beginning of the year 20,065,276 20,065,276 9,846,599 1,338,359Provision for the year 29,479,729 29,479,729 10,218,677 8,508,240Balance at the year end 49,545,005 49,545,005 20,065,276 9,846,599

Past Due But Not ImpairedDebtor Aging Neither Past Due Company/Group Total Nor Impaired 31-60 61-90 Over 91 days days days Rs. Rs. Rs.

2015Local Debtors 1,197,983,135 444,244,550 295,368,914 136,261,528 322,108,144Project Debtor 102,841,807 10,915,162 7,820,775 30,932,301 53,173,569Export Debtors 77,961,290 22,786,131 5,980,768 11,764,792 37,429,599 1,378,786,232 477,945,843 309,170,457 178,958,621 412,711,312

2014Local 871,686,736 296,191,373 248,297,628 152,930,310 174,267,424Project Debtors 98,970,692 73,163,963 - - 25,806,729Export Debtors 60,511,798 32,780,659 18,637,667 5,406,003 3,687,470 1,031,169,226 402,135,995 266,935,295 158,336,313 203,761,623


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9. AMOUNT DUE FROM RELATED PARTIES Group Company Relationship 2015 2015 2014 2013 Rs. Rs. Rs. Rs.

ATLI Industries (Pvt) Ltd Affiliate Company 26,552 26,552 - -Timber Lake International (Pvt) Ltd Affiliate Company 3,719,895 3,719,895 216,625 82,620Brush Master (Pvt) Ltd Affiliate Company 32,242,952 32,242,952 1,954,390 14,723,831Colombo Kade (Pvt) Ltd Affiliate Company - - - 731,839JAT Holdings Bangladesh (Pvt) Ltd Affiliate Company 147,295,193 147,295,193 89,127,278 46,775,402D Design (Pvt) Ltd Affiliate Company 2,461,991 2,461,990 1,930,582 402,981JAT Marina Investments (Pvt) Ltd Affiliate Company - - - 40,000JAT Engineering (Pvt) Ltd Affiliate Company 199,683 199,683 137,281 120,723Jchem Coating (Pvt) Ltd Affiliate Company 10,053,911 10,053,911 26,846,651 -Alpha Delta Coatings (Pvt) Ltd Affiliate Company 3,174,000 3,174,000 - -Esteem Plantations (Pvt) Ltd Subsidiary - 2,013,899 - -Worldwide Resins & Chemicals (Pvt) Ltd Affiliate Company 70,000 70,000 - -Crest Marketing (Pvt) Ltd Affiliate Company 2,442,670 2,442,670 3,488,168 - 201,686,846 203,700,745 123,700,974 62,877,396

10. INVESTMENTS IN EQUITY SECURITIES Group Company 2015 2015 2014 No. of No. of No. of Shares Rs. Shares Rs. Shares Rs.

QuotedAccess Engineering 7,500 143,820 7,500 143,820 - - 7,500 143,820 7,500 143,820 - -

Non-QuotedCrest Marketing (Pvt) Ltd 33 330 33 330 33 330 33 330 33 330 33 330 144,150 144,150 330

11. STATED CAPITAL 2015 2014 2013Fully Paid Ordinary Shares Number Rs. Number Rs. Number Rs.

Balance at the Beginning 443,716,000 628,770,000 90,000 900,000 90,000 900,000Issued During The Year - - 443,626,000 627,870,000 - -Balance at the End 443,716,000 628,770,000 443,716,000 628,770,000 90,000 900,000

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12. RETIREMENT BENEFIT OBLIGATION Group Company 2015 2015 2014 2013 Rs. Rs. Rs. Rs.

Balance as at 1 April 16,624,393 16,624,393 14,658,069 11,920,418Current service cost 2,662,399 2,662,399 1,465,807 2,894,479Interest cost 1,662,439 1,662,439 2,035,864 1,153,471Actuarial (gain)/Loss 2,281,784 2,281,784 (1,535,347) (971,198)Payments during the year (211,630) (211,630) - (339,101)As at 31 March 23,019,385 23,019,385 16,624,393 14,658,069

Group Amounts charged to profit or loss Remeasurement gains/(losses) in other comprehensive income Sub-total Actuarial changes Sub total As at included in arising from included in As at 01 April Service cost Interest profit or loss Benefits paid changes in OCI 31 March assumptions Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

2015 16,624,393 2,662,399 1,662,439 4,324,838 (211,630) 2,281,784 2,281,784 23,019,385

Company Amounts charged to profit or loss Remeasurement gains/(losses) in other comprehensive income Sub-total Actuarial changes Sub total As at included in arising from included in As at 01 April Service cost Interest profit or loss Benefits paid changes in OCI 31 March assumptions Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

2014 14,658,069 1,465,807 2,035,864 3,501,671 - (1,535,347) (1,535,347) 16,624,3932015 16,624,393 2,662,399 1,662,439 4,324,838 (211,630) 2,281,784 2,281,784 23,019,385

The principal assumptions used in determining defined benefit obligation are shown below: Group Company 2015 2015 2014

Discount Rate 10% 10% 10%Salary Increment 18% 18% 18%Staff Turnover 27% 27% 27%Retirement Age 55 years 55 years 55 years

Sensitivity of assumptions used Discount Rate Salary Increment Group Company Group Company Rs. Rs. Rs. Rs.

Effect on the defined benefit obligation liabilityIncrease by one percentage point 22,182,642 22,182,642 23,920,122 23,920,122Decrease by one percentage point 23,921,842 23,921,842 22,166,277 22,166,277


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13. INTEREST BEARING LOANS AND BORROWINGS13.a Group 2015 2014 Rs. Rs.

Current Interest Bearing Loans and BorrowingsFinance Leases (13.a.1) 3,099,096 9,747,631Bank Loans - Long Term 6,709,768 13,400,208Import Loan 290,005,365 280,308,604Bank Overdrafts 161,799,765 108,177,891 461,613,993 411,634,333

Non-current Interest Bearing Loans and BorrowingsFinance Leases (13.a.1) 3,072,793 2,589,179Bank Loans (13.a.2) 5,666,680 12,376,448 8,739,473 14,965,627

13.a.1 Finance Leases As At New Leases As At 01.04.2014 Obtained Repayment 31.03.2015 Current Non-current Rs. Rs. Rs. Rs. Rs. Rs.

Gross Liability 13,034,053 6,020,106 (11,648,908) 7,405,251 - -Finance Charges Allocated to Future Periods (697,243) (1,802,584) 1,266,465 (1,233,362) - -Net Liability 12,336,810 4,217,522 (10,382,443) 6,171,889 3,099,096 3,072,793

13.a.2 Bank Loans As At Loans As At 01.04.2014 Obtained Repayment 31.03.2015 Current Non-current Rs. Rs. Rs. Rs. Rs. Rs.

Commercial Bank of Ceylon 13,310,000 - (10,000,200) 3,309,800 - -Hatton National Bank PLC 12,466,656 - (3,400,008) 9,066,648 - - 25,776,656 - (13,400,208) 12,376,448 6,709,768 5,666,680

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13. INTEREST BEARING LOANS AND BORROWINGS (Contd.)13.b Company 2015 2014 2013 Rs. Rs. Rs.

Current Interest Bearing Loans and BorrowingsFinance Leases (13.b.1) 3,099,096 9,747,631 11,755,592Bank Loans - Long Term 6,709,768 13,400,208 3,400,008Import Loan 290,005,365 280,308,604 147,856,138Bank Overdrafts 161,799,765 108,177,891 18,864,678 461,613,993 411,634,333 181,876,416

Non-current Interest Bearing Loans and BorrowingsFinance Leases (13.b.1) 3,072,793 2,589,179 11,748,506Bank Loans (13.b.2) 5,666,680 12,376,448 12,466,656 8,739,473 14,965,627 24,215,162

13.b.1 Finance Leases As At New Leases As At 01.04.2014 Obtained Repayment 31.03.2015 Current Non-current Rs. Rs. Rs. Rs. Rs. Rs.

Gross Liability 13,034,053 6,020,106 (11,648,908) 7,405,251 - -Finance Charges Allocated to Future Periods (697,243) (1,802,584) 1,266,465 (1,233,362) - -Net Liability 12,336,810 4,217,522 (10,382,443) 6,171,889 3,099,096 3,072,793

13.b.2 Bank Loans As At Loans As At 01.04.2014 Obtained Repayment 31.03.2015 Current Non-current Rs. Rs. Rs. Rs. Rs. Rs.

Commercial Bank of Ceylon 13,310,000 - (10,000,200) 3,309,800 - -Hatton National Bank PLC 12,466,656 - (3,400,008) 9,066,648 - - 25,776,656 - (13,400,208) 12,376,448 6,709,768 5,666,680


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14. TRADE AND OTHER PAYABLES Group Company 2015 2015 2014 2013 Rs. Rs. Rs. Rs.

Trade Payables 522,356,881 522,356,881 471,151,704 245,039,421Other Payables 185,825,568 185,825,568 1,334,704 53,959,962Sundry Creditors including Accrued Expenses 3,077,953 2,496,498 108,856,659 47,833,175Amount due to Directors - - 19,833,515 8,483,902 711,260,403 710,678,948 601,176,582 355,316,460

15. CASH AND CASH EQUIVALENTS IN CASH FLOW STATEMENT Group Company 2015 2015 2014 2013 Rs. Rs. Rs. Rs.

15.1 Favourable Cash and Cash Equivalent BalancesCash and Bank Balances 85,872,538 85,552,054 26,828,324 50,252,772Fixed Deposit (3 Months Maturity Period) 11,921,164 11,921,164 11,423,450 10,426,147 97,793,702 97,473,218 38,251,774 60,678,919

15.2 Unfavourable Cash and Cash Equivalent BalancesBank Overdrafts (161,799,765) (161,799,765) (108,177,891) (18,864,678)Total Cash and Cash Equivalents For the Purpose of Cash Flow Statement (64,006,062) (64,326,546) (69,926,116) 41,814,241

16. REVENUE Group Company 2015 2015 2014 Rs. Rs. Rs.

Local sales 2,694,100,951 2,687,338,951 2,404,395,454Off Shore Sales 845,787,842 845,787,842 523,042,939Fees received in foreign currency 6,276,322 6,276,322 65,178,939 3,546,165,115 3,539,403,115 2,992,617,332

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17. OTHER INCOME Group Company 2015 2015 2014 Rs. Rs. Rs.

Sundry Income 6,414,541 6,414,541 4,659,458Vehicle Rent Income 473,591 473,591 561,296Rent Income 1,375,874 1,375,874 1,389,001Income - Supplier Registration - - 3,000Vehicle Disposal Gain - Bikes 479,101 479,101 338,870Foreign Exchange Gain 13,231,342 13,231,342 10,311,703Gain on Sale of Shares 650,164 650,164 - 22,624,612 22,624,612 17,263,328

18. FINANCE COST Group Company 2015 2015 2014 Rs. Rs. Rs.

Overdraft Interest 8,519,474 8,519,452 10,251,573Import Loan Interest 8,893,120 8,893,120 22,808,467Interest on Leases 1,146,614 1,146,614 1,915,976Loan Interest 14,750,980 14,750,980 3,125,289 33,310,188 33,310,166 38,101,305

19. FINANCE INCOME Group Company 2015 2015 2014 Rs. Rs. Rs.

Interest - Fixed Deposits 2,491,214 2,491,214 1,612,163 2,491,214 2,491,214 1,612,163


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20. PROFIT BEFORE TAX Group Company 2015 2015 2014 Rs. Rs. Rs.

Include in Cost of SalesEmployees Benefits including the following Defined Benefit Plan Costs - Gratuity (included in Employee Benefits) 169,357 169,357 24,236 Defined Contribution Plan Costs - EPF&ETF 2,238,915 2,238,915 234,700Depreciation 23,125,500 23,125,500 15,361,898

Included in Administrative ExpensesEmployees Benefits including the following Defined Benefit Plan Costs - Gratuity (included in Employee Benefits) - - - Defined Contribution Plan Costs - EPF&ETF 3,089,565 3,089,565 2,789,751Depreciation 11,513,423 11,513,423 11,501,895Auditors Remuneration 560,000 525,000 641,431

21. INCOME TAX EXPENSE Group Company 2015 2015 2014 Rs. Rs. Rs.

Current Income TaxCurrent Tax Expenses on ordinary activities for the period (Note 21.1) 95,335,411 95,335,411 55,159,371 95,335,411 95,335,411 55,159,371Deferred Income TaxDeferred Taxation Charge/(Reversal) (Note 21.2) 2,938,207 3,785,602 (937,020) 98,273,619 99,121,014 54,222,351

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21. INCOME TAX EXPENSE (Contd.)21.1 A reconciliation between tax expense and the product of accounting profit / (loss) Group Company 2015 2015 2014 Rs. Rs. Rs.

Profit before taxation 639,905,861 642,932,272 460,107,622Exempt Profit of JAT Paints (10,421,545) (10,421,545) (4,474,891)JAT Profit before taxation 650,327,406 653,353,817 464,582,513Disallowable expenses 49,423,663 46,397,252 26,146,086Allowable expenses (125,452,946) (125,452,946) (59,722,397)Income considered separately - Interest income (3,240,245) (3,240,245) (1,612,163)Exempted profit (232,719,884) (232,719,884) (200,377,510)Add: Interest income (Gross) 2,145,618 2,145,618 1,540,055Statutory income 340,483,612 340,483,612 230,556,584Taxable income 340,483,612 340,483,612 230,556,584

Tax on profit from sale of rubber based product (15%) - - 10,842,084Tax on balance taxable income (28%) 95,335,411 95,335,411 44,317,287 95,335,411 95,335,411 55,159,371

21.2 Deferred Income Tax Statement of Statement of Financial Position Comprehensive Income Group Company Group Company 2015 2015 2014 2013 2015 2015 2014 Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Deferred Tax LiabilityCapital Allowances for Tax Purposes 12,420,988 12,406,550 7,064,570 6,368,605 (5,356,418) (5,341,980) (695,965)

Deferred Tax AssetsDefined Benefit Plans 7,761,684 7,761,684 5,566,407 3,933,422 1,556,378 1,556,378 1,632,985Taxable Loss 861,833 - - - 861,833 - - 8,623,517 7,761,684 5,566,407 3,933,422Deferred Income Tax Income/(Expense ) (2,938,207) (3,785,602) 937,020


91


Other Comprehensive Income Group Company 2015 2015 2014 Rs. Rs. Rs.

Defined Benefit Plans 638,900 638,900 216,203 638,900 638,900 216,203

Net Differed Tax Liability 3,797,472 4,644,867 1,498,163 2,435,183

Group Company 2015 2015 2014 2013 Rs. Rs. Rs. Rs.

Deferred Tax Liability 4,644,867 4,644,867 1,498,163 2,435,183Deferred Tax Assets 847,395 - - -Net Differed Tax Liability 3,797,472 4,644,867 1,498,163 2,435,183

22. COMMITMENTS AND CONTINGENCIES22.1b CommitmentsThere are no material commitments as at the reporting date.

22.2 ContingenciesThere are no material contingencies as at the reporting date.

23. EVENTS OCCURRING AFTER THE REPORTING DATEThe Directors have recommended the payment of Rs. 79,425,164/- as final dividend in accordance with section 32-"Events after the reporting period" This proposed dividend has not been recognised as a liability as at 31 March 2015.

There have no other material events occurring after the reporting date that require adjustments to or disclosure in the financial statements.

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24. ASSETS PLEDGEDThe Following assets have been pledged as security for liabilities

Nature of the Assets Pledged Nature of the Liability Carrying amount pledged

2015Rs.

2014Rs.

Hatton National Bank PLC

1) Documents of title to goods imported

2) Accepted Usance drafts Over Draft

3) SBLC Lien Over FD 10M Import Loan Rs. 10Mn Rs. 10Mn

4) PD Facility Cheque Purchase Indemnity Long Term / Short Term Loan

5) Lodgment of PD Cheque with a maximum 60 days Letter of Guarantee

Commercial Bank of Ceylon

1) Lien Over Saving Deposit

2) Letter of Authority Over Draft

3) Floating Primary Mortgage Import Loan Rs. 157Mn Rs. 157Mn

4) Board Resolution Long Term / Short Term Loan

5) Documents of Title to Goods Imported Letter of Guarantee

6) Accepted Usance drafts

Hongkong and Shanghai Banking Corporation

1) Primary Mortgage Over Property Over Draft Rs. 68,670,000 Rs. 68,670,000

2) Supplementary Mortgage Import Loan Rs. 51,000,000 Rs. 51,000,000

Letter of Guarantee

National Development Bank

1) Primary Mortgage Over -Kaduwela Land Over Draft

2) Stock and Debtors LKR 225M Import Loan Rs. 225Mn Rs. 225Mn

3) Lien Over FD 2.9M Letter of Guarantee Rs. 2.9Mn Rs. 2.9Mn


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25. RELATED PARTY DISCLOSURESDetails of significant related party disclosures are as follows;

Name of the company Nature of the transaction Transaction Amount 2015 2014 Rs. Rs.

D Design Opening Balance 1,930,582 402,981 Expenses 531,409 1,527,601 Closing balance 2,461,991 1,930,582

JAT Holdings Bangladesh (Pvt) Ltd Opening Balance 89,127,278 46,775,402 Sales 485,169,138 284,967,254 Payment received (393,848,316) (243,143,485) Foreign Ex Gain (Loss) (33,152,908) 500,000 Expenses - 28,107 Closing balance 147,295,193 89,127,278

JAT Engineering (Pvt) Ltd Opening Balance 137,281 120,723 Expenses 61,320 - Fund Transfer in (1,008,918) - Fund Transfer out 1,010,000 16,558 199,683 137,281

Jchem Coating (Pvt) Ltd Opening Balance 26,846,651 (324,404,103) Credit Card Sales 3,555,165 - Creditor Settlement (22,273,093) - Fund Transfer in (1,570,000) - Fund Transfer out - 13,357,897 Expenses 3,495,189 41,182,857 Vehicle Disposal - (3,800,000) Share Capital - 300,510,000 10,053,911 26,846,651

Timber Lake International (Pvt) Ltd Opening Balance 216,625 82,620 Expenses 3,503,270 134,005 3,719,895 216,625

Crest Marketing (Pvt) Ltd Opening Balance 3,488,168 - Crest Marketing Credit Card Sales (2,123,079) - Expenses 752,581 655,168 Fund Transfer out 325,000 2,833,000 2,442,670 3,488,168

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25. RELATED PARTY DISCLOSURES (Contd.)Name of the company Nature of the transaction Transaction Amount 2015 2014 Rs. Rs.

Brush Master Opening Balance 1,954,390 14,723,831 Payments (45,452,144) - Expenses 35,963,248 1,443,256 Fund Transfer in (929,828) - Fund Transfer out 39,366,286 11,286,124 Rent Income 1,341,000 - Purchases - (25,498,821) 32,242,952 1,954,390

Alpha Delta Coatings (Pvt) Ltd Fund Transfer out 3,174,000 - Total 3,174,000 -

Worldwide Resins & Chemicals (Pvt) Ltd Payments 70,000 - 70,000 -

ATLI Industries (Pvt) Ltd Expenses 6,552 - Fund Transfer out 20,000 - 26,552 -

All related party transactions have been conducted on agreed commercial terms with respective parties.

25.1 Transactions with Key Management Personnel of the CompanyThe Key Management Personnel of the Company are those persons with authority and responsibility for planing, directing and controlling the activities of the Company, directly or indirectly including Directors (whether executive or otherwise) of the Company. There have been no transactions with Key Management during the year other than mentioned below and disclosed in Note 9. 2015 2014 2013 Rs. Rs. Rs.

Short-term employee benefits 14,253,640 19,314,020 17,723,108 14,253,640 19,314,020 17,723,108


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Movement Of Directors Current Account 2015 2014 Rs. Rs.

Opening Balance (19,833,515) (8,483,902)Transactions during the period 20,133,515 (11,349,613)Closing Balance 300,000 (19,833,515)

26. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIESThe Group’s principal financial liabilities, comprise of loans and borrowings and trade and other payables. The main purpose of these financial liabilities is to finance the Group’s operations and to provide guarantees to support its operations. The Group has loans and other receivables, trade and other receivables, and cash and short-term deposits that arrive directly from its operations. The Company also holds available-for-sale investments.

The Group is exposed to market risk, credit risk and liquidity risk.

“The Group’s Senior Management oversees the management of these risks. The Senior Management is supported by the Board of Directors (BOD) that advises on financial risks and the appropriate financial risk governance framework for the Group. BOD provides assurance to the Group’s Senior Management that the Group’s financial risk-taking activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with group policies and group risk appetite. It is the Group’s policy that all activities for risk management purposes are required to be approved by the Board of Directors of JAT Holdings (Private) Limited.”

The Board of Directors review and agree on policies for managing each of these risks which are summarised below.

Market RiskMarket risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise four types of risk: interest rate risk, currency risk, commodity price risk and other price risk, such as equity price risk. Financial instruments affected by market risk include loans and borrowings, deposits and available-for-sale investments.

The overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the entity’s financial performance.

Interest Rate RiskInterest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long-term debt obligations with fixed interest rates.

The Group manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. The Group’s policy is to maintain an appropriate balance between fixed and variable rate borrowings.

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Foreign Currency RiskForeign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the import of raw materials, finished goods and packing materials.

The major part of the foreign transactions is dealt with US Dollars. Change in US Dollar Rate 1% increase 1% decrease Rs. Rs.Effect on Equity of the Company (2,823,730) 2,823,730

Equity Price RiskThe Group’s quoted and unquoted equity securities are securities susceptible to market price risk arising from uncertainties about future values of the investment securities. The Group’s Board of Directors review and approve all equity investment decisions.

At the reporting date, the exposure to listed and unlisted equity securities at fair value was Rs. 144,150/-.

Credit RiskCredit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily for trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.

Trade ReceivablesCustomer credit risk is managed by each Company subject to the Group’s established policy, procedures and control relating to customer credit risk management. Credit quality of the customer is assessed based on the established credit risk evaluation policy and individual credit limits are defined in accordance with this assessment.

Outstanding customer receivables are regularly monitored.

Minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on actual incurred historical data.

Cash DepositsCredit risk from balances with banks is managed in accordance with the Group treasury policy. Investments of surplus funds are made only with approved counterparties as per this policy.


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Liquidity RiskThe Group monitors its risk to a shortage of funds by setting up a minimum liquidity level. The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans, and finance leases. The Group assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. Access to sources of funding is sufficiently available and debt maturing within 12 months can be rolled over with existing lenders.

The table below summarises the maturity profile of the group's financial liabilities based on contractual undiscounted payments.

Year ended 31 March 2015 Less than Above 1 year 1 year Total

Bank Loans 6,709,768 5,666,680 12,376,448Finance Lease 3,099,096 3,072,793 6,171,889Trade and Other Liabilities 711,260,403 - 711,260,403 721,069,267 8,739,473 729,808,740

Capital ManagementCapital includes ordinary shares. The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise Shareholder value.

The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to Shareholders, return capital to Shareholders or issue new shares.

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As at the financial year ended 31st March 2015 Distribution of Shareholders

No Shareholders Number of Shares % of share holding as at

31.03.2015

Number of Shares % of share holding as at

31.03.2014

1 Mr.A.W. Gunawardene 246,992,000 55.7 246,992,000 55.7

2 Ms.V.N.Gunawardene 120,000,000 27.0 120,000,000 27.0

3 J Chem Coatings (Pvt) Ltd 40,068,000 9.0 40,068,000 9.0

4 Dr.S. Selliah 1,320,000 0.3 1,320,000 0.3

5 Ms.A. Selliah 2,120,000 0.5 2,120,000 0.5

6 Mr.V. Kailasapillai 2,120,000 0.5 2,120,000 0.5

7 Ms.A. Kailasapillai 2,120,000 0.5 2,120,000 0.5

8 Ms.S. Subramaniam 2,120,000 0.5 2,120,000 0.5

9 Mr.K. Aravinthan 1,320,000 0.3 1,320,000 0.3

10 Arunodhaya Ltd 3,360,000 0.8 3,360,000 0.8

11 Arunodhaya Industries (Pvt) Ltd 3,360,000 0.8 3,360,000 0.8

12 Arunodhaya Investments (Pvt) Ltd 3,360,000 0.8 3,360,000 0.8

13 Andysel (Pvt) Ltd 2,120,000 0.5 2,120,000 0.5

14 Adamjee Lukmanjee & Sons (Pvt) Ltd 5,332,000 1.2 5,332,000 1.2

15 Mr.M.A. Lukmanjee 2,668,000 0.6 2,668,000 0.6

16 Mr.J.P. Amaratunga 2,668,000 0.6 2,668,000 0.6

17 SDS Spices (Pvt) Ltd 2,668,000 0.6 2,668,000 0.6

Total 443,716,000 100 443,716,000 100

Composition of Shareholders

Catergory No. of holders as at 31.03.2015

Total Holding % No. of holders as at 31.03.2014

Total holding %

Individual Shareholders 10 383,448,000 86 10 383,448,000 86

Institutional Shareholders 7 60,268,000 14 7 60,268,000 14

Total 17 443,716,000 100 17 443,716,000 100

Director's Shareholdings as at 31st March 2015

No Name of Shareholders No of Shares as at 31st March 2015 No of Shares as at 31st March 2014

1 Mr.A.W. Gunawardene 246,992,000 246,992,000

2 Dr.S. Selliah 1,320,000 1,320,000

3 Mr.J.P. Amaratunga 2,668,000 2,668,000

Total 250,980,000 250,980,000

Shareholder Information

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5 Years Summary

2014 -2015 2013 -2014 2012 -2013 2011 -2012 2010 - 2011 Rs. Rs. Rs. Rs. Rs.

Trading ResultsGross Turnover 3,546,165,115 2,992,617,332 2,175,402,931 1,634,296,588 724,604,697Profit from operating activities 670,724,834 481,609,454 397,057,721 281,127,901 78,981,240Finance Cost (30,818,974) (36,489,142) (26,267,924) (22,958,649) (12,042,425)Profit before taxation 639,905,861 445,120,312 370,789,797 258,169,252 66,938,815Tax expences (98,273,619) (54,222,352) (28,242,704) (34,959,339) (21,665,454)Profit for the year 541,632,242 390,897,961 342,547,093 223,209,913 45,273,361

Balance SheetAssetsProperty, plant and equipment 598,750,044 459,713,230 484,726,481 358,411,422 344,693,185Intangible assets 1,550,552 1,571,052 3,133,518 3,879,482 -Long term investment 7,500,000 7,500,000 5,625,000 7,500,000 6,977,626Deferred tax asset 847,395 - - 988,101 -Current assets 2,478,369,884 2,106,372,795 1,495,409,445 1,057,894,618 363,193,361Total Assets 3,087,017,875 2,575,157,077 1,988,894,444 1,428,673,623 714,864,172

Equity and liabilitiesShare capital 628,770,000 628,770,000 10,900,100 10,900,100 10,900,100Retained earnings 1,200,909,270 860,592,113 877,276,020 556,077,180 336,867,307

Finance lease obligation 3,072,793 2,589,179 4,505,216 10,929,116 13,281,811Employee benefits 23,019,385 16,624,393 14,658,069 11,920,418 6,387,045Long term loan 5,666,680 12,376,448 24,215,162 - -Deferred tax liability 4,644,867 1,498,163 2,435,183 - -Current liabilities 1,220,934,880 1,052,706,781 1,054,904,693 838,846,809 347,427,909Total Equity and liabilities 3,087,017,875 2,575,157,077 1,988,894,443 1,428,673,623 714,864,172

RatiosNP ratio (%) 18% 15% 17% 16% 9%Return on Equity (%) 30% 26% 39% 39% 13%Return on Total Assets (%) 18% 15% 17% 16% 6%Current Ratio (Times) 2.03 2.00 1.42 1.26 1.05Quick Ratio (Times) 1.45 1.23 1.09 1.01 1.03Gearing (%) 0.48% 1.00% 3.23% 1.93% 3.82%

Note:Financial year 2010 / 2011 to 2012 / 2013 comprise of the performance of JAT Holdings (Pvt) Ltd and Jchem Coatings (Pvt) Ltd operations.

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Our Branch Network

Head OfficeJAT Holdings (Pvt) Ltd.No: 351, Pannipitiya Road,Thalawathugoda, Sri Lanka.Phone : +94 11–4407700 / 0773207932 / 0777800555Fax : +94 11 – 2773793Email : [email protected] JAT Tech CenterHerman Miller Showroom134 Havelock Road,Colombo 5. Sri Lanka.Phone: + 94 115288662Fax: +94 115404430E-mail: [email protected]

JAT Nawala Tech CenterNo: 1, Narahenpita Road,Nawala, Sri Lanka.Phone / Fax: +94 11 4400108E-mail: [email protected]

JAT Moratuwa Tech CenterNo:515/A, Rawatawatta,Galle Road,Moratuwa. Sri Lanka.Phone: + 94 11 5745745Fax: +94 11 5745746E-mail: [email protected]

JAT Trinco Tech CenterNo. 405, Main Street,Trincomalee, Sri Lanka.Phone : +94 26 4925189Fax: +94 26 4925189E-mail: [email protected]

JAT Kiribathgoda Tech CentreNo. 127, Makola Road, Kiribathgoda, Sri Lanka.Tel: +94 11 2987580E-mail: [email protected]: www.jatholdings.com

Our DistributorsDavnik DistributorNo.107, Batugedara, Rathnapura.Tel: 045 2231677 Perera DistributorsNo.757, Anuradhapura Road, Dambulla.Tel: 066 2283838Fax: 066 2284484 Saman Udaya Kumara AgenciesTissa Road, Yalabowa, Wellawaya.Tel: 055 2274516Mobile : 077 7673344Fax: 055 2274516 Dambullu EnterprisesNo 185, Puttalam Road, Kurunegala.Tel: 0372224078/0372229777Fax: 0372224078 Wasana EnterprisesNo. 190, Alapitiwala, Ragama.Tel: 011 2955559Fax: 011 2955559 A.R.G. Distributors (Pvt)LtdNo.421, Kurunegala Road,Aladeniya, WarallagamaTel: 081 2460121Fax: 081 2463561 Asia Agro Services EnterprisesNo.26, Vilgoda Road, Kurunegala.Tel: 037 2056816Fax: 037 2056816 Pathinayake Paint DistributorsNo.320, New Tangalle Road,Kotuwegoda, Matara.Tel: 041 2222972Fax: 041 2222972 Rimaco DistributorsNo. 169, Hekittha Road, Wattala.Tel: 011 5920290Fax: 011 2931293

Sunera Enterprises219-A, Pallemulla, Haloluwa, Kandy.Tel: 081 2492716Fax: 081 4930750 Pasindu Suppliers EnterprisesJaffna Road, Issenbassagala,Medawachchiya.Tel: 025 2245345Fax: 025 2245345 Narayana Hardwares Trader92 C, Stanely Road, Jaffna.Tel: 021 2225390 / 0215675390Fax: 021 2225390

International Distributors Head Office - BangladeshJAT Holdings Bangladesh (Pvt) LtdHouse 5, Road 8, Block J,Baridhara,Dhaka 1212 Bangladesh.Tele : +88 028822243, 8826827Fax : + 88 028821830E mail : [email protected] JAT SIA (Pvt) LtdChandra Vihar BuildingAvenue Road, City MarketBangalore 560 004IndiaPhone: Office +91 80 40500525/535Fax +91 80 40500505/515E-mail: [email protected]: www.jatholdings.com

Head Office – MaldivesMalza Pvt Ltd.Sifa Building, 5Th Floor,Boduthakurufaanu Magu,Male' 20094MaldivesTel: 0096 03015566Fax: 0096 03015577E-mail: [email protected]

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Notice of Meeting

NOTICE IS HEREBY GIVEN THAT the 2nd Annual General Meeting of JAT Holdings (Private) Limited will be held at the Main Board Room of JAT Holdings (Private) Limited, No 351, Pannipitiya Road, Thalawathugoda 16th July 2015 4.00 p.m to transact the following business.

1. To read the notice convening the meeting.

2. To receive and adopt the Annual Report of the Board of Directors and Audited Financial Statements for the year ended 31st March 2015 and the report of the Auditors thereon.

3. To re - appoint Messrs Ernst & Young, Chartered Accountants as the auditors of the company and to authorise the Directors to determine their remuneration.

4. To authorise the Board of Directors to determine contributions for charities and other purposes for the ensuing year.

4. To declare final dividend as determined by the Directors.

5. To transact any other business of which due notice has been given.

By Order of the BoardJAT Holdings (Pvt) Ltd.

RNH Holdings (Private) LimitedCompany Secretaries

Colombo25 June 2015

Notes: 1. A member entitled to attend and to vote at the meeting is entitled to appoint a proxy to attend and vote instead of him/her.

2. A proxy need not be a member of the Company.

3. A form of proxy is enclosed for this purpose.

4. The completed form of proxy should be deposited at the registered office of the Company, No. 351, Pannipitiya Road, Thalawathugoda not less than 24 hours before the time appointed for holding the Meeting.

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Notes

103


JAT HOLDINGS (PRIVATE) LIMITED

I/We* the undersigned ..………………………………………………...................................................................................................................................………….........

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

....................................................................................................... being a member/members of JAT HOLDINGS (PRIVATE) LIMITED hereby appoint

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

or failing him/her*

Dr. Sivakumar Selliah of Colombo or failing himMr. Aelian Winston Gunawardene of Thalawathugoda or failing himMr. Indika Kushan Palinda Chandrasekara of Thalawathugoda or failing himMr. Somasundaram Sivasubramaniam of Colombo or failing himMr. Ambagahapathirage Lakmal Gayan Perera of Colombo or failing himMr. Jehan Prasanna Amaratunga of Colombo or failing him

as my/our* proxy, to represent me/us* to vote on my/our* behalf at the Annual General Meeting of the Company to be held on 16th July 2015 at No 351, Pannipitiya Road, Thalawathugoda at 4.00 p.m and at any adjournment thereof, and at every poll which may be taken in consequence thereof.

Signed this ………………..................................................................................day of ..……….....................................................................................................2015

………………………………..............….Signature and Date

*Please delete the inappropriate words.

Form of Proxy

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Instructions as to Completion of Form of Proxyi) The full name and the address of the proxy and of the

Shareholder appointing the proxy should be entered legibly in the form of proxy.

ii) In the case of a Corporation/Company this proxy shall be under its Common Seal duly signed.

iii) The complete form of proxy should be deposited at the Registered Office of the Company No: 351, Pannipitiya Road, thalawathugoda, not less than 24 hours before the time appointed for holding the Meeting.

Contents

Our MissionTo be the Preferred Supplier in the South Asian Region for Leading Brands in the Furnishing and Finishing Industries.

Our Vision 2015• To be the preferred customer of leading suppliers in the industry.

• Achieve a group turnover of Rs. 5 billion by 2015.

• Achieve a net profit (after tax) of 15% of turnover.

• Establish distributors in new markets and convert existing intermediaries to form joint ventures with the Company (Distributors’ 5/JV3).

• Be among the top 20 “Employers of Choice” in Sri Lanka.

• Be the principal brand of choice in the coating industry.

• Be renowned as the “best source of information” in the coating industry.

• Certify 10,000 professionals in the coating industry.

Our ValuesOur valued Employees at JAT are required to encompass four essential values in order to achieve our Mission and Vision:• To possess in-depth knowledge of the entire business.

• Complete and augment Customer satisfaction.

• Attain and achieve leadership at all levels.

• Spearhead continuous improvement and innovation.

Performance at a Glance 02 About Us 06 Our Brands 08 Chairman’s Message 12 Managing Director’s Message 14Board of Directors 16 Executive Directors 18 Senior Management 20 Operational Review 24 Awards 34 Financial Review 36Corporate Social Responsibility 38 Our People 39 Corporate Governance 42 Report of the Audit Committee 45Report of the Remuneration Committee 46 Statement of Directors Responsibilities 47 Annual Report of the Board of Directors 48

Financial ReportsIndependent Auditors' Report 53 Statement of Profit or Loss and other Comprehensive Income 54 Statement of Financial Position 55Statement of Changes in Equity 56 Statement of Cash Flow 57 Notes to the Financial Statements 59 Shareholder Information 985 Years Summary 99 Our Branch Network 100 Notice of Meeting 101 Notes 102 Form of Proxy 103 Corporate Information IBC

Corporate Information

Registered OfficeJAT Holdings (Pvt) Ltd.,No: 351, Pannipitiya Road,Thalawathugoda, Sri Lanka.Phone: +94 11 – 4407700Fax: +94 11 – 2773793Email: [email protected] Site: www.jatholdings.com

Date of Incorporation1st July 1993

Board of DirectorsDr. S. Selliah - ChairmanMr. Aelian Gunawardene - Managing DirectorMr. Jehan Amaratunga - Independent DirectorMr. Indika Chandrasekera - Director OperationsMr. S. Sivasubramaniam - Director FinanceMr. Lakmal Perera - Director Commercial

Audit CommitteeMr. Jehan Amaratunga - ChairmanDr. S. Selliah

Remuneration CommitteeDr. S. Selliah - ChairmanMr. Jehan Amaratunga

BankersCommercial Bank PLCThe Hongkong and Shanghai Banking Corporation LtdHatton National Bank PLCNational Development Bank PLC

AuditorsErnst & YoungChartered AccountantsNo 622-B,201, De Sarams Place,Colombo 10.

SecretariesRNH Holdings (Pvt) Ltd.Kotte Road,Kotte.

Produced by Copyline (Pvt) Ltd Photography by Prishan Pandithage Printed by Gunaratne Offset Ltd

A brave new world

JAT Holdings (Pvt) Ltd Annual Report 2014 /15

JAT Holdings (Pvt) LtdNo: 351, Pannipitiya Road,Thalawathugoda,Sri Lanka.

JAT Holdings (Pvt) Ltd
