Lanka Aluminium Industries PLC: ANNUAL REPORT 2019/2020

L A NK A A LU M I N I UM
INDU ST R I E S P LC
ANNUAL REPORT 2019/2020

Board of Directors Website
Mr. Sri Theagarajah Nagendra www.aluminium.lk

Mr. Jude Dinal Peiris
Mr. Jayantha Mootatamby Swaminathan Bankers
Mr. Ranjeevan Seevaratnam
Mr. Paras Chandaria Hatton National Bank PLC
Mr. Hemaka Devapriya Senarath Amarasuriya National Development Bank PLC
Mr. Dinesh Stephan Weerakkody DFCC Bank PLC
Mr. Sanjeev Kumar Nations Trust Bank PLC
Sampath Bank PLC
Secretaries Lawyers
SSP Corporate Services (Private) Limited
Messrs. Julius & Creasy,
101, Inner Flower Road, Colombo 03
41, Janadhipathi Mawatha,
Colombo 01.
Company Registration Number
PQ 187 Auditors
Registered Office KPMG, Chartered Accountants

32 A, Sir Mohamed Macan Marker Mawatha,
1st Floor, Lakshman's Building, Colombo 03.
321, Galle Road, Colombo 03.
Contents
Notice of Meeting.....................................................................................................................................2 - 3
Financial Highlights.........................................................................................................................................4
Board of Directors.....................................................................................................................................5 - 6
Chairman’s Statement............................................................................................................................ 7
Stewardship....................................................................................... 8
Report of the Directors on the State of Affairs of the Company...............................9 - 11
Corporate Governance....................................................................................................................12 - 29
Risk Management and Business Control..............................................................................30 - 35
Corporate Social Responsibility..................................................................................................36 - 41
Audit Committee Report................................................................................................................42 - 43
Remuneration Committee Report............................................................................................44 - 45
Related Party Transactions Review Committee Report...............................................46 - 47
Responsibility Statement of Managing Director and..................................................................
Group General Manager Finance and Administration...........................................................48
Statement of Directors’ Responsibility for Financial Reporting .......................................49
Financial Information...................................................................... 50
Financial Calendar.........................................................................................................................................51
Independent Auditor’s Report....................................................................................................52 - 54
Income Statements......................................................................................................................................55
Statements of Profit or Loss and Other Comprehensive Income...................................56
Statements of Financial Position..........................................................................................................57
Statements of Changes in Equity........................................................................................................58
Statements of Cash Flows........................................................................................................................59
Notes to the Financial Statements......................................................................................... 60 - 104
Supplementary Information.........................................................105
Statement of Value Addition...............................................................................................................106
Real Estate Portfolio..................................................................................................................................107
Five Year Summary....................................................................................................................................108
Twenty (20) Major Shareholders.......................................................................................................109
Analysis of Shareholders According to the
Number of Shares as at 31st March 2020....................................................................................110
Glossary of Financial Terms .................................................................................................... 111 - 112
Form of Proxy (Enclosed).......................................................................................................... 115 - 116
NOTICE OF MEETING
Notice is hereby given that the Thirty Fourth Annual General Meeting 5. To consider and if thought fit to pass the following Ordinary
Annual Report 2019-2020
of Lanka Aluminium Industries PLC will be held at the hall (Cinema) Resolution pertaining to the re-appointment of Mr. R. Seevaratnam,
of Block 2 of BMICH, Bauddhaloka Mawatha, Colombo-07 on Thursday as a Director who is over 70 years of age, in compliance with Section
29th October 2020 at 10.00 A.M for the purpose of transacting the 211 of the Companies Act No.7 of 2007; and whose reappointment
following items of business: is recommended by the Board of Directors
AGENDA Ordinary Resolution

1. To receive and consider the Audited Financial Statements for the
“ THAT the age limit of seventy (70) years stipulated in section 210
year ended 31st March 2020 together with the Annual Report of
of the Companies Act No.7 of 2007 shall not be applicable to Mr.R.
the Board of Directors and of the Auditors thereon.
Seevaratnam,Director who, as at the date of this resolution is 77 years
2. To declare a First and Final Dividend of Rs. 1/- per share in respect of age (having reached 70 years of age on 24th September 2013)
of the financial year ended 31st March 2020 as recommended by and accordingly that the re-appointment of Mr.R. Seevaratnam
the Board of Directors. as a Director of Lanka Aluminium Industries PLC which had been
3. To re-elect as a Director Mr. D. S. Weerakkody, who retires by effected by a duly passed resolution of its Board of Directors on 7th
rotation in terms of Article No.86 of the Articles of Association as September 2020 on the basis that such re-appointment will be
recommended by the Board of Directors. effective from 11th September 2020 subject to the approval of the
shareholders being obtained therefor, be and is hereby approved
4. To consider and if thought fit to pass the following Ordinary
and ratified in pursuance of section 211 of the Companies Act No.7
Resolution pertaining to the re-appointment of Dr. J.M.
of 2007 effective from the said date of 11th September 2020 and
Swaminathan, as a Director who is over 70 years of age, in
THAT any and all decisions, acts, transactions that may have been
compliance with Section 211 of the Companies Act No.7 of 2007;
executed, including the execution of documents or otherwise
and whose reappointment is recommended by the Board of
which had been carried out or effected by Mr. R. Seevaratnam, in his
Directors.
capacity as a Director of the Company and for and on its behalf and
Ordinary Resolution in good faith and in its interests during the period commencing
from 11th September 2020, and upto the date hereof be and
“That the age limit of seventy (70) years stipulated in section 210 of
are hereby approved and ratified and accordingly that such acts,
the Companies Act No.7 of 2007 shall not be applicable to Dr. J.M.
transactions and documents shall, for all intents and purposes, be
Swaminathan,Director who, as at the date of this resolution is 79
valid and binding upon the Company”.
years of age (having reached 70 years of age on 9th January 2011)
and accordingly that the re-appointment of Dr. J.M. Swaminathan 6. To consider and if thought fit to pass the following Ordinary
as a Director of Lanka Aluminium Industries PLC which had been Resolution pertaining to the re-appointment of Mr. Hemaka D.S.
effected by a duly passed resolution of its Board of Directors on Amarasuriya as a Director who is over 70 years of age, in compliance
7th September 2020 on the basis that such re-appointment will be with Section 211 of the Companies Act No.7 of 2007; and whose
effective from 11th September 2020 subject to the approval of the reappointment is recommended by the Board of Directors
shareholders being obtained therefor, be and is hereby approved
and ratified in pursuance of section 211 of the Companies Act No.7 Ordinary Resolution
of 2007 effective from the said date of 11th September 2020 and
“THAT the age limit of seventy (70) years stipulated in section
210 of the Companies Act No.7 of 2007 shall not be applicable
to Mr Hemaka D.S. Amarasuriya,Director who, as at the date
which had been carried out or effected by Dr. J.M. Swaminathan
Lanka Aluminium Industries PLC
of this resolution is 76 years of age (having reached 70 years

, in his capacity as a Director of the Company and for and on its
of age on 19th November 2013) and accordingly that the re-
behalf and in good faith and in its interests during the period
appointment of Mr.Hemaka D.S. Amarasuriya as a Director of
commencing from 11th September 2020 and upto the date hereof
Lanka Aluminium Industries PLC which had been effected by a
be and are hereby approved and ratified and accordingly that such
duly passed resolution of its Board of Directors on 7th September
acts, transactions and documents shall, for all intents and purposes,
2020 on the basis that such re-appointment will be effective from
be valid and binding upon the Company”.
11th September 2020 subject to the approval of the shareholders
being obtained therefor, be and is hereby approved and ratified
in pursuance of section 211 of the Companies Act No.7 of
2
Notice of Meeting contd
2007 effective from the said date of 11th September 2020 and

which had been carried out or effected by Mr. Hemaka D.S.
Amarasuriya, in his capacity as a Director of the Company and for
and on its behalf and in good faith and in its interests during the
period commencing from 11th September 2020, and upto the date
hereof be and are hereby approved and ratified and accordingly
that such acts, transactions and documents shall, for all intents and
purposes, be valid and binding upon the Company”.
7. To authorize the Board of Directors to determine the remuneration

of the Auditors, Messrs KPMG, Chartered Accountants who are
deemed to have been re-appointed as Auditors in terms of Section
158 of the Companies Act No. 07 of 2007.
8. To authorise the Board of Directors to determine contributions to

charities.
By Order of the Board of Directors of Lanka Aluminium Industries PLC
(Sgd.)
S S P CORPORATE SERVICES (PRIVATE) LIMITED
SECRETARIES
Colombo
29th September 2020
1. A shareholder entitled to attend, speak and vote at the above

mentioned meeting is entitled to appoint a proxy to attend, speak
and vote instead of him/her. Such proxy need not be a Shareholder
of the Company.
2. A Form of Proxy is enclosed.
3. The completed Form of Proxy should be deposited at the Registered

Office of the Company, at 1st Floor, Lakshman’s Building, No.321,
Galle Road, Colombo 3, not later than 48 hours before the time
appointed for the holding of the meeting.
3
Financial Highlights
NET ASSETS PER SHARE EARNINGS PER SHARE
Rs.
Rs.
96.57
98.10 16
100 95.08
14.03
14
90
11.75
78.64
12
80
70.83
70 10
8.12
60 8
50 6
3.94
40 4 3.16
30 2
(2016) (2017) (2018) (2019) (2020) (2016) (2017) (2018) (2019) (2020)
Total Assets Total Liabilities Group Net Turnover Profit before Interest & Tax
Rs.Million Rs.Million
3000 4000 400
3500 350
2500
3000 300
Profit before Interest & Tax
2000
Group Net Turnover
2500 250
1500 2000 200

1500 150
1000
1000 100
500
500 50
0 0 0
(2016) (2017) (2018) (2019) (2020) (2016) (2017) (2018) (2019) (2020)
4 4
Board of Directors
Mr. S T Nagendra Mr. R Seevaratnam

Non-Executive Chairman Executive Director
Appointed to the board in October 1990 Appointed to the Board in December 2008.
Mr. Nagendra was appointed to the Board of Lanka Aluminium Former Senior Partner of Messrs KPMG Ford, Rhodes, Thornton &
Industries PLC in October 1990 and held the office of Non-Executive Company, Chartered Accountants. Graduated from the University of
Chairman until his demise on 5th of July 2020. London, majoring in Botany and Zoology. Fellow of the Institute of
Chartered Accountants England and Wales and Fellow of the Institute
He was formerly Chairman of the James Finlay Group, the Employers’ of Chartered Accountants of Sri Lanka. He is also presently on the
Federation of Ceylon and the British Business Association. He served on Board of several quoted and unquoted companies.
the committees of the Planter’s Association of Ceylon and the Ceylon
Chamber of Commerce. He was Chairman and Director of several
Mr. Paras Chandaria
private and public quoted companies. He served on the boards of a
Non-Executive Director
few companies. Appointed to the Board on 15th August 2011.
Mr. Paras Chandaria is a graduate from the London School of Economics

Mr. J D Peiris
Executive Chairman and Political Science. He has over 25 years international business
Appointed to the board in 1990. experience, having worked in Africa, Europe, Americas and Asia and
is currently based in London. He has deep and diverse experience
Mr. Dinal Peiris is an Engineer with a BSc (Hons) Degree (Lond) and an
starting up, building, turning around, managing and guiding multiple
MBA from the London Business School, UK. He joined the company
global and regional businesses across different industry verticals. He
in December 1989 as General Manager, the Company’s Board of
is currently in a business leadership role at Mainetti Group (largest
Directors in 1990 and was appointed Managing Director in May 1999.
garment hanger manufacturer - global), Cyklop Group (packaging
He has considerable techno/commercial experience in several areas,
business - global), Metecno Group (insulated panel producer - global),
especially in manufacturing of aluminium, steel, other metal products
ImagiNation (edutainment - India). He is also the Executive Chairman
as well as fabrics. He has also been involved in the setting up of new
of UST Global, a leading global digital technology services business
businesses including the company’s subsidiaries. He is on the Board of
committed to touching 3 billion lives through digital solutions and
several companies and government institutions in Sri Lanka and serves
technologies. In addition to his business and social commitments, he
as the Chairman/Managing Director of the company’s subsidiaries.
spends time on various CSR projects tackling the root causes of issues
Mr. Dinal Peiris was appointed as executive chairman on 12th August
such as exploitation of children, medical health, and education of girls
2020.
in India.
Dr. J M Swaminathan
Mr. Hemaka Amarasuriya
Independent Non-Executive Director
Appointed to the board in June 2002. Independent Non-Executive Director
Appointed to the Board on 15th August 2011
Dr. J. M. Swaminathan is an Attorney-at-Law with over 55 years in
Mr. Hemaka Amarasuriya was the former Chairman of the Singer Group
practice. He was the former Senior Partner of Messrs. Julius & Creasy.
of Companies in Sri Lanka and of NDB Bank, and a former Senior Vice
He is a Member of the Office for Reparations Sri Lanka. He has served
President of Singer Asia Limited. He is a Fellow of the Institute of
as a Member of the Law Commission of Sri Lanka and Member of the
Chartered Accountants of Sri Lanka and of the Chartered Institute of
Council of Legal Education and the Council of the University of Council.
Management Accountants, U.K. He also holds an Honorary Fellowship
He is also a Member of the Company Law Advisory Commission and
from the Chartered Institute of Marketing, U.K. and a Diploma in

The Intellectual Property Law Advisory Commission. He is the Chairman
Marketing Strategy from the University of New York. He is also a
of the Studies of the Council of Legal Education and also a Consultant
Fellow of the Institute of Certified Accountants and a Chartered Global
at the Institute of Advanced Legal Studies of the Council of Legal
Management Accountant. His wide experience in the field of marketing
Education. He is a Member of the Visiting Faculty of the LLM Course
has been recognized with many awards received both in Sri Lanka and
of the University of Colombo. He also serves on the Boards of several
abroad. He also has an abundance of experience in the industrial arena
public and private companies.
having chaired the Regional Industrial Service Committee Southern
Province of the Ministry of Industrial Development which manages
industrial parks outside the BOI for many years. He is on the Directorate
of other listed companies and non-listed companies.
5
STEWARDSHIP
Board of Directors contd
Mr. Sanjeev Kumar

Mr. Dinesh Weerakkody

Independent Non-Executive Director Non-Executive Director
Appointed to the Board in October 2011 Appointed to the Board in May 2015
Mr. Dinesh Weerakkody is the Chairman of Hatton National Bank Mr. Sanjeev Kumar has a degree in Mechanical Engineering from Indian
PLC, Chairman of the International chamber of Commerce Sri Lanka Institute of Technology, Delhi, and Diplomas in Foreign Trade and
and Cornucopia Sri Lanka . He is a former Chairman of the National Business Administration. He has over 43 years of experience across
Human Resource Development Council of Sri Lanka, Commercial Bank spectrum of industries and countries, encompassing power generation
of Ceylon PLC and the Employees’ Trust Fund Board of Sri Lanka. He and distribution equipment, auto components, aluminium extrusions
was also the Chairman of the government appointed Committee to and architectural facades, building material, packaging, plastic injection
review the Banking Sector and NBFI consolidation and the Committee moulding and pipe extrusion, building envelope solutions, insulated
appointed to review the Budgetary Allocation for Education. He was panels and edutainment based theme parks.
also a Director of DFCC Bank.
He has held leadership positions across different companies around
He is a Graduate in Business Administration (UK), a Fellow Member the globe – from CEO of Emtelle Group, headquartered in the UK to
of both the Chartered Institute of Management Accountants Managing Director of A-D Technologies Asia and Africa, Regional Head
(UK) and the Certified Management Accountants (Sri Lanka), of Mainetti Group. He has been instrumental in expanding business
Professional Member of the Singapore Human Resource across product groups and regions, setting up green field companies,
Institute and holds a MBA from the University of Leicester. joint ventures and global alliances. He has successfully lead cross
cultural teams in executing major projects in India, South East Asia,
He currently serves in a number of private sector and MNC Boards Middle East and Africa. Mr. Sanjeev Kumar is currently the Regional
and Chairs/Member of the Audit Committee and the Remuneration Head of Metecno Group Asia, Head of Cyklop Group India, and the CEO
Committee in several of those companies. He is a Council Member of Imagination Edutainment India Pvt. Limited. He is also on the boards
of the Sri Lanka Institute of Directors Vice Chairman Banking Group of of several companies as Independent Director.
the Employers‘ Federation of Ceylon and a Financial Advisory Board
Member of Sri Lanka Cricket and Caritas Sri Lanka.
6
Chairman’s Statement
On behalf of the Board of Directors, I am pleased to welcome you to the 34th Annual General Meeting of Lanka Aluminium Industries PLC, and

present to you the Annual Report and the Audited Accounts of the company for the year ended 31st March 2020.
The year under review 2019/2020, experienced a series of unexpected and unfortunate events which adversely impacted the economy.
We started the year with certain positive expectations from the economy which unfortunately, did not materialise.
In April, the Easter bomb attack and the unsettled conditions that prevailed thereafter, particularly had a negative effect on the growth in the
construction sector as building sites did not commence work for several months. This, together with the onset of the Presidential election in
November and the general pessimism brought forward from the previous year, prevented any semblance of economic growth.
In fact, according to the Central Bank statistics, the overall economic growth in 2019, at approx. 2%, was one of the lowest we have experienced
during the last five years. This, of course, had a very negative impact on the demand for construction materials which included aluminium
extrusions.
During the year, Group turnover reduced by approx. 7% which resulted in profit from operations declining by 11%. There was a slight reduction
in net finance cost mainly due to the reduced level of operations and Group profit before tax reduced from Rs. 80.8 Million to Rs. 64.6 Million.
Group profit after tax, for the year is Rs. 46.7 Million, which although is one of the lowest we have experienced over the last few years, is still
commendable taking cognizance of the macro economic factors. In spite of this reduced performance, after taking into consideration the
company’s ability to pay together with the current performance, your Board has recommended a dividend of Rs. 1/- per share for the year.
The current year 2020/2021 started off with the COVID-19 pandemic which resulted in unprecedented events which the world was not prepared
for. I am certain you will agree that we, as a nation, has so far coped well to contain the spread of the virus, but market conditions have been
badly affected.
I am pleased to report that your company has reacted well to the challenges brought about by the COVID situation and with the support &
cooperation of staff in all categories, we have managed to reduce our cost and increase efficiencies.
This has resulted in an improvement in the company’s performance as indicated in the published quarterly results.
If the present market conditions continue, this trend should last for this year.
Our future profitability will, to a great extent, depend on new foundations and on property development. We are confident that the newly elected
government will embark on several new infrastructure projects. The government’s policy to encourage local manufacture as well as the current
import restrictions will also present new opportunities for our company.
On behalf of the Board, I wish to place on record, our deep appreciation and gratitude to our former Chairman, late Mr. S.T. Nagendra, who passed
away in July 2020. Having joined the company on retirement as the Chairman of Finlays Colombo Limited, he was appointed to the Board as
Chairman in October 1990. He shared his valuable business experience with us and guided the company until his demise.
The Board will always be grateful to Mr. Nagendra for his invaluable contribution towards the progress of the company.
I also wish to thank the staff, our customers, suppliers, service providers and the Board of Directors for their unstinted advice and support.
Finally, my gratitude and thanks go to the representatives of the major shareholder as well as the Board of Directors for appointing me as the
Chairman of the company. I assure you of my best efforts to guide the company to its continued success.
(Sgd.)
J.D. Peiris
Executive Chairman
29th September 2020
7 7
Stewardship
8
Report of the Directors on the State of Affairs of the Company
The Board of Directors is pleased to present their Report and the 9. Corporate Donations

Audited Financial Statements of the Company for the year ended 31st Donations made by the Company amounted to Rs. 37,551/-
March 2020. The details set out herein provide pertinent information (2019 – Rs. 106,043/-). No donations were made for political
required by the Companies Act, No.7 of 2007, the Listing Rules of the purposes.
Colombo Stock Exchange and are guided by recommended best
accounting practices. 10. Directors
The Directors of the Company as at 31st March 2020.
1. Review of the year Mr. S.T. Nagendra Non Executive Chairman
The Chairman’s Statement at page 7 reviews the affairs of the Mr. J.D. Peiris Managing Director
Company for the financial year ended 31st March 2020. These Dr. J.M. Swaminathan Independent Non-Executive
Mr. R. Seevaratnam Executive
reports form an integral part of the annual report of the Board of
Mr. Paras Chandaria Non Executive
Directors for the year under review. Mr. H.D.S. Amarasuriya Independent Non-Executive
2. Principal Activity Mr. D.S. Weerakkody Independent Non-Executive
Mr. Sanjeev Kumar Non Executive
The principal activity of the Company is the manufacture and
sale of aluminium extrusions.
In terms of Article 86 of the Articles of Association of the
3. Financial Statements Company, Mr. D.S. Weerakkody retires by rotation at the Annual
The audited financial statements of the Company and group are General Meeting and being eligible offers himself for re-election.
given on pages 55 to 104.
A resolution for the re-appointment of Dr. J.M. Swaminathan
4. Auditor’s Report as a director who is 79 years of age will be proposed at the
The Auditor’s report on the financial statements is given on Annual General Meeting in terms of Section 211 of the Companies
pages 52 to 54. Act No.7 of 2007. Dr. J.M. Swaminathan’s re-appointment is
5. Accounting Policies and changes during the year recommended by the Directors.
The Financial Statements have been prepared in accordance with
Sri Lanka accounting and auditing standards act no 15 of 1995 A resolution for the re-appointment of Mr. R. Seevaratnam as a
which requires compliance with Sri Lanka Accounting standards. director who is 77 years of age will be proposed at the Annual
The detail accounting policies adopted in the preparation of General Meeting in terms of Section 211 of the Companies
Financial Statements are given on pages 60 to 76 There were Act No.7 of 2007. Mr. R. Seevaratnam’s re-appointment is
no changes to the accounting policies used by the group and recommended by the Directors.
the company during the year except for changes in accounting
A resolution for the re-appointment of Mr. H.D.S. Amarasuriya
policies disclosed in note 3.7 to the Financial Statements.
as a director who is 76 years of age will be proposed at the
6. Interest Register Annual General Meeting in terms of Section 211 of the Companies
The Company maintains an Interest Register and the particulars Act No.7 of 2007. Mr. H.D.S. Amarasuriya’s re-appointment is
of those directors who were directly or indirectly interested in a recommended by the Directors.
contract of the Company are stated therein.
Mr. S. T. Nagendra, Non-Executive Chairman passed away on 5th
7. Directors’ Interest
July 2020.
None of the directors had a direct or indirect interest in any
contracts or proposed contracts with the Company other than
The Board wishes to place on record the Company’s sincere
as disclosed in Note 31 related party transactions to the financial
appreciation to Mr. S. T. Nagendra the former Chairman for his
statements.
very valuable contribution extended to the Company and the

8. Directors’ Remuneration and Other Benefits Board during his long tenure with the Company
Directors remuneration in respect of the Company for the
financial year ended 31st March 2020 is given in Note 8 to the
financial statements.
9
STEWARDSHIP
Report of the Directors on the State of Affairs of the Company contd
11. Board Sub-Committees 14. Dividends

The following Board Sub-Committees are functional. The Board of Directors propose for payment of a First and Final
Dividend of Rs. 1/- per share for the year ended 31st March
•• Audit Committee
Mr. H.D.S. Amarasuriya Chairman/Independent Director 2020.
Mr. D.S. Weerakkody Member/Independent Director 15. Investments
Dr. J.M. Swaminathan Member/Independent Director
Details of investments held by the Company are disclosed in

Note 14 to the financial statements.
The report of the audit committee appears on pages 42 to 43
16. Intangible Assets
•• Remuneration Committee Intangible assets include the product performance license
Mr. D.S. Weerakkody Chairman/Independent Director
acquired during the year of 2014/2015 and it is stated at cost
less accumulated amortization and impairment loss.
Mr. S. Kumar Member/Non Executive Director
17. Property, Plant and Equipment
The report of the remuneration committee appears on pages 44 to 45 An analysis of the property, plant and equipment of the
Company, additions and disposals made during the year and
•• Related Party Transactions Review Committee
depreciation charged during the year are set out in Note 11 to
Mr. H.D.S. Amarasuriya Chairman/Independent Director
Mr. D.S. Weerakkody Member/Independent Director the financial statements.
18. Capital Commitments
The Board of Directors confirms that all applicable rules in the Code The capital expenditure approved by the Board but
of Best Practice on Related Party Transations and Section 9 of CSE not contracted for as at 31st March 2020 is Rs. 212 Mn
Listing Rules have been complied with by the Group as at the date (2018/2019 - Rs. 249 Mn).
of this Report.
19. Going Concern
The report of the related party transaction review committee
The Board of Directors is satisfied that the Company will continue
appears on pages 46 to 47
its operations in the foreseeable future. For this reason, the
12. Directors’ Shareholding Company continues to adopt the going concern basis in
The Directors of the Company as at 31st March 2020 did not hold preparing the Financial Statements.
ordinary shares of the Company.
20. Stated Capital
13. Auditors The Stated Capital of the Company is Rs.137,028,230/- There was
The financial statements for the year ended 31st March 2020 no change in the Stated Capital of the Company during the year.
have been audited by Messrs KPMG, Chartered Accountants,
21. Taxation
who have expressed their willingness to continue in office. In
The tax position of the Company is given in Note 9 to the
accordance with Section 158 of the Companies Act No.07 of
Financial Statements.
2007, the auditors will be deemed to have been re-appointed
at the forthcoming Annual General Meeting and accordindly a 22. Disclosure as per Colombo Stock Exchange Rule No.7.6
resolution authorising the Board of Directors to determine their 31.03.20 31.03.19
remuneration will be proposed thereat.
Market price per share as at 31st March 43.00 54.40
The fees paid to the Auditors during the year are disclosed in
Highest share price during the year 70.00 70.00
Note 8 to the financial statements.
Lowest share price during the year 40.00 45.40
As far as the Board of Directors is aware, the Auditors do not

have any relationship (other than that of an Auditor) with the 23. Shareholding
Company. The Auditors also do not have any interest in the The number of registered shareholders of the Company as at
Company. 31st March 2020 was 1,142.
24. Major Shareholders

The twenty largest shareholders of the Company as at 31st March
2020, together with an analysis are given on pages 109 to 110.
10
Report of the Directors on the State of Affairs of the Company contd
25. Statutory Payments The Board of Directors holds regular meetings and also meet if

To the best of the knowledge and belief of the Board of Directors circumstances warrant. The Board reviews the strategic direction
all statutory payments in relation to the government and the of the Company, its exposure of key business risks, the annual
employees have been made on time. budgets and the progress made toward achieving these budgets
and their capital expenditure programmes.
26. Corporate Social Responsibility(CSR)
Corporate social responsibility is an extension of the values The Board of Directors has delegated its primary objective to
we stand for as a company. Our goal is to connect with the achieve the strategic policy within the overall business policy,
people and businesses we serve and to make communities and indicated above, to the Executive Chairman/ Managing Director.
our Country better. Our CSR work focuses on four key areas: The Directos are responsible for the Company’s systems
responsible business practices, environmental sustainability, of internal finance controls. The Board has reviewed the
leadership and service, diversity and inclusion. During 2019/20 effectiveness of the systems of finance controls for the period up
the Company sponsored and supported charitable and to the date of signing the accounts. The Directors’ responsibility
community activities, with donations and sponsorships totaling for the financial statements is described on page 49
Rs. 37,551/-
28. Events Occurring After the Reporting Date
Our products go a long way towards minimizing the felling of
Subsequent to the reporting date of the Financial Statements,
trees and are completely recyclable without any negative impact
no circumstances have arisen, in the opinion of the Board of
on the environment. Schemes are in place to collect off-cuts and
Directors, which would require adjustments to the accounts.
waste which are recycled in-house.
There are also no significant post balance sheet events which in
27. Corporate Governance/Internal Control the opinion of the Directors require disclosure.
The Board of Directors confirms that, as at date of the Annual 29. Annual General Meeting
Report, the company complies with and is committed to good The 34th Annual General Meeting of the Company will be held
corporate governance. The Company has 5 non-executive at the hall (Cinema) of Block 2 of BMICH, Bauddhaloka Mawatha,
Directors on its Board. The Board as a whole decided on the Colombo-07 on Thursday 29th October 2020 at 10.00 A.M.
appointment of non-executive independent Directors. The
Directors so appointed retire in rotation at each annual general For and on behalf of the Board of Directors of
meeting and seek re-election by the shareholders. LANKA ALUMINIUM INDUSTRIES PLC
According to listing rule 7.10.4 (e) Dr. J.M. Swaminathan, Director
of the Company who has served on the Board for a period
exceeding nine years, is consequently presumed not to be
(Sgd) (Sgd)
independent by reason thereof.
J D Peiris Dr. J M Swaminathan
The Independent Non Executive Directors of the Company Executive Chairman Director
namely Mr. H.D.S. Amarasuriya and Dr. J.M. Swaminthan are
Directors of Acme Printing and Packaging PLC and Dr. J.M. (Sgd)
Swaminthan is a Director of Metecno Lanka (Pvt) Ltd in which S S P Corporate
majority of the other Directors of the Company are Directors. Services (Private) Limited,
According to listing rule 7.10.4 (g), a Non Executive Director is Secretaries

presumed to be non independent. If he is a Director of another
Company in which majority of the other Directors of the
Company are also Directors. 29th September, 2020
However, in the opinion the Board of Directors, , Dr. J.M.

Swaminathan and Mr. H.D.S. Amarasuriya satisfy other qualifying
criteria in terms of independence, and the Board of Directors
having considered such other factors from a holistic perspective
are of the opinion that Dr. J.M. Swaminathan and Mr. H.D.S.
Amarasuriya are nevertheless Independent Directors.
11
STEWARDSHIP
Corporate Governance
Our Board of Directors sets our long-term strategy and provides oversight
on the basis of strong principles and an appropriate tone from the top. It
ensures the long-term success of our company based on a clear strategy and
good corporate governance. Its focus on corporate culture helps us align the
interests between our business, our wider stakeholders and society.”
Corporate governance is the structures and processes for the direction Corporate Governance Practices
and control of companies. It is also about the relationships among Lanka Aluminium believes that good corporate governance is a
the management, Board of Directors, controlling shareholders,
critical factor in achieving business success. In pursuing the Corporate
minority shareholders and other stakeholders. The system of corporate
Objective, we have committed to the highest level of governance and
governance that ensures that the company acts in the best interests
strive to foster a culture that values and rewards exemplary ethical
of all stakeholders and that the “tone at the top” is appropriate.
standards, personal and corporate integrity and respect for others.
Further an important element of corporate governance is to ensure
Our approach to governance is predicated on the belief that there
the accountability of certain individuals in an organization through
is a link between high‑quality governance and the creation of long‑
mechanisms that try to reduce or eliminate the cost of principal agent
term shareholder value. Accordingly, corporate governance should
problem. To avoid mismanagement, good corporate governance is
encompass the following:
necessary to enable companies operate more efficiently, to improve
access to capital, mitigate risk and safeguard stakeholders. It also •• The company’s performance and the performance of the
makes companies more accountable and transparent to investors so board
as to minimize expropriation and unfairness for shareholders. Sound •• The relationship between the board and executive
corporate governance is reliant on external market place commitment management
and legislation plus a healthy board culture which safeguards policies •• The appointment and assessment of the board’s directors
and process. Corporate governance covers a very wide range of issues Board membership and responsibilities
and disciplines from company secretarial and legal, through to business •• The “ethical tone” of the company, and how the company
strategy, executive and non‑executive management and investor conducts itself
relations, to accounting and information systems and remuneration. •• Risk management, corporate compliance and internal controls
•• Communication with the shareholders
The goals of good corporate governance systems are:
•• Financial reporting
a. Ensuring integrity and ethical behavior in the company.
The Board is committed to maintaining a high standard of corporate
b. Ensuring that all shareholders are treated equitably.
governance practices within the Group and devotes considerable
c. E nsuring that the board has sufficient relevant skills and
effort to identify and formalize best practices. We believe that sound
understanding to review and challenge management’s
performance and actions and to provide oversight and and effective corporate practices are fundamental to the smooth,
advice to management. effective and transparent operation of a company and its ability to
d. E nsuring full disclosure and transparency to all stakeholders attract investment, protect the rights of shareholders and stakeholders,
of the company, including the reporting of financial and enhance shareholder value. Further, it is our view that governance
information. is not just a matter for the Board; a good governance culture must be
e. C
onsidering and balancing the interests of all stakeholders, fostered throughout the organization.
including those to whom the company has legal, contractual,
social, and market driven obligations, as well as to non- The Board is committed to ensuring there is a strong and effective
shareholder stakeholders, including employees, investors, system of corporate governance in place to support the successful
creditors, suppliers, local communities, customers, and policy
execution of the Company’s strategy. At Lanka Aluminium, we structure
makers.
corporate governance processes through a number of managerial
Poor corporate governance can create potential conflicts of interests, bodies which interact, control and depend on each other. Corporate
expropriation and unfair of minority shareholders. It only benefits the
governance at Lanka Aluminium can be structured as illustrated in our
parties involved but do not affect value to other stakeholders, small
shareholders with little impact on the stock price are brushed aside to corporate governance model below.
make way for the interests of majority shareholders and the executive
board. It can greatly eroded public confidence and tarnished society
as a whole.
12
Corporate Governance contd
The Chairman meets with the Independent Non‑Executive Directors

as and when necessary.
Responsibilities of the Board

ARTY TR AN
TED P S AC •• Review of Corporate objectives, budgets and forecasts.
R EL A TIO
NS
R •• Reviewing of operational and functional performance.
•• Ensuring the executive management focuses on managing
EV
IE
EE
W
risks to key business objectives
IT T
CO
N E R AT I O N CO M M
MM
•• Ensuring the implementation of an effective internal control
IT T E E
system and risk management system
SHAREHOLDERS •• Ensuring effective systems to secure integrity of information,
internal controls, business continuity and risk management
MU
•• Approving budgets and major capital investments.

RE
•• Establish a process of monitoring and evaluation of progress

BO S
AR OR on strategy implementation, budgets, plans and related risks
D O F DIREC T
T &
EN OL
•• Ensuring Compliance with Highest Ethical and Legal Standards

EM TR
AG ON
AU D EE
IT C O M M IT T
AN C
•• Ensuring all stakeholders interests are considered in corporate

M AL
SK N
T
RI TER
EXE EN
C U TIV
E M A N AGE M decisions
IN
•• Approval of the Annual and Interim Financial Statements prior

O R G A N IZ AT I O N
to publication.
•• Recommending Dividends for Approval by the Shareholders
This is also clearly a time where engagement with shareholders is more
Chairman and Chief Executive Officer
important than ever. As representatives of shareholders accountable
to them for the Group’s performance, it is a key part of the Board’s Other is a clear demarcation of the responsibilities between our
approach to governance to ensure shareholders’ views are heard and Non‑Executive Chairman and our Managing Director who is the Chief
understood. The Board governs the Group consistent with our long‑ Executive Officer during the year ended 31st March 2020. The functions
stated business strategy and commitment to a transparent and high‑ performed by our Chairman and our Managing Director are distinct
quality governance system. and separate, ensuring the balance of power and authority within the
organization, so that no person has unfettered powers of decision
The Board of Directors
making implementation.
The Board is collectively responsible for promoting the success of
Lanka Aluminium by directing and supervising policy and strategy. It is Role of Chairman
responsible to shareholders for the Company’s financial and operational Our Chairman is responsible for providing leadership and preserving
performance and risk management. The primary role of the Board is to
order at Board Meetings and the good corporate governance of our
protect and enhance long‑term shareholder value. It sets the overall
group whilst facilitating the effective discharge of Board functions and
strategy for the Group and supervises executive management. It also
business strategies. He is responsible for;
ensures that good corporate governance policies and practices are
implemented within the Group. In the course of discharging its duties, •• Ensuring the Board adheres to procedures and the relevant
the Board acts in good faith, with due diligence and care, and in the statutes whilst being in complete control of the affairs of the
best interests of the Company and its shareholders. Company,
The Board consists of 8 Directors out of which 6 are non‑executive •• Ensuring that its obligations to the various stakeholders and
directors. The names and profiles of the Directors are given on pages regulatory bodies are met,
5 & 6 of this Annual Report. They possess the skill, experience and •• Encouraging effective participation by both Executive and
knowledge, to set the directions and oversee the operations of the Non-Executive Directors on matters taken up for consideration
Company. The Board has determined that the 4 Independent Non‑ and
Executive Directors, satisfy the criteria for Independent set out in the •• Ensuring that shareholders are given adequate opportunity to
Listing Rules and annually each Non‑Executive Director declares his make observations, express their views and seek clarifications
independence/ non independence i.e. compliance with the relevant at meetings of shareholders.
statutory regulations.
Requirement to appoint a “Senior Non‑Executive Director” is not

relevant to the Company as the Chairman and the Managing Director
roles are segregated.
13
STEWARDSHIP
The Board Balance Board Committees

Coming from diverse business and professional backgrounds, the The Board delegates its powers and authorities from time to time
non‑executive directors (including independent non‑executive to committees in order to ensure the operational efficiency and
directors) of the Company have shared their valuable experiences to specific issues are being handled with relevant expertise. Three board
the Board for promoting the best interests of the Company and its committees have been established and each of them has its specific
shareholders. The non‑executive directors have actively participated in duties and authorities set out in its own terms of reference.
the board committees of the Company and they have made significant a. Audit Committee
contribution of their skills and expertise to these committees. The
The Audit Committee comprises of the following three independent
composition of the Executive and Non‑Executive Directors in the Board
non-executive directors.
satisfies the requirements laid down in the Listing Rules of the Colombo
Stock Exchange. The Board consists of six Non‑Executive Directors and Mr. H D S Amarasuriya – Chairman
three of them are Independent Non‑Executive Directors. The Board Mr. D S Weerakkody
has determined that the three independent Non‑Executive Directors Dr. J M Swaminathan
satisfy the criteria for “Independence” set out in the Listing Rules. Further details of the Audit Committee are given on this Annual Report
on pages 42 to 43.
Holding Regular Board Meetings
b. Remuneration Committee
The Board meets regularly at least four times a year at quarterly
intervals and holds additional meetings as and when the Board thinks The Remuneration Committee consists of following Three
appropriate. During the year under review, 5 Board meetings were Non‑Executive Directors, two of whom except Mr. S Kumar are
held. The meetings were presided over by the Chairman. Independent.
Directors of the Company play an active role in participating the Mr. D S Weerakkody – Chairman
Company’s meetings through contribution of their professional Dr. J M Swaminathan
opinions and active participation in discussion. The attendance record Mr S Kumar
of each of the directors for the Board meetings, held during Financial Non-Executive Directors are remunerated in accordance with the
Year 2019/2020 is listed as follows: Articles of Association of the Company. The fees and reimbursable
expenses are payable in consideration of the basis of contribution/
Attendance
Name of Director 28th May 08th Aug 14th Nov 13th Dec 14th Feb
2019 2019 2019 2019 2020 %
Mr. S.T Nagendra
√ √ √ x x 60
Non Executive Chairman/Non-Executive Director
Mr. J D Peiris
√ √ √ √ √ 100
Managing Director
Mr. R Seevaratnam
√ √ √ √ √ 100
Executive Director
Mr. Paras Chandaria
x x x √ x 20
Mr. Hemaka Amarasuriya
√ √ √ √ √ 100
Independent Non‑Executive Director
Mr. Dinesh Weerakkody

x √ √ x √ 60
Dr. J.M Swaminathan
√ √ √ √ √ 100
Mr. S Kumar
x √ √ √ x 60
14
services performed at the Board and Committee Meetings, and the Dedication of adequate time & effort

Company’s year end financial performance.
Adequate time is devoted at every meeting to ensure that the Board’s
The Company has no share option made available to the Directors, responsibilities are discharged satisfactorily.
Executives or employees of the Company.
Training for the Directors
The early termination of Directors is determined by the Articles of
The policy on Directors training is to provide adequate opportunities
Association of the Company.
for continuous development subject to requirement and relevance for
Further details of the Remuneration Committee are given on this each Director.
Annual Report on pages 44 to 45.
Supply of Information
c. Related Party Transactions Review Committee
The notices of Board Meetings are provided along with the agenda
A Related Party Transactions Review Committee was set up in well ahead of the scheduled meeting. The Board Papers are circulated
compliance with the Listing Rules of the Colombo Stock Exchange. among the Directors ahead of the meeting providing adequate time to
The Related Party Transactions Review Committee comprises of the review and call for any additional information and clarification to assist
following three independent non‑executive directors. them to formulate independent views.
Mr. H D S Amarasuriya – Chairman Availability of a Nomination Committee

Mr. D S Weerakkody
The Company has not formed a specific Nomination Committee.
Dr. J M Swaminathan
However, performance of the Board and its composition are being
A formalized process is in place for related party transactions including evaluated annually.
identification of related parties, types of transactions and avoidance
of conflict of interests. Directors individually declare their transactions Appointments to the Board
with the Company on an as and when basis and make disclosures of The Company is having a formal and transparent procedure for
their interest in compliance with the requirements of the Companies appointment of new Directors to the Board. No new directors have
Act No.07 of 2007 and other relevant statutory requirements. The been appointed during the financial year of 2019/2020.
Company maintains an interest register as stipulated in the Companies
Re-election of Directors
Act No.07 of 2007. All related party transactions as defined by the
applicable accounting standards are disclosed on Note 31 of the According to the Articles of association of the company, Director
Financial Statements on pages 55 to 104 of this Annual Report. Mr Paras Chandaria retire by rotation and being eligible for re‑election
will stand for re‑election by shareholders at the Annual General
Access to Independent professional advice
Meeting.
The Directors obtain independent professional advice whenever
required, assist in discharging their duties.
Appraisal of Board performance
The performance of the Board, its sub Committees and individual
Company Secretary
Directors are being evaluated annually.
All directors have access to the advice and services of the Company
Secretary, who is responsible to the Board in ensuring that Board Disclosure of information in respect of Directors
procedures are followed and that applicable rules and regulations are The names of the Directors and their profiles are disclosed on pages 5
compiled with. Any question of the removal of the Company Secretary to 6 of this Annual Report. Directors’ interests in contracts are indicated
should be a matter of for the Board as a whole. S S P Corporates Services in Note 31 of the Financial Statements of this Annual Report.
(Pvt) Ltd functions as the Secretary of the Board.

Appraisal of Chief Executive Officer
Independent judgment of the Directors
The performance of the Managing Director is being evaluated annually.
The Independent Directors remain independent from day to day
management and are free from any business and / or other relationship Constructive use of Annual General Meeting
which may hinder their exercise of unbiased judgment. This enables We ensure that all proxy votes are counted and the quantum of proxies
them to act critically and independently in the best interest of the lodged on each resolution is conveyed to our Chairman. Separate
Company. resolution is proposed at an Annual General Meeting on each substantial
separate issue. At the Annual General Meeting the respective Chairmen
15
STEWARDSHIP
of the Remuneration Committee and Audit Committee are present to an external professional body, members of the Audit Committee are
provide any clarification to shareholders as necessary. The notice and expected to report to the Board as necessary the occurrence of any
the agenda for the Annual General Meeting together with the Annual material control issues, serious incident or events that have had a
Report of the Company containing the relevant documents are sent to major commercial impact, or any significant new risks which have been
the shareholders giving 15 working days’ notice prior to the date of the identified.
Annual General Meeting.
Code of Business Conduct and Ethics
Communication with Shareholders
The Company has developed and institutionalized a strong set of
All shareholders are invited and encourage being present, actively corporate values and code of conduct that is circulated to Directors and
participating and voting at the Annual General Meeting. The Annual all employees. The Board ensures that Directors and employees strictly
General Meeting provides an opportunity for shareholders to seek comply with the code of Business Conduct and Ethics at all levels in the
and obtain clarifications and information on the performance of the performance of their official duties., communications, role modeling
Company. The external Auditors are invited to attend the Annual and in any other circumstances, so as to prevent the tarnishing of our
General Meeting, for any professional assistance that may requested. Company’s image in any manner. The violation of the code of ethics is
Shareholders who are not in the position to attend the Annual General an offence that is subject to disciplinary action.
Meeting in person are entitled to have their voting rights exercised by
Code of Best Practice on Corporate Governance
a proxy of their own choice.
We set out below the corporate governance practices adopted and
Major Transactions
practiced by the Company, the extent of adoption of the Code of Best
There were no major transactions during the financial year that Practice on Corporate Governance issued in year 2017 by The Institute
materially altered our Company’s net asset base or the consolidated of Chartered Accountants of Sri Lanka and the Rules set out in Section
Group net asset base.
7.10 of the Colombo Stock Exchange Listing Rules on Corporate
Financial Reporting Governance.
The Board responsibility to present the Financial Statements accepts in Section A

the Statement of Directors’ Responsibility shown on page 49.
This section covers Company’s extent of adherence to the requirements
The report of the directors on the state of affairs of the Company is of the Code of Best Practice on Corporate Governance issued in year
given on this Annual Report on pages 9 to 11. 2017 by The Institute of Chartered Accountants of Sri Lanka. This
The Statement of Directors’ Responsibilities is on page 49 Of this reflects Company’s governance in following six fundamental aspects:
Annual Report. •• Directors
•• Director Remuneration
The Auditor’s Report on the Financial Statements for the year ended
31st March 2020 is presented on pages 52 to 54 of this Annual Report. •• Relationship with Shareholders
•• Accountability and Audit
The management discussion and analysis of the company is covered •• Institutional Investors
from Chairman’s Review on page 7 of this Annual Report.
•• Other Investors
The Board is satisfied that the Company will continue its operations •• Internet of things and cyber security
in the foreseeable future. For this reason, the Company continues to •• Environment, society and governance
adopt the going concern basis in preparing the Financial Statements. These are discussed in the sections that follows.
Internal Control
The Board acknowledges its overall responsibility for maintaining

a sound system of internal controls to safeguard shareholders’
investments and the Company’s assets. The Board’s policy is to have
systems in place which optimize the Company’s ability to manage
risk in an effective and appropriate manner. The Board has delegated
to the Audit Committee responsibility for identifying, evaluating
and monitoring the risks facing the Company and for deciding how
these are to be managed. In addition to internal audit carried out by
16

Code of Best Practice on Corporate
Compliance Details of Compliance
Governance
A. Directors
A.1 The Board Complied The Board consists of 8 Directors out of which 6 are non‑executive
Every public company should be headed by directors. The names and profiles of the Directors are given on pages
an effective Board, which should lead and 5 & 6 of this Annual Report. They Possess the skill, experience and
control the Company. The Board should include knowledge, to set the directions and oversee the operations of the
a balance of Executive and Non‑Executive Company. The composition of the Executive and Non‑executive
Directors such that no party can dominate the Directors satisfies the requirements laid down in the Listing Rules of
Board’s decision making. The Board of a Listed the Colombo Stock Exchange.
Company includes two or one third of Non‑ The Board has determined that the 4 Independent Non‑Executive
Executive Directors appointed to the Board of Directors, satisfy the criteria for Independent set out in the Listing
Directors as “independent director”. Rules and annually each Non‑Executive Director declares his
independence/ non independence i compliance with the relevant
statutory regulations.
Requirement to appoint a “Senior Non‑Executive Director” is not
relevant to the Company as the Chairman and the Managing Director
roles are segregated as at 31st March 2020.
The Chairman meets with the Independent Non‑Executive Directors
as and when necessary.
A1.1 Frequency of Board Meetings Complied The Board generally meets on a quarterly basis, but more frequently
The Board should meet regularly and the Board whenever it is necessary. During the year under review, 5 Board
Meeting should be held at least once a quarter meetings were held. The meetings were presided over by the
of a financial year. Chairman. The attendance by each of the Directors is set out on page
14.
A1.2 Responsibilities of the Board Complied Please refer “Responsibilities of the Board” on page 13.
The Board’s role is to provide entrepreneurial
leadership of the Company within a framework
of prudent and effective controls which enables
risk to be assed and managed.
A1.3 Compliance with laws and access to Complied The Board collectively and the Directors individually act in accordance
independent professional advice. with the laws of the country of operation which are Applicable to the
There should be a procedure agreed by the business enterprise. The Board of Directors ensures that procedures
Board of Directors, in furtherance of their duties and processes are in place to ensure that the Company complies with
to take professional advice if necessary. all applicable laws and regulations.
A procedure has been established for Directors to seek independent
professional advice from external parties when necessary at the
expense of the Company.
A 1.4 Board Secretary Complied The Directors have access to the advice and services of the Board
All Directors should have access to the advice Secretary. The Board Secretary ensures that Board procedures,
and services of a Company Secretary, who is relevant statutory obligations and other applicable rules and
regulations are complied with.
responsible to the Board for ensuring that Board

procedures are followed and that applicable The Board Secretary had provided the Board with support and advice
rules and regulations are compiled with. relating to Corporate Governance matters, Board procedures, and
applicable rules and regulations during the financial year. The Board
Secretary ensures that the Board members are provided with timely
and accurate information to fulfill their duties.
The appointment and removal of the Board Secretary is a decision
taken by the Board as a whole. S S P Corporates Services (Pvt) Ltd
functions as the Secretary of the Board.
17
STEWARDSHIP

Code of Best Practice on Corporate Compliance Details of Compliance

Governance
A1.5 Independent judgment Complied The Independent Directors remain independent from day to day
All Directors should bring independent management and are free from any business and / or other
judgement to bear, in discharging their duties relationship which may hinder their exercise of unbiased judgment.
and responsibilities on matters relating to the This enables them to act critically and independently in the best
Board including strategy, performance, resource interest of the Company.
allocation, risk management, compliance and
standards of business conduct
A1.6 Dedication of adequate time and effort by Complied Adequate time is devoted at every meeting to ensure that the Board’s
the Board and Board Committees responsibilities are discharged satisfactorily.
Every Director should dedicate adequate time
and effort to matters of the Board and the
Company.
A1.7 Ability to present resolution to the Board Not This was not exercised during the financial year 2019/2020.
One third of directors can call for a resolution to Applicable
be presented to the Board where they feel it is
in best interest to the company to do so.
A1.8 Induction and Training for Directors Complied The policy on Directors training is to provide adequate opportunities
Every Director should receive appropriate for continuous development subject to requirement and relevance for
training on the first occasion that he or she is each Director.
appointed to the Board of a listed Company and
subsequently as necessary.
A.2 & A2.1 Chairman and Chief Executive Officer Complied There is a clear demarcation of the responsibilities between our
There should be a clear division of Non‑Executive Chairman and our Managing Director who is the Chief
responsibilities between the Chairman and Executive Officer. The functions performed by our Chairman and our
the Chief Executive Officer to ensure a balance Managing Director are distinct and separate, ensuring the balance of
of power and authority, in such a way that power and authority within the organization, so that no person has
any individual has no unfettered powers of unfettered powers of decision making implementation.
decisions.
A.3 Chairman’s Role Complied The Chairman in running the Board facilitates the effective discharge
The Chairman should lead and manage the of Board proceedings. All the Directors are encouraged to participate
Board, ensuring that it discharges its legal and in decision making and their views are obtained to ensure that the
regulatory responsibilities effectively and fully, Board functions in an efficient manner which is beneficial to the
and preserves order, and facilitates the effective stakeholders and the Company.
discharge of the Board function. Please refer page 13 for the Chairman’s role.
A.4 Financial Acumen Complied The Board of Lanka Aluminium Industries PLC consists of professionals
The Board should ensure the availability within as well as entrepreneurs who have many years of experience in the
of those with sufficient financial acumen and corporate world. Their proficiency in the diverse areas of business,
knowledge to offer guidance on matters of academic and/or entrepreneurial financial skills, business acumen,
finance. broad practical wisdom and unique perspectives enable the efficient
and effective decision making and leadership of the Group.
A.5 Board Balance Complied All Directors are Non‑Executive Directors except two Executive
There should be balance of Executive and Directors. Each of them brings vast experience and the ability
Non‑Executive Directors so that no individual to exercise independence and judgment when taking informed
or small group of individuals can dominate the decisions.
Board’s decision‑making.
A5.1 Presence of Non-Executive Directors Complied Please refer “Board of Directors” profile on pages 5 to 6.
A5.2 Independent Directors Complied Three out of the Six Non‑Executive Directors are considered
independent. The requirement as per the Code has been complied
with throughout the financial year.
18

Governance
A5.3 Criteria to evaluate Independence of Non- Complied The Board considers Non‑Executive Directors’ independence on an
Executive Directors annual basis and concluded for the financial year that each of them
continues to be free from any business or other relationship that
could reasonably be perceived to materially interfere with the exercise
of their unfettered and independent judgment.
A5.4 Signed declaration of independence by the Complied Independent Directors have submitted written declarations of their
Non-Executive Directors independence as required by Schedule K of the Code and section
7.10.2(b) of the Listing Rules.
A5.5 Determination of independence of the Complied The Board annually determines the independence of each Non-
Directors by the Board Executive Independent Director based on the declarations submitted
by them. Circumstances have not arisen for the determination of
independence by the Board, beyond the criteria set out in the Code
other than for the Directors mentioned in the report of the Directors
on pages 9 to 11.
A.5.6 Alternate Directors Not No alternative directors have been appointed.
Applicable
A.5.7 Senior Independent Directors Not A senior Independent Director has not been appointed by the Board
Applicable as the Chairman and the Managing Director are separate persons.
The requirement to appoint a Senior Independent Director does not
arise under this Code.
A 5.8 Confidential discussion with the Senior Not Please refer the comments in A 5.7 above.
Independent Director Applicable
A 5.9 Meeting of Non-Executive Directors Not The Chairman meets with the Non‑Executive Directors without the
The Chairman should hold meetings with the Applicable presence of the Executive Director on a need basis.
Non-Executive Directors only, without the However, there were no formal specific meetings held with Non‑
Executive Directors being present, as necessary Executive Directors during the year.
and at least once each year.
A 5.10 Recording of concerns in Board Minutes Complied All concerns raised by the Directors on matters of the Company and
Where Directors have concerns about the wished to be recorded have been duly recorded in the Board minutes
matters of the Company which cannot be in sufficient detail.
unanimously resolved, they should ensure their
concerns are recorded in the Board Minutes
A6, A6.1 & A6.2 Supply of Information Complied The notices of Board Meetings are provided along with the agenda
Obligation of the Management to provide well ahead of the scheduled meeting. The Board Papers are circulated
appropriate and timely information and among the Directors ahead of the meeting providing adequate time
adequate time for circulation of respective to review and call for any additional information and clarification to
Board documents assist them to formulate independent views.
A 7 Appointments to the Board Complied The Board assesses the suitability of the prospective nominees to
A formal and transparent procedure should be the Board and approves the persons as “fit and proper” to serve as a
followed for the appointment of new Directors to member of the Board.
the Board.
A.7.1 Appointments to the Board Complied The Board has not established a Nominations Committee to make
recommendations on Board appointments. Hence, appointments
to the Board are made collectively and with the consent of all the
Directors.
A.7.2 Assessment of Board composition Complied An assessment is made of the Board composition to ascertain whether
the combined knowledge and experience of the Board matches
the strategic demands facing the Company when considering new
appointments to the Board.
19
STEWARDSHIP

Governance
A.7.3 Disclosure of details of new Directors to Complied Details of new Directors are disclosed to the shareholders at the
shareholders time of their appointment by way of public announcements to the
Colombo Stock Exchange as well as in the Annual Report, along with
a brief resume of the Director
which includes;
•• the nature of his expertise in relevant functional area
•• other Directorships or memberships in Board Sub-Committees
•• whether the Director is considered “Independent”
No new directors have been appointed during the financial year of
2019/2020.
A.8, A 8.1 & A 8.2 Re-election Complied According to the Articles of association of the company, Director Mr
All Directors should be required to submit Paras Chandaria retire by rotation and being eligible for re‑election
themselves for Re‑election at regular intervals will stand for re‑election by shareholders at the Annual General
and at least every three years. Meeting.
A 8.3 Resignation Not There were no resignations of Directors during the year.
In the event of a resignation of a director prior to Applicable
completion of his appointed term, the director
should provide a written communication to the
board of his reasons for resignation.
A 9, A 9.1, A9.2, A9.3 & A9.4 Appraisal of board Complied The performance of the Board, its sub Committees and individual
performance Directors are being evaluated annually.
The Board should periodically appraise its own
performance against the preset targets in order
to ensure that the Board responsibilities are
satisfactorily discharged.
A.10 Disclosure of Information in respect of Complied The biographical details of the Directors including their qualifications,
Directors nature of expertise in relevant functional areas, memberships in Board
Details in respect of each Director should be Sub-Committees and other directorships are given on pages 5 to 6.
disclosed in the Annual Report for the benefit of Directors’ attendance at Board and Board Sub-Committee meetings
the shareholders. are given on pages 14, 42, 44 & 46 and Directors’ interest in contracts
with the Company are disclosed on Pages 93 to 96 of this Report.
A.11, A 11.1 & A 11.2 Appraisal of the Chief Complied The performance of the Managing Director is being evaluated
Executive Officer annually.
Setting the of the annual targets and the
appraisal of the CEO
B. Directors’ Remuneration
B.1 Remuneration Procedure Complied The Company has a formal and transparent procedure for developing
The Company should establish a formal and policy on executive remuneration and fixing the remuneration
transparent procedure for developing policy packages of individual Directors. No Director has been involved in
on executive remuneration and for fixing the deciding his/her remuneration in order to avoid the self-review threat.
remuneration packages of individual Directors.
No Director should be involved in deciding his

own remuneration.
B.1.1 Remuneration Committee Complied The Remuneration Committee makes recommendations to the Board
To avoid potential conflicts of interest, the on remuneration policy for the Executive Director and the corporate
Board of Directors should set up a Remuneration management that is consistent with the objectives of the Company.
Committee to make recommendations to the The Committee determines and agrees with the Board the broad
Board, within agreed terms of reference, on policy framework for the remuneration of the Managing Director.
the Company’s framework of remunerating The Managing Director participates at meetings when deciding the
executive directors. remuneration of the corporate management in order to recruit, retain
and motivate the corporate management team.
20

Governance
B.1.2 & B 1.3 Composition of the Remuneration Complied The Remuneration Committee comprises of the following three Non‑
Committee Executive Directors.
Remuneration Committee should consist •• Mr. Dinesh Weerakkody – Chairman (INED)
exclusive of Non‑Executive Directors who are •• Mr. J.M Swaminathan (INED)
Independent of Management. The members
•• Mr. S. Kumar (NED)
of the Remuneration Committee should be
listed in the Board’s remuneration report to the Further details of the Remuneration Committee are given on this
shareholders. Annual Report on pages 44 to 45.
B.1.4 Remuneration of the Non Executive Complied Non‑Executive Directors are remunerated in accordance with the
Directors Articles of Association of the Company. The fees and reimbursable
The Board as a whole, or where required by expenses are payable in consideration of the basis of contribution/
the Articles of Association, the shareholders services performed at the Board and Committee Meetings, and the
should determine the remuneration of Non‑ Company’s yearend financial performance.
Executive Directors, including members of the
Remuneration Committee, within the limits set
in the Articles of Association. Where permitted
by the Articles, the Board may delegate this
responsibility to a subcommittee of the Board,
which might include the CEO.
B.1.5 Consultation of the Chairman and access Complied The Committee consults the Chairman on proposals relating to the
to professional advice remuneration of the Executive Director and has access to professional
advice in discharging their duties.
B.2 Level and make-up of Remuneration Complied Please refer Remuneration Committee Report on Pages 44 to 45.
The level of remuneration of both Executive and
Non‑Executive Directors should be sufficient
to attract and retain the Directors needed to
run the Company successfully. A proportion of
Executive Directors’ remuneration should be
structured to link rewards to the corporate and
individual performance.
B.2.1 & B 2.2 Level and make-up of the Complied The Board makes assessments on the fact that the remuneration
remuneration of the Executive Director of Executive and the Non‑Executive Directors reflects the market
The Remuneration Committee should provide expectations and is sufficient enough to attract and retain the quality
the packages needed to attract, retain and of Directors needed to run the Company.
motivate Executive Directors of the quality The remuneration package of the Managing Director is structured to
required but should avoid paying more than is link rewards to corporate and individual performance, ensuring there
necessary for this purpose. is strong alignment between the short‑term and long‑term interests
Executive directors’ remuneration should be of the Company
designed to promote the long‑term success of
the company.
B.2.3 Comparison of remuneration with other Complied The Committee ensures that remuneration of executives at each level
companies of management is competitive and in line with their performance.

The Remuneration Committee should judge Surveys are conducted as and when necessary to ensure that the
where to position levels of remuneration of remuneration is on par with those of competitive companies.
the Company, relative to other companies. It
should be aware what comparable companies
are paying and should take account of relative
performance, but should use such comparisons
with caution, mindful of the risk that they can
result in an increase of remuneration levels with
no corresponding improvement in performance.
21
STEWARDSHIP

Governance
B.2.4 Comparison of remuneration with Complied It also takes into consideration data concerning executive pay among
other companies in the Group the related group companies when determining annual salary
increases.
B.2.5 Performance related payments to the Complied Performance based incentives have been determined to ensure
Managing Director that the total earnings of the Executive Director is aligned with the
achievement of objectives and budgets of the Company.
B.2.6 Executive share options Complied The Company has no share option made available to the Directors,
Executives or employees of the Company.
B.2.7 Deciding the Executive Directors’ Complied In deciding the remuneration of the Managing Director, the
Remuneration Committee takes note of the provisions set out in Schedule E of the
Code
B.2.8 Early termination of Directors Complied Not applicable to the Board except for the Executive Directors
Remuneration Committees should consider including Managing Director who is an employee of the Company
what compensation commitments (including and his terms of Employment is governed by the employment
pension contributions) their Directors’ contracts contract.
of service, if any, entail in the event of early
termination. Remuneration Committees
should in particular, consider the advantages
of providing explicitly for such compensation
commitments to apply other than in the case of
removal for misconduct, in initial contracts.
B.2.9 Early termination not included in the initial Complied Please refer comment in B.2.8 above.
contract
Where the initial contract does not explicitly
provide for compensation commitments,
Remuneration Committees should, within
legal constraints, tailor their approach in early
termination cases to the relevant circumstances.
The broad aim should be, to avoid rewarding
poor performance while dealing fairly with
cases where departure is not due to poor
performance.
B.2.10 Remuneration of Non-Executive Director Complied Please refer B.1.4 above on page 21.
B.3 & B 3.1 Disclosure of Remuneration Complied The names of the members of our Remuneration Committee are
The Company should disclose the Remuneration indicated in page 44 Please refer Note 8 To the Financial Statements
Policy and the details of Remuneration of the for the details of remuneration paid to Board of Directors and key
Board as a whole management personnel.
C. Relations with Shareholders

C.1 Constructive use of the Annual General Complied The Company conducts Annual General Meeting on effective manner
Meeting and Conduct of General Meetings to communicate with shareholders and encourage their active
The Board should use the AGM to communicate participation.
with shareholders and should encourage their
participation.
C.1.1 Notice of the AGM Complied The notice and the agenda for the Annual General Meeting together
Companies should arrange for the Notice of with the Annual Report of the Company containing the relevant
the AGM and related papers to be sent to documents are sent to the shareholders giving 15 working days’
shareholders as determined by statute, before notice prior to the date of the Annual General Meeting as required by
the meeting. section 135(1) of the Companies Act No 7 of 2007.
C.1.2 Separate resolution for all separate issues Complied Separate resolution are proposed at an Annual General Meeting on
each substantial separate issue.
C.1.3 Use of proxy votes Complied We ensure that all proxy votes are counted and the quantum of
proxies lodged on each resolution is conveyed to our Chairman.
22

Governance
C.1.4 Availability of all Board Sub-Committee Complied At the Annual General Meeting the respective Chairman of the
Chairmen at the Annual General Meeting Remuneration Committee, Related Party Transactions Review
Committee and Audit Committee are present to provide any
clarification to shareholders as necessary.
C1.5 Adequate notice of Annual General Meeting Complied Please refer c1.1 above
and summary of procedure
C.2 Communication with shareholders Complied Please refer C.1 above.
The Board should implement effective
communication with shareholders.
C.2.1 to C2.7 Board should use the Annual Complied All shareholders are invited and encourage to be present, actively
General Meeting to communicate with investors participate and vote at the Annual General Meeting. The Annual
and encourage their participation general Meeting provides an opportunity for shareholders to seek
and obtain clarifications and information on the performance of the
Company.
The external Auditors are invited to attend the Annual General
Meeting, for any professional assistance that may requested.
Shareholders who are not in the position to attend the Annual
General Meeting in person are entitled to have their voting rights
exercised by a proxy of their own choice.
C.3, C.3.1 & C 3.2 Major and Material Complied There were no major transactions during the financial year that
Transactions materially altered our Company’s net asset base or the consolidated
Directors should disclose to shareholders all Group net asset base.
proposed material transactions which would
materially alter the net asset position of the
Company, if entered into
D. Accountability and Audit
D.1 Financial Reporting Complied Lanka Aluminium Industries PLC has reported a true and fair view of
The Board should present a balanced and its financial position and performance for the year ended 31st March
understandable assessment of the Company’s 2020 and at the end of each quarter of 2019/20 financial year.
financial position, performance and prospects. The Board ensures that the quarterly and annual Financial
Statements of the Company and Group are prepared and published
in compliance with the requirements of the Companies Act No. 7
of 2007, Sri Lanka Accounting Standards (LKASs and SLFRSs) and the
Rules of the Colombo Stock Exchange.
D.1.1 and D1.2 Board responsibility to present Complied Please refer the Statement of Directors’ Responsibility shown on page
the Financial Statements and annual reports of 49 and directors have made the required declaration on Pages 93 to
the directors 96 of this annual report.
D.1.3 Before approve financial statements for a Complied Please refer Responsibility Statement of Managing Director and Group
financial period, A declaration should be made General Manager Finance and Administration on page 48.
by Chief Executive Officer and Chief Financial
Officer to the Board
In their opinion, the financial records of the

entity have been properly maintained and
that the financial statements comply with the
appropriate accounting standards and give a
true and fair view of the financial position and
performance of the Company and that the
system of risk management and internal control
was operating effectively
D.1.4 Directors Report Complied Please refer the Report of the Directors on the State of Affairs of the
Company on pages 9 to 11.
23
STEWARDSHIP
Code of Best Practice on Corporate Governance Compliance Details of Compliance

D.1.5 Statement by the Directors and the Auditors Complied The Statement of Directors’ Responsibilities is on page 49 of this
Annual Report. The Auditor’s Report on the Financial
Statements for the year ended 31st March 2020 is presented on
pages 52 to 54 of this Annual Report.
D.1.6 Management discussion and analysis Complied The management discussion and analysis of the company
is covered from Chairman’s Review on page 7 of this Annual
Report.
D.1.7 Requirement for an Extraordinary General Complied This is not applicable to us however should the situation arise,
Meeting in a situation of serious loss of capital an Extraordinary General Meeting would be called upon and
our shareholders would be notified accordingly.
D.1.8 Disclosure of related party transactions Complied The Directors disclose their interest in transactions in
companies in as and when basis. However, they make
disclosures of their interest in transactions with the Company
in compliance with the requirements of the companies act
and other statutory requirements. The Company maintains an
interest register as stipulated in the Companies Act.
D.2 Risk Management and Internal Control Complied The Board of Directors acknowledges its overall responsibility
The Board should have a process of risk management for maintaining a process of risk management and a sound
and a sound system of internal controls to safeguard system of internal controls, to safe guard shareholders’
shareholders’ investments and Company’s assets. investment and the Company’s assets.
D.2.1 Annual evaluation of the risks facing the Complied The Board has appointed a three-member Audit Committee
Company and the effectiveness of the system of comprising of all Independent Non-Executive Directors. The
internal controls Audit Committee on quarterly basis monitor the company’s risk
management system and internal control system in the context
of likelihood and their impact to the Group along with the
effectiveness of the system of internal controls to address them
to a satisfactory level.
D.2.2 Robust assessment of the principal risks facing Complied The assessment of the principal risks facing the company
and risk mitigation strategies have been discussed on Risk
Management Report on pages 30 to 35.
D.2.3 Internal audit function Complied The internal auditors under the direction of the Audit
Committee are tasked with reviewing the adequacy and the
effectiveness of the internal controls of the Company. Internal
audit function is outsourced to a firm of Chartered Accountants.
D.2.4 Review of the process and effectiveness of Complied The Audit Committee monitors, reviews and evaluates the
risk management and internal controls by the Audit effectiveness of the risk management and internal control
Committee system including the internal controls over financial reporting.
The internal auditors review the adequacy and effectiveness
of the Internal control system and report their findings to the
Audit Committee. In the financial year under review, the Board
of Directors was satisfied with the effectiveness of the system of
internal controls of the Company. Please refer Audit Committee
Report on pages 42 to 43.
D.2.5 Responsibilities of Directors in maintaining Complied Please refer Report of the Directors on the State of Affair of the
a sound system of internal control Company on pages 9 to 11.
D.3,D.3.1 & D.3.2 Audit Committee, Composition, Complied Please refer Audit Committee Report on pages 42 to 43.
Duties & Responsibilities and Disclosures of Audit
Committee
The Board should have a formal and transparent
arrangement in selecting and applying the accounting
policies, financial reporting and internal control &
risk management principles and maintaining an
appropriate relationship with the Company’s External
Auditors.
24

Governance
D.4, D4.1 to D.4.3 Related Party Transaction Complied Please refer Related Party Transactions Review Committee Report on
Review Committee, Composition, Duties & pages 46 to 47.
Responsibilities and Disclosures of Related Party
Transaction Review Committee
The Board should establish a procedure to
ensure that the Company does not engage in
transactions with “related parties” in a manner
that would grant such parties “more favorable
treatment” than that accorded to third parties in
the normal course of business.
D.5, D.5.1 to D.5.4 Code of Business Conduct and Complied The Company has developed and institutionalised a strong set of
Ethics corporate values and code of conduct that is circulated to Directors
The Company should develop a Code of and all employees. The Board ensures that Directors and employees
Business Conduct and Ethics for Directors and strictly comply with the code of Business Conduct and Ethics at all
members of the senior management team levels in the performance of their official duties., communications,
role modelling and in any other circumstances, so as to prevent the
tarnishing of our Company’s image in any manner. The violation of the
code of ethics is an offence that is subject to disciplinary action.
D.5 & D.5.1 Corporate Governance Disclosures Complied We are adhering to the highest standards of corporate governance as
is evident in this Annual Report on pages 12 to 29.
E. Institutional Investors
E.1 & E.1.1 Shareholders voting Complied The Company is committed to maintain good communications with
Institutional shareholders are required to make investors. The Chairman conducts a structured dialogue with the
considered use of their votes and encouraged shareholders based on the mutual understanding of objectives and
to ensure their voting intentions are translated ensures that the views of the shareholders are communicated to the
into practice Board as a whole.
The Annual General Meeting is used to have an effective dialogue
with the shareholders on matters which are relevant and concern to
the general membership.
The Managing Director has regular discussions with key institutional
shareholders to share highlights of the Company’s performance and
also with the view to obtaining constructive feedback. The feedback
obtained from institutional shareholders is communicated to the
entire Board by the Managing Director.
E.2 Evaluation of Corporate Governance Complied Institutional investors are encouraged to give due weight to all
initiatives relevant factors drawn to their attention when evaluating the
governance arrangements particularly in relation to Board structure
and composition.
F. Other Investors
F.1 & F1.1 Investing/ Divesting decision by Complied Individual shareholders are encouraged to carry out adequate analysis
Individual Shareholders and seek the independent advice prior to make investing or divesting
directly in shares of the Company
F.2 Individual shareholders voting Complied All shareholders are encouraged to participate at meetings of the
Company and a Form of Proxy accompanies each Notice providing
shareholders who are unable to attend such meeting the opportunity
to cast their vote.
25
STEWARDSHIP


G. Internet of Things and Cybersecurity
G.1 The Board should have a process to identify how Complied The board assigned this responsibility to the Information
in the organisation’s business model, IT devices within Technology Division and which ensures security of the IT
and outside the organisation can connect to the System.
organisation’s network to send and receive information
and the consequent cyber security risks that may affect
the business. Internal and external parties could have
computing devices embedded in everyday objects
which may enable them to interconnect with the
Company’s network to send and receive data. Such
access could be authorised or unauthorised.
G.2 The Board should appoint a Chief Information Complied IT Manager performs the duty of Chief Information Security
Security Officer (CISO) with sufficient expertise, Officer (CISO).
authority and budgetary allocation to introduce and
implement a cyber security risk management policy
which should be approved by the Board. The policy
should include a robust cyber security.
Risk management process, incident response system,
vendor management system, disaster recovery plan
and a governance structure to monitor effective
implementation, reporting and the need for cyber
security insurance.
H. Environment, Society and Governance(ESG)
H.1 & H 1.1 Companies should provide information in Complied Sustainability principles related to ESG factors are embedded
relation to: in the operations of the Company and initiatives implemented
•• The relevance of environmental, social and to ensure adherence by the Company.
governance factors to their business models and
strategy.
•• How ESG issues may affect their business.
•• How risks and opportunities pertaining to
ESG are recognised managed, measured and
reported.
H.1.2 Environmental governance of an organization Complied Refer H.1 and H.1.1 above
should adopt an integrated approach that takes into
consideration the direct and indirect economic. Social,
health, and health and environmental implications of
their decisions and activities.
H.1.3 Social governance of an organisation should Complied Sustainability principles related to social factors are
include its relationship with the community, customers, embedded in the operations of the Company and initiatives
employees, suppliers, outsourced providers and any implemented to ensure adherence to social governance
other party that can influence or be influenced by the by the Company are discussed in the Corporate Social
organisation’s business model. Responsibility Reports and Analysis and compliance section of
this report.
26

H.1.4 Companies should establish a governance Complied Process of managing risks in line with ESG aspects is discussed
structure to support its ability to create value and in the Risk management report on pages 30 to 35.
manage risks in the short, medium and long-term,
recognising managing and reporting on all pertinent
aspects of ESG.
The Company should recognise the key resources/
capitals deployed in its business and establish financial
and non-financial measures for resource/capital
management and related outputs and outcomes.
The Company should have a process to ascertain,
assess and mange risks which have an impact on the
sustainability of the Company.
The company should have a process to recognise
material matters relating to significant stakeholders
and a method of engagement relevant to their level of
interest and influence.
The disclosures should deal with how the Company
has complied with the mandatory and voluntary
codes of corporate governance and how its leadership
structure, organisational culture, code of conduct
and business model supports sustainability of the
company in the short, medium and long-term.
27
STEWARDSHIP
Section B
This section covers the Company’s extent of adherence to the requirements of the Continuous Listing Requirements Section 7.10 on Corporate
Governance Rules for Listed Companies issued by the Colombo Stock Exchange. This reflects the Company’s level of conformity to CSE’s Listing
Rules which comprise the following fundamental principles:
•• Non-Executive Directors
•• Independent Directors
•• Disclosures Relating to Directors
•• Remuneration Committee
•• Audit Committee
The following table presents the details of the Company’s compliance with Section 7.10 and Section 9 of the CSE Listing Rules on Corporate
Governance as at 31st March 2020.
Section Corporate Governance Rule Compliance Details of Compliance

Directors
Non-Executive Directors 7.10.1 Number of Non-Executive Directors Complied The Board of Directors comprises eight
–One-third of the total number of Directors, Directors, six of whom are Non Executive
subject to a minimum of two. Directors
Independent Directors 7.10.2(a)Number of Independent Directors – Complied Three of the Non-Executive Directors are
One-third of Non-Executive Directors, subject independent
to a minimum of two.
Independent Directors 7.10.2(b) Each non-Executive Director should Complied All Non-Executive Directors have submitted
submit a declaration of independence/non declarations. Independent Non-Executive
independence. Directors have submitted declarations
confirming their independence
Disclosures relating to 7.10.3(a)Names of Independent Directors should Complied Please refer board of directors on page
Directors be disclosed in the Annual Report. pages 5 to 6.
Disclosures relating to 7.10.3(b)The Board shall make a determination Complied The Board has determined that the Three
Directors annually as to the Independence or Non- Independent Non-Executive Directors,
independence of each Non-Executive Director. satisfy the criteria for Independent set
out in the Listing Rules and annually
each Non-Executive Director declares
his independence/ non independence
compliance with the relevant statutory
regulations.
Disclosures relating to 7.10.3(c)A brief résumé of each Director should Complied Please refer board of directors on pages 5
Directors be included in the Annual Report including the to 6.
area of experience
7.10.3(d)Provide brief résumé of any new Complied No new directors has been appointed
Director appointed to the Board during the financial year of 2019/2020.
Remuneration Committee
Composition 7.10.5(a)Number of Independent Non-Executive Complied The Committee comprises two Independent
Directors in the Committee to be – Non‑Executive Directors and one
Non‑Executive Director
•• a minimum of two (where a Company
has only two Directors on the Board), or
•• in all other instances majority of whom to
be independent
Separate Committee to be formed for the Complied A separate Remuneration Committee was
Company or the Listed Parent’s Remuneration formed for the Company
Committee to be used.
28
Section Corporate Governance Rule Compliance Details of Compliance
Chairman of the Committee to be a Non- Complied The Committee is chaired by an
Executive Director independent Non-Executive Director

Functions 7.10.5(b)Function of the Committee. Complied The Remuneration Committee Report sets
out the functions of the Committee and
please refer pages 44 to 45.
Disclosure in the Annual 7.10.5(c)The Annual Report should set out – Complied Please refer Remuneration Committee
Report Report on pages 44 to 45.
•• Names of Directors comprising the
Remuneration
•• Statement of Remuneration policy
•• Aggregate remuneration paid to
Executive & non-executive Directors
Audit Committee
Composition 7.10.6(a)Number of Independent Non-Executive Complied The Committee comprises of three
Directors in the Committee to be – Independent Non-Executive Directors
•• a minimum of two (where a Company
has only two Directors on the Board), or
•• in all other instances majority of whom to
be independent.
Separate Committee to be formed for the Complied A separate Audit Committee was formed for
Company or the Listed Parent’s Committee to the Company
be used
Chairman of the Committee to be a Non- Complied The Committee is chaired by an
Executive Director Independent Non-Executive Director
Chairman or one member of the Committee Complied The Chairman of the Committee is a
to be a member of a recognised professional member of a recognised professional
accounting body accounting body.
CEO and CFO to attend Committee meetings, Complied Managing Director attends by invitation.
unless otherwise determined by the Audit Group General Manager – Admin & Finance
Committee. attends by invitation.
Functions 7.10.6(b) Function of the Committee Complied The Audit Committee Report sets out the
functions of the Committee. Please refer
pages 42 to 43.
Disclosure in the Annual 7.10.6(c) Names of Directors comprising the Complied Please refer Audit Committee Report on
Report Audit Committee, The Audit Committee shall pages 42 to 43.
make a determination of the independence
of the Auditors and disclose the basis for such
determination and The Annual report shall
contain a Report of the Audit Committee in the
prescribed manner.
Related Party Transactions Review Committee
Composition 9.2.2 Combination of Non-Executive Directors Complied The Committee comprises of three
and Independent Non-Executive directors. Independent Non‑Executive Directors.

9.2.3 Separate Committee to be formed for the Complied A separate Related Party Transactions
Company or the Listed Parent’s Committee to Review Committee was formed for the
be used. Company.
Functions Function of the Committee. Complied The Related Party Transactions Review
Committee Report sets out the functions of
the Committee.
Disclosure in the Annual 9.3.2 (c) The Annual Report shall contain a Complied Please refer Related Party Transactions
Report Report of the Related Party Transactions Review Review Committee Report on pages 46 to
Committee in the prescribed manner. 47.
29
STEWARDSHIP
Risk Management and Business Control
Lanka Aluminium’s objective is to create value for the benefit of shareholders,

employees and society at large. Value Creation requires solid socially

responsible operations and profitable growth over time. One prerequisite for
this is control and management of business risks.”
Enterprise Risk Management (ERM) framework Risk management at Lanka Aluminium and security. The Company has established
encompasses practices relating to the believes that managing risk is crucial appropriate internal control systems and
identification, analysis, evaluation, treatment, for growth and success. Therefore, it has other risk mitigation techniques to ensure the
mitigation and monitoring of the strategic, embedded risk management into its delivery of shareholder wealth and to meet its
operational, and legal and compliance risks organizational culture, making the employees obligations to other stakeholders.
to achieving our key business objectives. ERM the core of the risk management process. This
The Group recognizes the importance
seeks to minimize the adverse impact of these makes the Group more adaptable enabling it
of adopting a proactive and systematic
risks, thus enabling the Company to leverage to successfully mitigate any risks arising from
approach when dealing with risks. The Group
market opportunities effectively and enhance the current dynamic environment. The Board
has made risk management a key element of
its long-term competitive advantage. of Directors has overall responsibility for risk
its corporate governance. It strives to maintain
oversight with a focus on the most significant
Several risks can impact the achievement a balance between entrepreneurial attitude
risks facing the Company. We consider risk
of our business objective. Similarly, a single and the level of risk associated with business
management as a vital component in our
risk can impact the achievement of several opportunities.
operations and build upon management’s risk
business objectives of the company. The
assessment and mitigation processes, which Risk governance structure
focus of risk management is to assess risks
include standardized reviews of long-term Our risk management framework is
and deploy mitigation measures. This is done
strategic and operational planning, executive implemented at various levels across the
through periodic board of director’s meetings
development and evaluation, regulatory enterprise. The key roles and responsibilities
and Audit committee of the Board. Our core
and litigation compliance, health, safety and regarding risk management in the Company
values and ethics provide the platform for our
environmental compliance financial reporting are summarized as follows:
risk management practices.
and controls, and information technology
Level Key roles and responsibilities

•• Review of Corporate objectives, budgets and forecasts
•• Reviewing of operational and functional performance
Board of Directors (BOD)
•• Ensuring the executive management focuses on managing risks to key business objectives
•• Ensuring the implementation of an effective internal control system and risk management system
•• Monitored the Group’s risk management and internal control processes through detailed discussions
with management and executive Directors.
•• Formal confirmations and assurances are obtained from management regularly regarding the efficiency
of the internal control system and risk management system, and compliance with applicable laws and
regulations.
Audit Committee •• Ensured that the risks are appropriately monitored and controlled, by considering the Group’s principal
risks and uncertainties and by reviewing the mitigating actions taken by the management.
•• Reviewed the processes to ensure the internal controls and risk management framework are adequate
to meet the requirements of the SLAS.
•• The Board of Directors and Audit Committee obtain and are guided by technical advice from external
consultants as required.
30
Risk Management and Business Control contd

Level Key roles and responsibilities
•• Ensuring units are managed in accordance with the Company’s risk management practices
•• Ensuring compliance with risk management policies and procedures laid out by the Company in
their respective business units
Senior Management •• Managing risks concomitant with the business decisions relating to their unit, span of control or area
of operations
•• Ensuring effectiveness of risk mitigation actions in their units
•• Reporting risk events and incidents relating to their unit in a timely manner
•• Adhering to risk management policies and procedures
Operational and other staff •• Implementing prescribed risk mitigation actions
•• Reporting risk events and incidents in a timely manner
Board of Directors (BOD)
Audit Committee
Senior Management
Operational & Other Staff
Business objectives Risk Assessment 1. Strategic risk

Our industry and company are in significant Risk assessment is the identification and Risks arising out of the choices we have made
transformation, and this has naturally analysis of existing and emerging risks to in defining our strategy and the risks to the
resulted in heightening of risks related to form a basis for determining how risks are successful execution of these strategies are
covered in this category – for example risks
strategic choices, strategy execution along managed in terms of likelihood and impact. A
inherent to our industry and competitiveness
with traditional operational and compliance bottom-up and top-down approach is utilized
are analyzed and mitigated through strategic
related risks. The business objectives of the to ensure a holistic risk management process.
choices of target markets, the Company’s
Company are articulated as a set of specific The bottom-up approach is supported
market offerings, business models and talent
near-term goals, and long-term strategic by cross-functional meetings with line
base. Potential risks to the long-term scalability
goals in a corporate scorecard. These management to identify and prioritize risks
and sustainability of the organization are
goals cover the dimensions of consistent while the top-down approach reviews and
also analyzed and mitigated. Societal risks
financial performance, market penetration, assesses if risks are comprehensively identified
relating to the impact of our strategy on
differentiation of our solutions, operational and prioritized, and properly addressed by
the environment, local communities, and
excellence, cost optimization initiatives, line management regarding the achievement conservation of essential resources.
attracting and retaining talent, and the long- of the Group’s objectives. Risk areas are
We periodically assess risks to the successful
term sustainability of the organization. In categorized into Strategic Risk, Operational
execution of our strategy, such as the
addition, progress of initiatives to mitigate Risk and Legal & compliance Risk perspectives
effectiveness of strategic programs that
the impact of potential changes to laws and for further assessment and management.
are being executed, the momentum in
regulations in the country.
new initiatives, the impact of strategy on
31
STEWARDSHIP
financial performance, leveraging of inorganic strategies, effectiveness and the associated mitigating actions and highlights to the Audit
of organization structure and processes, retention and development of Committee quarterly to enhance the accountability and quality of the
high-performing talent and leadership. risk management process.
2. Operational risk Risk Response

Risks arising out of internal and external factors affecting policies, Risk response is the process of selecting and implementing measures
procedures, people and systems in our support functions thereby to alleviate the impact of identified risks.
impacting service delivery, compromises our core values or not in •• Avoid : A decision to nullify the risk by refraining from the
accordance with generally accepted business practices or impacting activities that cause it
their own service operations are covered in this category – for example, •• Share / Transfer : A decision to share the specific risk with
risks of business activity disruptions due to natural calamities, terrorist another entity
attacks or war or regional conflicts, or system failures, virus attacks or •• Reduce : A decision to reduce the level of risk through
breach of cyber security. targeted mitigation, if not To completely nullify it
3. Legal & compliance Risk •• Accept : A decision to allow the risk to remain as is,
irrespective of its severity
Risks arising out of threats posed to our financial, organizational, or
reputational standing resulting from violations or non-conformance Risk overview
with laws, regulations, codes of conduct or organizational prescribed The following table presents an overview of Lanka Aluminum’s
practices or contractual compliances are covered in this category – for approach to risk management and business controls and a description
example, risks of potential litigations, breach of contractual agreement, of the nature and the extent of its exposure to risks. The risk overview
noncompliance to regulations, potential risk arising out of major highlights the main risks known to Lanka Aluminium, which could
regulatory /geo-political changes, potential risk arising out of strategic or hinder it in achieving its strategic and financial business objectives.
business or operational decisions. The risk overview may, however, not include all the risks that may
Risk Management Process ultimately affect Lanka Aluminium. Some risks not yet known to Lanka
Aluminium, or currently believed not to be material, could ultimately
The Enterprise Risk Management (ERM) System uses risk indicators and have a major impact on our businesses, objectives, revenues, income,
monitors the high priority risks. The setting of risk indicator aligns with assets, liquidity or capital resources. Risk management and controls
the risk tolerance, representing the risk magnitude the Group is willing forms an integral part of the business planning and review cycle. The
to take in achieving its business goals. In addition to ERM System, Key company’s risk and control policy is designed to provide reasonable
Performance Indicators for key business units have been incorporated to assurance that objectives are met by integrating management
measure their progress in achieving business goals. ERM is allowing the control into the daily operations, by ensuring compliance with legal
Group to monitor a comprehensive set of indicators at the same time for requirements and by safeguarding the integrity of the company’s
better business performance and risk management. financial reporting and its related disclosures. It makes management
While the Audit Committee meetings are held at least on a quarterly responsible for identifying the critical business risks and for the
basis to review and discuss risk management progress of high priority implementation of fit-for-purpose risk responses.
risks and to provide continuous pulse of the business environment
and monitor changes of key performance indicators are updated and
monitored so that underperformed activities can draw management
attention on a timely basis. Risk owners are required to take mitigating
actions to address these risks. Such actions are integrated in the
day-to-day activities and their effectiveness is closely monitored by

Internal Auditor. If there are any risk indicators highlighted by Internal
Auditor, responsible risk owners are required to re-assess the existing
remedial action plans and promptly propose new ones if necessary.
Being an integral part of the Group’s ERM to provide assurance on the
effectiveness of the Group’s risk management process and system of
internal control, the Internal Auditor carries out continuous assessment
on the risk management progress and risk responses submitted by risk
owners. The Internal Auditor reporting significant risks, material changes
32

Risk Exposure Company Objectives Risk response
1. Strategic Risks To minimize the serious impact on Reduce & Share
a. Metal Risks consolidated earnings Each Strategic Business Unit (SBU) mitigates this risk by keeping a
Aluminium is traded balanced LME position with defined thresholds for temporary long or
on the London Metal short positions.
Exchange (LME) and is
A balanced position is attained when the LME exposure in fixed-priced
subject to fluctuations
sales to customers equals metal inventories plus fixed-price metal
in price that have direct
purchases from suppliers.
impact on direct costs.
To the extent that such balance is not achieved through physical
positions, the SBU offers LME + premium price to selective customers.
Net exposure to fluctuations in the LME price is considered medium.

b. Possibility to Expect to have a fairly stable billet Accept
increase billet premium The billet premium has historically been fairly stable. We continuously
premium
monitors its exposure and evaluates mitigation actions.
c. Increase of To purchase Aluminium scrap from Accept
Aluminium scrap external suppliers at competitive Prices of scrap also fluctuates depending on the LME prices. Net
price
minimum price exposure to fluctuations in the scrap price is considered medium.
d. Interest Rate and To minimize adverse effects of Reduce & Share
Foreign Exchange interest rate & foreign exchange It is the Compnay’s objective to limit its exposure to changes in
Rate Risk
rate volatility. interest and exchange rates while retaining the opportunity to
benefit. Accordingly the Group manages interest and exchange
rate fluctuations with an appropriate mix of fixed and variable rate
debts, forward contracts if necessary, through a centralized treasury
management function.
e. Technological and To keep pace with current Accept
Quality related risks technological developments Develop a long term plan to replace existing machines with technology
and quality standards to avoid advanced machines, obtain certificates from relevant authorities and
obsolescence ensure products comply with most of the local and international
standards and already the equipment required to test the quality of
To minimize production of stocks
products are in place.
that do not meet the standards
f. Risk of competition To avoid losses of market share Accept
Our businesses are highly competitive. Failure to compete with
competitors on areas including price, product range, quality and
service would have an adverse effect on the Group’s financial results.
Hence we aim to have a broad appeal in range and format in a way that
allows us to compete effectively.
2. Operational Risks To minimize risk associated with Reduce & Transfer
g. Credit Risk debtor defaults Credit risks arise due to the non-payment by debtors which can lead to
working capital issues. Company extends credit facilities to customers
during the course of business. Some of our credit risk is covered by
bank guarantees. Further to bank guarantees we undertake actions
such as implementation of Group credit policy, Evaluation of customers
prior to granting credits, periodic review of receivables by the Credit
Management Committee and credit suspension on overdue accounts
and legal procedures for recovery of long overdue receivables to
mitigate the credit risk.
33
STEWARDSHIP

h. Asset Risk To minimize losses that can cause Transfer & Reduce
from machine breakdown and Obtained comprehensive insurance cover for plant and machinery and
damages from fire or theft carry out planned preventive maintenance programs
i. Lack of Internal To maintain sound system of Avoid

Controls internal controls to safeguard The Directors acknowledged their responsibility for the Company’s
company assets. system of internal control. The system is designed to give assurance
regarding the safeguarding of assets, the maintenance of proper
accounting records and the reliability of financial information
generated, effectiveness and efficiency of operations, and compliance
with applicable laws and regulations. Further carryout continuous
internal audits by an independent external firm.
j. Human Resources To reduce labour turnover Reduce

To ensure smooth flow of Our greatest asset is our employees. It is critical to our success to attract,
operations without interruptions retain, develop and motivate the best people with the right capabilities
To ensure adaptability through at all levels of operations. We review our people and policies regularly
training and adopting best and are committed to investing in development and incentives for our
practices people. There are clear processes for understanding and responding
to employees’ needs through HR initiatives, and communication of
business developments.
k. Global Crisis of To minimize Fixed Overheads Reduce

COVID 19 virus To maintain Sales Reduce the Overhead costs and improve the liquidity position
similar risks Diversify the customer base and look for new markets not affected by
the COVID 19 virus
Closely monitor and manage the existing parties (Eg : Customers,
Suppliers, Banks etc.)
Develop a multiple supplier network and arrange sufficient financial
facilities
l. IT Systems and To ensure efficient information Reduce
Infrastructure technology system and minimize The business is dependent on efficient information technology (IT)
possible risks associated with data systems. We have extensive controls in place to maintain the integrity
security, hardware, software and and efficiency of our IT infrastructure and to ensure consistency
communication systems of delivery, and all relevant staff is effectively engaged to mitigate
IT related risks through effective policy and procedures as well as
increased awareness. Data back ups are taken regularly and stored in
outside locations and regular upgrading of virus scanners.
m. Inventory To reduce stock out situations Reduce

Management Risk Plan monthly production based on budgets and sales forecasts and
To reduce the accumulation of

slow moving stocks review during production planning meetings held monthly.
To minimize the losses through Adopt various quality standards at different stages to verify the quality
obsolete stocks until the product is delivered.
To minimize risk of sub standard Stocks that are not up to standards are separated as scrap and
material being received reproduced local aluminium billets through melting unit.
To minimize inventory holding Continuous stocks verification systems to identify nonmoving stocks.
days Regularly monitor inventory days.
34

n. Investment in To reduce the risk of loss in present Reduce

Capital and future investments. Investments in assets are properly planned and made on a timely basis
and reduce the idle assets as far as possible.
3. Legal & compliance Risk To minimize adverse impact of Avoid
o. Environmental operations to the environment Comply with the standards set by the relevant authorities and ensure
Issues
compliance
p. Legal and To minimize possible losses Reduce
Regulatory Issues arising from non compliance The legal function proactively identifies and sets up appropriate
with statutory and regulatory systems and processes for legal and regulatory compliance in respect
requirements of all our investments. The internal audit function of the Group ensures
To minimize or take counter the safeguarding of company assets and recommends process
measure to reduce the impact improvements in areas where process control failures are noted.
arising from changes to regulatory
issues
q. Issues pertaining To retain talented employees Reduce
to employees and maintain good industrial The Board of Lanka Aluminium Industries PLC assesses all the issues
and industrial
relationship with governmental with regard to employees and Industrial Relation which influence the
relationship
agencies. performance of the Group. Company takes considerable amount of
steps to ensure employees are satisfied at all the levels and their issues
are addressed in order to retain talented employees. A well structured
grievance handling system is in place to handle the grievance of
employees at all levels. We make sure to maintain pertinent industrial
relationships with all the governmental agencies. There are no issues
which affect the Company’s performance to be disclosed.
35
STEWARDSHIP
Corporate Social Responsibility
Our Progress
We believe any long-term sustainable business is value creating, not just

for financial stakeholders, but also for customers, suppliers, employees,
communities and the environment, being a socially responsible company can
strengthen a company’s image and build its brand, which we thrive forward.
Corporate Social Responsibility (CSR) is a Our corporate social responsibility strategy Strong Values
concept whereby Companies integrates is deeply rooted in the principles of integrity
Our values describe how we need to act in
social and environmental concern in their and high standards of business conducts. It
order to deliver on our purpose – to shape
business operations and in their interaction encapsulates our ambition to put the needs
a sustainable future through innovative
with their stakeholders on a voluntary basis. of people, communities
Aluminium solutions.
We recognize that creating value for our
customers, society, and the environment i. Customer first - We identify
strengthens our business. Our commitment the individual preferences and
to CSR is increasingly important to how others expectations of our customers and
perceive our brand, and our CSR efforts help provide a range of products and after
us to create strong relationships built on sale services to our customers through
trust with customers, employees, suppliers, the effective distribution channel.
and other stakeholders. We believe good ii. Trustworthy - We do what we have
CSR concept can bring along a variety of obliged, we act with integrity,
competitive success such as greater access to transparency, and treat others with
and the country at the heart of how we work
capital and markets, increased revenue and respect.
today, to help create a better tomorrow.
profits, operational cost savings, improved
While it builds on our heritage as a socially iii.
Entrepreneurship - We drive the
productivity and quality, efficient human
responsible business, Our CSR strategy business as if it belongs to us. We are
resource base, improved brand image and
represents an exciting step in our corporate energetic, enthusiastic and focused
reputation, enhanced customer loyalty,
responsibility ambitions and our CSR strategy on results when carrying out new
better decision making and risk management
is designed to leverage our communities and initiatives.
processes.
planet that we serve – today and tomorrow.
iv. Accountability - We take responsibility
We truly believe that Lanka Aluminium
We can do more together for our actions. We make decisions
Industries PLC has a responsibility to conduct
We know that working together with and accept the outcome, whether
business operations in ways that benefit our
our employees, customers, suppliers and good or bad.
community and the environment as a whole.
communities creates better outcomes on v.
One Company - We know we
issues that matter to us all. We believe in Ethics work better as team. We share
setting targets that force us to extend, require our knowledge and experience to
us to work together to develop solutions We believe that our commitment to ethical
ensure we achieve our collective
that create positive customer experiences, conduct offers good return on investment
and individual goals, targets and
make great workplaces and support our to the company. It helps us attract and
objectives.
retain loyal customers, business partners,
communities. Through target’s scale we

have a special opportunity to make our and talented employees. As we enter new
Quality Policy
country a better place. Positive change in markets and offer new products and services,
the business environment are introduced by ethical challenges and concerns may arise. Lanka Aluminium Industries PLC being an
stakeholders such as suppliers, employees, Our commitment to ethical behavior guides organization engaged in Manufacturing of
customers and the local community our business decisions and how we approach Anodized, Powder Coated and Mill Finished
who while working together will make a technological advances. Extrusions as per pre-determined specification
difference which generates value to CSR. is committed;
core strengths and lean into our competitive
advantage to create value for the people,
36
Corporate Social Responsibility contd
• To provide innovative, high quality products and efficient services

Conducting Fabricators Training Programs
to meet our customer’s need & expectation. Malabe & Habarakada
• Create a working environment to help each employee to be a part

of the team which strives towards excellence.
We believe we have a responsibility to address the issues that are

important not only to our business, but also to the people and
communities with whom we interact. We use the insights and expertise
of subject matter experts across the business as well as the feedback
from external stakeholders to manage CSR at Lanka Aluminium
Compliance & Integrity

Integrity and ethical behavior are everyone’s responsibility at Lanka
Aluminium. Our ethics and values reflect our continued commitment
to applying ethical business practices and legal compliance throughout
our organization, wherever we operate and conduct business on behalf
of the Company. Our ethics and values provides a framework for what
we consider responsible business conduct. We put the customer first and
we work together as One Company. We are trustworthy, entrepreneurial,
and accountable. Our company has a strong heritage and culture with
high standards of business conduct. Our ethics & values are designed
to help us make the right decisions for ourselves and for the Company.
Engage with Stakeholders

The following outlines the various stakeholder groups of the Company
and our methods of engagement:
Investors and Shareholders

We have a duty to provide satisfactory return to our investors and
shareholders by pursuing profitability of business operations and
ventures. We utilize a number of techniques to engage and maintain a
healthy, proactive dialogue with our investors and shareholders such as
periodic meetings and business promotional meetings. Our shareholders
are kept informed through our website, annual and interim reports, and
press releases and through the Annual General Meeting.
Banks and Prospective Lenders

Financial institutions and prospective lenders play a major role in the
manufacturing sector. Lanka Aluminium maintains a good and healthy

relationship with financial institutions, since these entities provide the
necessary capital to undertake business development initiatives. We
respond to lenders’ queries and settle any dues in a timely manner.
a significant and concentrated effort to maintain a healthy and

Employees
satisfactory relationship with them. An engaged employee will
A competent workforce is the core of any successful company. Similarly, be happy and more productive. Through various means, we
the Employees form the heart of our business operations and we make keep our employees engaged: Periodic meetings, wide-array of
37
STEWARDSHIP
benefits, and training programmes. In return for their commitment working conditions to attract talented people who share our passion
our employees are provided with a safe working environment, equal for innovative aluminium solutions.
opportunities, individual career growth, opportunities for training
We believe that the most important part of our Performance process
and development, rewards based on performances, and initiatives to
is the dialogue between employees and their managers throughout
improve work-life balance.
the process, set targets - the “What” we deliver. But the “How” we
A competent workforce is the core of any successful company. deliver is increasingly important. At Lanka Aluminium, it is about
Similarly, the human resource of Lanka Aluminium Industries PLC is achievements in accordance with our values, in a safe and compliant
the real force behind its success. Lanka Aluminium is comprised of a manner, and through utilizing capabilities across the company. As part
highly skilled team of workers, mechanical, electrical engineers and of achieving performance we also focus on individual development
technical staff as well as marketing specialists who are competent plans. Our ambition is that the process will serve to enhance focus,
in identifying and evaluating the viability of potential important assure alignment, and generate energy. The ultimate goal is to give
customers which has enabled Lanka Aluminium to deliver remarkable every employee the opportunity to make a meaningful contribution
results over the years of operation. toward our purpose and enrich their own personal development in
the journey.
The Company recruitment and selection process is developed with a
focus to attract and retain employees in line with the company vision.
CELEBRATING THE DAWN OF THE NEW YEAR
Lanka Aluminium has maintained healthy attrition level among
industry peers which helped to build up a strong loyal workforce that
has become the core strength of the company. The company has also
offered exciting career prospects for talented employees. Moreover,
the company has established an innovative culture that facilitates the
identification, recognition and implementation of innovative ideas
conceptualized by the employees.
APPRECIATING HARDWORK OF EMPLOYEES

Our Team
Companies across the world have taken transformative measures in
ensuring that employees enjoy a great extent of work life balance,
which in turn is known to benefit immensely by way of employee
motivation, productivity, satisfaction and retention.
Lanka Aluminium depends on the skills and commitment of its

We offer engaging development opportunities, recognize
employees. We strive to offer an encouraging and stimulating
achievements, and foster an inclusive and healthy workplace to help
working environment, interesting career opportunities, and good
employees achieve their full potential. We want our people to feel they
38
are helping to change the world. Our values underpin the company

CONDUCTING FABRICATORS TRAINING PROGRAMS
culture and support a great employee experience. We promote a
culture of integrity, transparent communication, seek ongoing
input from our employees and provide extensive opportunities to
collaborate and innovate. We invest in our employees’ health and
well-being, offer flexible work practices, and provide a safe workplace.
We recruit a diverse workforce and foster an inclusive culture where
everyone feels welcomed, valued, respected, and heard, regardless
of their race, ethnicity, nationality, class, caste, religion, belief, gender,
language, age, health or other status.
With the majority of our workforce based at our factory, we offer

training, mentoring, and development programs and encourage our
employees to build a career with Lanka Aluminium. Our occupational
health and safety mechanism is a preventive measure that aims
to minimize the risk of accidents and injuries, as well as reduce the
risk of occupational illness that may arise as a result of our business.
Alongside the practical measures taken to improve safety standards,
we make a concerted effort to increase employee awareness to help
them understand their responsibilities regarding occupational health
and safety. Our aim is to transform employees thinking in such a
manner that they are also concern about the well-being and safety of
their working colleagues.
The Company creates opportunities for social interaction amongst

colleagues and family. We also celebrate christmas party with
games, entertainment and distribution of gifts. The annual cricket
competition was played and all workers had an opportunity to interact
and get to know the members of all departments.
Remuneration and Benefits to employees

consideration the importance of monetary and non-monetary rewards
in designing remuneration packages in order to meet employee
expectations. The company also ensures the remuneration offered
is competitive and attractive in comparison to industry peers, which
would in turn benefit the company by way of retention of the core
talent in-house. In addition to the monthly stipend, the employees
are offered with a number of other benefits, such as annual and
performance based bonus payments, training and development
programs, staff welfare activities etc. The compensation strategy is
formulated in a way that there is a balance between the internal and

external equity for the employees as well as a method of sharing the
company’s success among the employees, while ensuring that each
of their commitments is perceived and remunerated on a fair basis. In Government and Regulatory Bodies
addition, compensation packages are formulated considering industry The manufacturing industry is regulated and Lanka Aluminium has
benchmarks and best practices. always complied with all the necessary regulatory requirements.
We keep in touch with relevant regulatory bodies to clearly
communicate our grievances. Through the act of paying liable
taxes we contribute to the National treasury.
39
STEWARDSHIP
Customer Engagement The Community

Lanka Aluminium is in constant contact with our existing and prospective We understand that all our activities have an impact on the
customers as they formLanka Aluminium is in constant contact with its local community and environment we operate in. Our open and
existing and prospective customers as they form the basis of business transparent policies that are open to the scrutiny of any interested
operations. We organize meetings to identify customer expectations party have led to a healthy channel of communication between
and to better communicate their values. This open dialogue has led the Company and different elements of society. We also create
to interdependent relationships with our customers. CSR can play a employment opportunities, which bring direct and indirect
role in building customer loyalty based on distinctive ethical values. economic benefits to the communities that we operate in.
We keep customers informed about our technology and solutions
Lanka Aluminium strives to understand and respect the cultural
through the seminars and training Programs conducted Island wide.
values and laws wherever we operate. We actively support
We have conducted several seminars at various locations in Sri Lanka,
important initiatives in those communities where our employees
during the year under review. The primary objective of these seminars
live and work. This commitment is visible in our contributions of
and the forums was to introduce new systems and products which
financial, equipment and volunteer support.
conform to the high standards set by architects and designers and to
reinforce the importance of maintaining superior quality standards set
by Lanka Aluminium. As a key player in the aluminium extrusion industry,
Activity Party Amount (Rs.)
we identify the individual preferences of our customers and provide
range of products and services to our customers through the effective
Sevana Fund - Donation
distribution channel. Donation 25,000
for construction of Pagoda
Suppliers and Contractors

Kemyo Pvt Ltd - Karate
Sponsorships 5,000
Lanka Aluminium has an effective supply chain and our supplier tournament
declaration exists to ensure that more than 500 suppliers are working State Engineering
in line with the values and culture of sustainable development. The Corporation Annual get- 25,000
supplier declaration states that improper payments, corruption, and together
bribery are strictly prohibited, as are child labor and forced labor. Our State Engineering
20,000
procurement policy has clearly outlined the standards that we expect Corporation Annual trip
from our suppliers. The supply chain partners are engaged in our Engineering Department -
50,000
business operation in many ways. We also need registered suppliers Welfare trip to Jaffna
who are capable of carrying out work in an uninterrupted manner, who
Aluminium Fabricator
are trustworthy, competitive in terms of prices, quality of service offered 55,500
Association programme
and flexibility, ease of communication, having a good past track record,
and adhere to ethical conduct. Labour suppliers must pay fair wages that
comply with local laws and regulations and must compete fairly and in
compliance with applicable laws. Our supply chain continues to adapt,
innovate, and transform our products and services to create outcomes
that enable Lanka Aluminium business growth and optimize customer
experience. The reach of our global supply chain is immense and we take
seriously the responsibility of delivering superior aluminium extrusions in
an ethical and environmentally responsible manner.
Dealers and Consignment Agents

We have built lasting relationships with our dealers and consignment
agents. We liaise with companies specializing in particular areas, thus
generating a valuable knowledge transfer process. We interact with
dealers and consignment agents to deliver exceptional value to all our
customers.
40
Fabricator Training Programmes

training on Aluminium Fabrication Association which aim to provide
theoretical knowledge and practical skills needed to develop and
prepare individuals for employment
opportunities as Aluminium Fabricators. Lanka Aluminium Industries

PLC provided required training opportunities such as Fabrication
workshop providing individuals the opportunity of conducting
practical sessions and gaining firsthand experience in Aluminium
Fabrication.
Industry Peers and Competitors

Over the years, we have built strong relationships with our peers
Sponsorships Undertaken and competitors to uplift the Aluminium extrusions manufacturing
industry as a whole. Collectively, we realize the importance of engaging
We are bound to our responsibility to CSR, in the year under review
and promoting ethical business practices, sharing of knowledge, and
Lanka Aluminum Industries PLC sponsored the Karate Tournament held
actively participating in industry initiatives to enhance and develop
by Kemyo (Private) Limited within employees of the company, a fun and
the Sri Lankan Aluminium extrusions manufacturing sector.
engaging event. Which helped to strengthen our relationship with them,
we provided a financial assistance of Rs. 5,000/- for this event. We hope
to establish a strong rapport; you have loyal customers that will always
support you so we believe in a healthy and strong relationship with the
customer which is a win-win situation for Lanka Aluminium Industries
PLC and its customer base. Over the course of the year we valued and
respected our loyal customers, we funded the Annual trips and Annual
get together of our loyal customers of State Engineering Corporation
amount of Rs. 45,000/- and provided an engaging and enthusiastic
welfare trip of Engineering Department, we sponsored Rs. 50,000/-.
Conducting Fabricators Training Programs – Kurunegala

41
STEWARDSHIP
Audit Committee Report
Composition of the Committee Risk Management and Internal

The Audit Committee is a subcommittee of the main Board which is appointed by the Board of
Control
Directors of the Company and reports directly to the board. The Audit Committee reviews the processes
for the identification, evaluation and
Currently, the Audit Committee comprises of following Independent Non Executive Directors
management of all significant development
whose profiles are given on pages 5 to 6.
and operational risks faced by the Group.
•• Mr. H D S Amarasuriya – Chairman
•• Monitored the Group’s risk
•• Mr. D S Weerakkody – Independent Non-Executive Director
management and internal control
•• Dr. J M Swaminathan – Independent Non-Executive Director
processes through detailed
Regular Attendees by invitation discussions with management and
•• Mr. J D Peiris – Managing Director executive Directors.
•• Mr. R Sevaratnam – Executive Director •• Formal confirmations and assurances
•• Mr. A F Feroze Noon – Group General Manager –Finance & Administration are obtained from management
regularly regarding the efficiency of
Secretary to the Committee
the internal control system and risk
•• S S P Corporate Services (Pvt) Ltd
management system, and compliance
Meetings with applicable laws and regulations.
Audit Committee convened four meetings during the financial year ended 31st March 2020 and •• Ensured that the risks are
the attendance of the members of the Audit Committee was as follows: appropriately monitored and
controlled, by considering the Group’s
28th May 08th Aug 14th Nov 14th Feb
Name of the member principal risks and uncertainties and
2019 2019 2019 2020
Mr. H D S Amarasuriya √ √ √ √ by reviewing the mitigating actions
taken by the management.
Mr. D S Weerakkody x √ √ √
•• Reviews the processes to ensure the
Dr. J M Swaminathan √ √ √ √
internal controls and risk management
The Quorum for a meeting is two members. The proceedings of the Audit Committee are framework are adequate to meet the
regularly reported to the Board of Directors, and the minutes of the meetings are made available requirements of the SLAS.
to the Board of Lanka Aluminium Industries Plc. •• The Board of Directors and Audit
Committee obtain and are guided
Role of the Committee
by technical advice from external
The main objective of the Audit Committee is to assist the Board of Directors to effectively carry
consultants as required.
out its responsibilities relating to financial and other connected affairs of the Company. The
Committee is empowered to;
Internal Audit
The main focus of the Internal Audit is to
•• Review the adequacy and the integrity of internal control systems and management
provide independent assurance on the overall
information systems, including systems for compliance with applicable laws, rules,
system of internal controls, business and
directives and guidelines.
associated risk management and governance
•• Propose best practices on disclosures in financial results and annual reports of the
based on internal controls, and compliance
Company in line with the principles set out in the Code of Corporate Governance, other
with laws and regulations and established
applicable laws, rules, directives and guidelines.
policies and procedures of the Group.
•• Propose an adequate system of risk management for Management to safeguard
•• The Audit Committee monitors and
Company’s assets.
•• Examine any matter relating to the financial and other connected affairs of the reviews the scope of the Internal
Company Audit plan, the follow-up actions
•• Review Internal and External Audit Reports and follow up on recommendations. taken by the management to ensure
the effectiveness of the Internal Audit
•• Ensure that a well-managed sound financial reporting system is in place to provide
function.
timely reliable information to the Board of Directors, regulatory Authorities,
•• Reviews and evaluates the
Management and all other stakeholders.
independence, effectiveness and
competency of the Group’s Internal
Audit function, their resource
42
Audit Committee Report contd
resource requirements, and made Other Activities

recommendations for any required The oversight function of the preparation,
changes. presentation and adequacy of disclosures in
•• The Audit Committee continued to the quarterly and annual financial statements
ensure the coordination between of the Group, in accordance with Sri Lanka
Group Internal Audit and the External Accounting Standards (SLFRS/LKAS) and
Auditors the Company’s compliance with financial
•• The internal audit function is reporting requirements, information
outsourced to Messrs Ernst & Young, requirements of the Companies Act and
a firm of Chartered Accountants. other relevant financial reporting related
Internal Auditors directly submitted to regulations and requirements, were
their findings to Audit Committee and duly performed and the Audit Committee
these are made available to external reviewed and discussed the quarterly and year
auditors. end financial statements and recommended
External Audit their adoption to the Board. The Committee
The external audit approach and scope was reviewed the process to assess the
reviewed and discussed by the Committee effectiveness of the internal controls that
with the External Auditors and Management have been designed to provide reasonable
prior to the commencement of the audit. assurance to the Directors that assets are
safeguarded and that the financial reporting
•• Carries out a review of the
system can be relied upon in preparation and
effectiveness and the progress of the
presentation of the financial statements.
external auditor and the audit process.
•• Assess the performance and Conclusion
effectiveness of the external Based on the reports submitted by the External
auditors, their independence, Auditors, the Internal Auditors and the Risk
professional capabilities and make Management system of the Company, the
recommendations to the Board Audit Committee is satisfied with the control
pertaining to the re-appointment of environment, implementation of the Group’s
the external auditors. accounting policies and operational controls
•• Holds discussions from time to time and is confident that the financial position of
to assess the current developments in the Group is secure.
respect of reporting and compliance
in view of the changes in the Auditing
Standards, Inland Revenue Act etc.
The External Auditors informed the
Committee on an ongoing basis regarding
matters of significance that were pending (Sgd.)
resolution. Before the conclusion of the H D S Amarasuriya
audit, the Committee met with the External Chairman - Audit Committee
Auditors and discussed the audit issues and
the Management to agree on audit issues. The Colombo

Audit Committee assessed the independence 29th September, 2020
and performance of the Company’s external
auditors and made recommendations to
the Board of Directors that Messrs KPMG,
Chartered Accountants be reappointed as
the External Auditors for the financial year
2020/21.
43
STEWARDSHIP
Remuneration Committee Report
Composition of the Committee Key Objective

The Remuneration Committee is responsible for setting the Reviewing the current policy on Remuneration Packages of the
company’s policy on compensation and benefits and overseeing individual Directors and Key Management Personnel and suggesting
its implementation. It is also mandated to review significant Human recommendations to the Board.
Resources policies that influence company performance.The
committee consists of the following members whose profiles are given
Responsibilities
on pages 5 to 6. The Remuneration Committee is responsible for:
•• Mr. D S Weerakkody - Chairman •• Developing Group’s remuneration policy and determining the
•• Dr. J M Swaminathan - Independent Non-Executive Director remuneration packages of executive employees of the Group
•• Mr. S Kumar - Non-Executive Director •• The Committee recommends to the Board and its subsidiaries
the remuneration to be paid to key Management Personnel
Regular Attendees by invitation
•• The Committee also Reviews the policies pertaining to
•• Mr. S T Nagendra- Non-Executive Chairman
the remuneration and perquisites of the Executives of the
•• Mr. J D Peiris – Managing Director
Company
•• Mr. R Sevaratnam – Executive Director
•• A formal evaluation of its own performance
•• Mr. H D S Amarasuriya – Independent Non-Executive Director
Secretary to the Committee Employment Report
•• S S P Corporate Services (Pvt) Ltd The success and growth of Lanka Aluminium is dependent on the
Meetings knowledge and collective skills of its employees. The Company
recognises its responsibilities towards employees and is committed to
Remuneration Committee convened two meeting during the financial
facilitating learning and development in order to create a highly skilled
year ended 31st March 2020 and the attendance of the members of the
and motivated workforce, thereby reaching a higher level of excellence.
Remuneration Committee Meeting held during the year under review
was as follows. The table below reflects the employment report of the Company as at
31st March 2020.
14th 14th
Name of the member Nov Feb Levels Total
2019 2020
Top management 3
Mr. D S Weerakkody √ √ Senior management 7
Dr. J M Swaminathan √ √ Professionally qualified and experienced specialists
Mr. S Kumar √ x 33
and mid-management
Skilled technical and academically qualified staff,
The Chairman of the Committee can convene a special meeting in the 80
junior management, supervisors and clerical staff
event a requirement arises provided all members are given sufficient
Factory Staff & Workers 71
notice of such special meeting. The Quorum for a meeting is two
Total Permanent 194
members. The proceedings of the Committee meetings were regularly
Employees on contract 96
reported to the Board of Directors. Total 290
The Remuneration Committee operates within agreed terms of
Remuneration
reference and is committed to the principles of accountability
and transparency, and ensuring that remuneration arrangements The Human Resource Committee of the Board approved the
align reward with performance. Further, committee believes that remuneration philosophy, strategy, and policy of the Company. The
Company’s remuneration philosophy is anchored on the total reward
recruitment, motivation and retention of outstanding senior leadership

are crucial to promoting a robust future for the Company. Therefore, approach. The remuneration strategy’s main aim is to enable the
the committee has adopted a detailed process to ensure that the Board Company to develop, motivate, maintain and retain an internal talent
selects, motives, and retains the right personnel for senior leadership pipeline, and when necessary attract the requisite skills from the labour
position in keeping with the policy devised on board diversity. market to enable the institution’s growth strategy. The remuneration
policy codifies the remuneration principles, processes, practices and
procedures to give effect to the Institution’s remuneration philosophy
and strategy. The pay mix may comprise a combination of guaranteed
pay (fixed pay and bonus) and variable pay (short-term incentives)
44
Remuneration Committee Report contd
depending on the level in the organizational

hierarchy and performance.
Lanka Aluminium will continue to focus on

introducing and strengthening HR policies,
practices & systems in the area of performance
management, employee recognition and
employee engagement in 2020-2021.
(Sgd.)
D S Weerakkody
Chairman - Human Resources and
Remuneration Committee
29th September, 2020
45
STEWARDSHIP
Related Party Transactions Review Committee Report
Composition of the Committee Policies and procedures adopted by

Members of this Committee consists of three Independent Non-Executive Directors. The

the committee
•• The Committee reviews all proposed
Committee comprised the following members:
related party transactions to ensure
•• Mr. H D S Amarasuriya – Chairman
they are carried out on an arm’s length
•• Mr. D S Weerakkody – Independent Non-Executive Director basis.
•• Dr. J M Swaminathan – Independent Non-Executive Director •• At each subsequent scheduled

meeting of the Committee, the
Regular Attendees by invitation
management shall update the
•• Mr. J D Peiris – Managing Director
Committee as to any proposed
•• Mr. A F Feroze Noon – Group General Manager – Finance & Administration
material changes in any previously
reviewed related party transactions
Secretary to the Committee
and seek approval of the Committee
•• S S P Corporate Services (Pvt) Ltd
for such proposed material changes
prior to the completion of the
Meetings
transaction.
The Committee held four meetings during the year under review and attendance of the
members of the Related Party Transactions Review Committee is given below. •• The Committee intends to meet
as and when a need arises. The
28th May 08th Aug 14th Nov 14th Feb
Name of the member minutes of all meetings are properly
2019 2019 2019 2020
documented and communicated to
Mr. H D S Amarasuriya √ √ √ √
the Board of Directors.
Mr. D S Weerakkody x √ √ √
Dr. J M Swaminathan x √ √ √ •• The Directors of the RPTRC ensure
The Quorum for a meeting is two members. The proceedings of the Committee meetings were that they have, or have access to,
regularly reported to the Board of Directors. enough knowledge or expertise

to assess all aspects of proposed
Lanka Aluminium Industries PLC established the Related Party Transactions Review Committee related party transactions, and
to comply with both the Code of Best Practice on Related Party Transactions issued by the where necessary, they shall obtain
Securities and Exchange Commission of Sri Lanka and Section 9 of the Listing Rules of the appropriate professional and expert
Colombo Stock Exchange. advice from an appropriately qualified
Objectives person
•• To exercise oversight on behalf of the Board, that all Related Party Transactions (“RPTs”,
Duties of the Committee
other than those exempted by the CSE listing rules on the Related Party Transactions) of
•• To review proposed related party
Lanka Aluminium Industries PLC and all its subsidiaries are carried out and disclosed in
transactions prior to them being
a manner consistent with the CSE listing rules.
entered into with a view to best serve
•• To advise and update the Board of Directors on the related party transactions of each of
the interests of the Company;
the subsidiaries on a quarterly basis.
•• To ensure compliance with the CSE listing rules on the Related Party Transactions. •• To monitor all related party
•• To review policies and procedures of Related Party Transactions of the Group. transactions to ensure that they are
•• To ensure shareholder interests are protected and that fairness and transparency are carried out on normal commercial
maintained. terms so that they are not in any way
disadvantageous to the best interests
of the Company and its minority
shareholders;
•• Obtain expert knowledge and advice

either from within the Company or
from outside to assess proposed
related party transactions;
46
Related Party Transactions Review Committee Report contd
•• To review both recurrent and non-

recurrent- related party transactions;
•• Recommend to the Board and obtain

their approval before executing
related party transactions.
Review of Related Party Transactions

The Committee is of the opinion that all
related party transactions entered into
during the year were of recurrent nature. The
aggregate value of the recurrent Related Party
Transactions does not exceed 10% of the gross
revenue / income as per the audited Financial
Statement of year 2019/2020. Further no
substantial assets acquired/transferred from,
or disposed to any Related Party of Entity
during the year under review. The details of
other related party transactions entered into
during the year are given in Note 31 to the
financial statements on Pages 93 to 96 of this
Annual Report.
Conclusion
The Committee confirms that all applicable
rules in the Code of Best Practice on Related
Party Transactions and Section 9 of CSE Listing
Rules have been complied with by the Group
as at the date of this Report.
(Sgd.)
H D S Amarasuriya
Chairman - Related Party Transactions Review
Committee

47
STEWARDSHIP
Responsibility Statement of Managing Director and

Group General Manager Finance and Administration
Compliance with Laws and Company’s state of affairs. We confirm that Auditors to review the manner in which these
Regulations to the best of our knowledge, the Financial Auditors are performing their responsibilities,
The Financial Statements of Lanka Aluminium Statements, significant Accounting Policies and to discuss auditing, internal control and
Industries PLC and the Consolidated and other financial information included in financial reporting issues. To ensure complete
Financial Statements of the Company and its this Annual Report, fairly present all material independence, the Independent Auditors and
subsidiaries (the Group) for the year ended aspects regarding the financial position, the Internal Auditors have full and free access
31st March 2020 are prepared and presented results of the operations and the Cash Flows to the members of the Audit Committee to
in compliance with the requirements of the of the Group during the year under review. discuss any matter of substance.
following: We also confirm that the Group has adequate
The Audit Committee Report is given on
•• Sri Lanka Accounting Standards resources to continue in operation and have
pages 42 to 43.
issued by The Institute of Chartered applied the Going Concern basis in preparing
these Financial Statements. Conclusion
Accountants of Sri Lanka (SLFRS/LKAS)
•• Companies Act No. 07 of 2007 We confirm that to the best of our knowledge:
System of Internal Control
•• Listing Rules of the Colombo Stock •• The Group has complied with all
The Company has taken proper and sufficient
Exchange applicable laws, regulations and
care in installing a system of internal control
•• Sri Lanka Accounting and Auditing guidelines and there is no material
and accounting records, for safeguarding
Standards Act No. 15 of 1995 litigation against the Group other
assets, and for preventing and detecting
•• Code of Best Practice on Corporate than those disclosed in Note 33 of the
frauds as well as other irregularities, which
Governance issued jointly by the Financial Statements
are reviewed, evaluated and updated on
Institute of Chartered Accountants of •• The system of internal control is
an ongoing basis. We have evaluated the
Sri Lanka and the Securities and operating effectively
internal controls and procedures of the Group
Exchange Commission of Sri Lanka in •• The Financial Statements reflect in a
for the financial period under review and
2017 true and fair manner, the form
confirm, based on our evaluations that there
•• Financial Reporting and substance of transactions, and
were no significant deficiencies and material
The Significant Accounting Policies used reasonably present the Company’s
weaknesses in the design or operation of
in the preparation of the consolidated state of affairs and have applied the
internal controls and frauds that involves
Financial Statements are appropriate and Going Concern basis in preparing
management or other employees. The
are consistently applied, except unless these Financial Statements
Internal Auditors conduct periodic audits
otherwise stated in the notes accompanying •• All taxes, duties, levies and all statutory
to provide reasonable assurance that the
the Financial Statements. The Significant payments by the Group and all
established policies and procedures of the
Accounting Policies and estimates that contributions, levies and taxes payable
Group were consistently followed. However,
involved a high degree of judgment on behalf of and in respect of the
there are inherent limitations that should
and complexity were discussed with the employees of the Group as at 31st
be recognised in weighing the assurances
Audit Committee and Company’s External March 2020 have been paid, or where
provided by any system of internal control
Auditors. There are no departures from the relevant provision made.
and accounting.
prescribed Accounting Standards in their
adoption. Comparative information has Report of Independent Auditors Lanka Aluminium Industries PLC
been reclassified wherever necessary to The Financial Statements were audited by
comply with the current presentation. The Messrs KPMG, Chartered Accountants, the (Sgd.)
Board of Directors and the management of Independent Auditors and their report is
J D Peiris
the Company accept responsibility for the given on pages 52 to 54. Executive Chairman
integrity and objectivity of these Financial
Audit Committee
Statements. The estimates and judgments
The Audit Committee pre-approves the (Sgd.)
relating to the Financial Statements were
audit and non-audit services provided by A F Feroze Noon
made on a prudent and reasonable basis, in
Messrs KPMG, Chartered Accountants. The Group General Manager
order that the Financial Statements reflect a
Audit Committee meets periodically with Finance & Administration
true and fair view and the form and substance
the Internal Auditors and the Independent
of transactions reasonably present the 29th September, 2020
48
Statement of Directors’ Responsibility for
Financial Reporting
This Statement of Directors’ responsibilities is The Directors have provided the auditors

to be read in conjunction with the Report of Messrs KPMG, Chartered Accountants with
the Auditors and is made to distinguish the every opportunity to carry out reviews
respective responsibilities of the Directors and tests that they consider appropriate
and to the Auditors in relation to the Financial and necessary for the performance of their
Statements contained in this Annual Reports. responsibilities. The auditors have examined
The Board accepts responsibility for the the financial statements together with all
preparation and fair presentation of Financial financial records and related data and express
Statements in accordance with Sri Lanka their opinion.
Accounting Standards. This responsibility
Compliance Report
includes: designing, implementing and
The directors confirm that, to the best of their
maintaining internal controls relevant to
the preparation and fair presentation of knowledge all taxes and levis payable by the
Financial Statements that are free from Group/ Company and all contributions, levis
material misstatements, whether due to and taxes payable on behalf of the employees
fraud or error; selecting and applying of the Group/ Company, and all other known
appropriate accounting policies; and making statutory obligations as at the reporting date
accounting estimates that are reasonable in have been paid or provided for in the financial
the circumstances. statements.
The Group’s /Company’s Financial Statements, Approval of Financial Statements

presented in this report for the year ended 31st The Directors’ report and the financial
March 2020; conform to the requirements of statements of the Company and the Group
Sri Lanka Accounting Standards (SLFRS/ LKAS) were approved by the Board of Directors on
and the Companies Act No 7 of 2007. They
29th September, 2020.
also confirm that the Financial Statements
presented by them gives a true and fair view For and on behalf of the Board of Directors of
of Company activities as at that date. The
financial information is consistent with that in
the Financial Statements. Lanka Aluminium Industries PLC
The Directors are of the view that adequate

funds and other resources are available (Sgd.) (Sgd.)
within the Group / Company for the Group/
J D Peiris Dr J M Swaminathan
Company to continue in operation for the
Executive Chairman Director
foreseeable future.
The Board of Directors has initiated an efficient 29th September, 2020

and concise system of Internal Control. It also
includes Internal Checks and Internal Audits,
along with the financial and other controls
required to carry on the business smoothly,
whilst safeguarding assets in a secure and

reliable manner. The Directors have also
taken all reasonable steps to ensure that
the Company and its subsidiaries maintain
adequate and accurate accounting books
of records which reflects the transparency
of transactions and provide an accurate
disclosures of the Group’s/Company’s
financial position.
49
STEWARDSHIP
Financial Information
Financial Calendar...............................................................................................51
Independent Auditor’s Report................................................................. 52 - 54
Income Statements.............................................................................................55
Statements of Profit or Loss and Other Comprehensive Income...........56
Statements of Financial Position.....................................................................57
Statements of Changes in Equity....................................................................58
Statements of Cash Flows.................................................................................59
Notes to the Financial Statements......................................................60 - 104
Financial Calendar
Financial Statements 2019/20

01st Quarter Interim Financial Statements - 8th August 2019
(30th June 2019 – Unaudited)
02nd Quarter Interim Financial Statements - 14th November 2019

(30th September 2019 – Unaudited)
03rd Quarter Interim Financial Statements - 14th February 2020

(31st December 2019 – Unaudited)
04th Quarter Interim Financial Statements - 2nd July 2020

(31st March 2020 – Unaudited)
Annual Report and Accounts

Annual Report 2019/2020 - 29th September 2020
Meeting
34th Annual General Meeting - 29th October 2020
51
FINANCIAL INFORMATION
Independent Auditor’s Report
KPMG Tel : +94 - 11 542 6426

(Chartered Accountants) Fax : +94 - 11 244 5872
32A, Sir Mohamed Macan Markar Mawatha, +94 - 11 244 6058

P. O. Box 186,
KPMG InternetTel: : +94 - 11 542 6426
www.kpmg.com/lk
Colombo 00300, Sri Lanka.
(Chartered Accountants) Fax :
+94 - 11 244 5872
32A, Sir Mohamed Macan Markar Mawatha, +94 - 11 244 6058
TO THE SHAREHOLDERS
P. O. Box 186, OF LANKA In our opinion, the accompanying
Internet financial
: www.kpmg.com/lk other ethical responsibilities in accordance
ALUMINIUMColombo 00300, Sri Lanka.
INDUSTRIES PLC. statements of the Company and the Group with the Code of Ethics. We believe that the
give a true and fair view of the financial audit evidence we have obtained is sufficient
Report on the Audit of the Financial
Statements position of the Company and the Group as and appropriate to provide a basis for our
at 31st March 2020, and of their financial opinion.
Opinion performance and cash flows for the year
then ended in accordance with Sri Lanka Key Audit Matters
We have audited the financial statements
Accounting Standards. Key audit matters are those matters that, in
of Lanka Aluminium Industries PLC (the
“Company”) and the consolidated financial Basis for Opinion our professional judgment, were of most
statements of the Company and its significance in our audit of the Company
subsidiaries (the “Group”), which comprise We conducted our audit in accordance with
financial statements and the consolidated
the statement of financial position as at 31st Sri Lanka Auditing Standards (“SLAuSs”).
financial statements of the current year. These
March 2020, and the statement of profit or loss Our responsibilities under those standards
matters were addressed in the context of our
and other comprehensive income, statement are further described in the Auditor’s
audit of the Company financial statements
of changes in equity and statement of cash Responsibilities for the Audit of the Financial
and the consolidated financial statements as
flows for the year then ended, and notes to Statements section of our report. We are
a whole, and in forming our opinion thereon,
the financial statements, including a summary independent of the Group in accordance
and we do not provide a separate opinion on
of significant accounting policies and other with the Code of Ethics issued by CA Sri Lanka
these matters.
explanatory notes set out on pages from 55 (“Code of Ethics”), and we have fulfilled our
to 104.
Risk description Our response

01. Impairment allowance for Trade and other Receivables.
Refer to Note 3.4.5 (accounting policy) and Note 17 to these Our audit procedures included:
Financial Statements. •• Challenging the appropriateness of the selection of accounting
The Group has recognized impairment provisions relating to policies based on the requirements of the SLFRS 09.
Trade receivables of Rs. 45.7mn (Company Rs. 31.6mm), Other •• Evaluating the appropriateness of the management approach
Receivable of Rs. 5.5mn (Company Rs. 2.6mn) over the application and use of practical expedients applied for
Impairment allowances represent management’s best estimate of SLFRS 9.
the losses expected within receivables as at the financial position • • Assessing management’s processes, systems and controls
date. They are calculated for specific assets and on a collective implemented over impairment assessment.
basis for portfolios of receivables of a similar nature. • • Identifying and testing the relevant key controls and evaluating
The calculation of impairment allowances is inherently the completeness, accuracy and relevance of data used.
•• Evaluating the appropriateness of the assumptions used
judgmental for any institution and the Group use subjective
based on our knowledge and information of the client and the
assumptions/ judgements made to determine the classification
industry.
category (e.g. business model and SPPI assessment), and ECL
•• Evaluating and testing the mathematical accuracy of models
modelling (e. g. macro-economic inputs) as per the requirements
applied.
of SLFRS 09.
•• Assessing the completeness, accuracy and relevance of the
Impairment remains one of the most significant judgements
disclosures required by SLFRS.
made by management particularly in light of the uncertain
economic outlook in the country and, at the reporting date the
potential impact of the global Covid-19 outbreak significantly
affected on the macro economic forecasts which affect the ECL
adjustment.
M.R. Mihular FCA P.Y.S. Perera FCA C.P. Jayatilake FCA

T.J.S. Rajakarier FCA W.W.J.C. Perera FCA Ms. S. Joseph FCA
Ms. S.M.B. Jayasekara ACA W.K.D.C Abeyrathne FCA S.T.D.L. Perera FCA
G.A.U. Karunaratne FCA R.M.D.B. Rajapakse FCA Ms. B.K.D.T.N. Rodrigo FCA
R.H. Rajan FCA M.N.M. Shameel ACA Ms. C.T.K.N. Perera ACA
M.R. Mihular FCA Alahakoon ACA
A.M.R.P. P.Y.S.Perera FCA C.P. Jayatilake FCA
(“KPMG International”), a Swiss entity. T.J.S. Rajakarier FCA W.W.J.C. Perera FCA Ms. S. Joseph FCA
Ms. S.M.B. Jayasekara
Principals ACA Perera
- S.R.I. W.K.D.C Abeyrathne
FCMA(UK), FCA S.T.D.L.
LLB, Attorney-at-law, Perera
H.S. FCA
Goonewardene ACA
52 G.A.U. Karunaratne FCA Ms. P.M.K.Sumanasekara FCA
R.M.D.B. Rajapakse FCA Ms. B.K.D.T.N. Rodrigo FCA
R.H. Rajan FCA M.N.M. Shameel ACA Ms. C.T.K.N. Perera ACA
Independent Auditor’s Report contd

Risk description Our response
02. Carrying value of Inventory
Refer to Note 3.9 (accounting policy) and Note 16 to these Our audit procedures included;
Financial Statements. •• Challenging the management with regard to the calculation
methodology, the basis for provision and the process with
The Group has recognized a total inventory provision of Rs. 4.3mn
respect to inventory provision.
(Company -Rs. 4.3mn) in arriving at a total inventory value of Rs.
•• Testing the design, implementation and operating
596.1mn (Company - Rs. 531.1mn)
effectiveness of the key control’s management has established
Application of costing for finished goods and work-in-progress for inventory recognition and provision computations to
requires special audit consideration due to the volatility of input ensure the accuracy of the inventory valuation and provision.
prices. •• Performing the observations of inventory physical verifications
Given the level of significant management judgments and in order to identify the existence and any damaged inventory.
estimates involved this is considered to be a key audit matter. •• Assessing the adequacy of, and movements in, inventory
provisions held, by recalculating a sample of items included
within the provision to ensure appropriate basis of valuation.
•• Evaluating, on a sample basis, whether inventories were stated
at the lower of cost or net realizable value at the reporting date
by comparing the sales prices of inventories subsequent to the
reporting date where available and with the latest prices prior
to the business interruption and checked whether there were
any considerably low margin products which would potentially
have an effect of the net realizable value.
•• Evaluating the appropriateness of the assumptions used
in management assessment of provision for slow moving
inventory to ensure that management assessment is adequate
based on our knowledge and information of the client and the
industry
Other Information conclude that there is a material misstatement disclosing, as applicable, matters related to
there in, we are required to communicate the going concern and using the going concern
Management is responsible for the other
matter to those charged with governance. We basis of accounting unless management
information. The other information comprises
have nothing to report in this regard. either intends to liquidate the Group or to
the information included in the Annual Report
cease operations, or has no realistic alternative
but does not include the Financial Statements Responsibilities of Management and
Those Charged with Governance for but to do so.
and our Auditor’s Report thereon.
the Financial Statements
Those charged with governance are
Our opinion on the Financial Statements does
Management is responsible for the responsible for overseeing the Company’s
not cover the other information and we do
preparation of Financial Statements that and the Group’s financial reporting process.
not express any form of assurance conclusion
give a true and fair view in accordance with Auditor’s Responsibilities for the
thereon.
Sri Lanka Accounting Standards, and for such Audit of the Financial Statements
In connection with our audit of the Financial internal control as management determines
Statements, our responsibility is to read the Our objectives are to obtain reasonable
is necessary to enable the preparation of
other information and, in doing so, consider assurance about whether the Financial
Financial Statements that are free from
whether the other information is materially Statements as a whole are free from material
material misstatement, whether due to fraud
inconsistent with the Financial Statements misstatement, whether due to fraud or error,
or error.
or our knowledge obtained in the audit or and to issue an Auditor’s Report that includes
In preparing the Financial Statements, our opinion. Reasonable assurance is a high
otherwise appears to be materially misstated.
management is responsible for assessing the level of assurance but is not a guarantee that
When we read the annual report, if we Group’s ability to continue as a going concern,
53
Independent Auditor’s Report contd
an audit conducted in accordance with SLAuSs exists, we are required to draw attention matters in our Auditor’s Report unless law
will always detect a material misstatement in our Auditor’s Report to the related or regulation precludes public disclosure
when it exists. Misstatements can arise from disclosures in the Financial Statements about the matter or when, in extremely rare
fraud or error and are considered material if, or, if such disclosures are inadequate, to circumstances, we determine that a matter
individually or in the aggregate, they could modify our opinion. Our conclusions are should not be communicated in our report
reasonably be expected to influence the based on the audit evidence obtained because the adverse consequences of
economic decisions of users taken on the up to the date of our Auditor’s Report. doing so would reasonably be expected to
basis of these Financial Statements. However, future events or conditions may outweigh the public interest benefits of such
As part of an audit in accordance with SLAuSs, cause the Group to cease to continue as a communication.
we exercise professional judgement and going concern. Report on Other Legal and
maintain professional skepticism throughout •• Evaluate the overall presentation, Regulatory Requirements
the audit. We also: structure and content of the Financial
As required by section 163 (2) of the
•• Identify and assess the risks of material Statements, including the disclosures,
Companies Act No. 07 of 2007, we have
misstatement of the Financial Statements, and whether the Financial Statements
obtained all the information and explanations
whether due to fraud or error, design and represent the underlying transactions
that were required for the audit and, as far
perform audit procedures responsive to and events in a manner that achieves fair
as appears from our examination, proper
those risks, and obtain audit evidence presentation.
accounting records have been kept by the
that is sufficient and appropriate to •• Obtain sufficient appropriate audit Company.
provide a basis for our opinion. The risk evidence regarding the financial
of not detecting a material misstatement CA Sri Lanka membership number of the
information of the entities or business
resulting from fraud is higher than for one engagement partner responsible for signing
activities within the Group to express an
resulting from error, as fraud may involve this independent auditor’s report is 3272.
opinion on the Consolidated Financial
collusion, forgery, intentional omissions, Statements. We are responsible for the
misrepresentations, or the override of direction, supervision and performance
internal control. of the group audit. We remain solely
•• Obtain an understanding of internal responsible for our audit opinion. CHARTERED ACCOUNTANTS
control relevant to the audit in order Colombo, Sri Lanka
We communicate with those charged with
to design audit procedures that are
governance regarding, among other matters, 29th September 2020
appropriate in the circumstances, but not
the planned scope and timing of the audit
for the purpose of expressing an opinion
and significant audit findings, including any
on the effectiveness of the Company and
significant deficiencies in internal control that
the Group’s internal control.
we identify during our audit.
•• Evaluate the appropriateness of
We also provide those charged with
accounting policies used and the
governance with a statement that we have
reasonableness of accounting estimates
complied with ethical requirements in
and related disclosures made by
accordance with the Code of Ethics regarding
management.
independence, and to communicate with
•• Conclude on the appropriateness of
them all relationships and other matters that
management’s use of the going concern
may reasonably be thought to bear on our

basis of accounting and, based on the
independence, and where applicable, related
audit evidence obtained, whether a
safeguards.
material uncertainty exists related to
events or conditions that may cast From the matters communicated with those
significant doubt on the Group’s ability charged with governance, we determine
to continue as a going concern. If we those matters that were of most significance
conclude that a material uncertainty in the audit of the Financial Statements
of the current period and are therefore
the key audit matters. We describe these
54
Income Statements

COMPANY GROUP
For the year ended 31st March, 2020 2019 2020 2019
Note
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
Revenue 5 1,757,408 1,940,954 1,876,181 2,019,914
Cost of sales (1,309,853) (1,455,721) (1,399,230) (1,519,648)

Gross profit 447,555 485,233 476,951 500,266
Other income 6 15,754 7,817 15,403 7,423
Administrative expenses (141,623) (139,487) (146,627) (143,423)
Marketing expenses (139,572) (135,874) (145,209) (140,080)
Profit from operations 182,114 217,689 200,518 224,186
Finance income 7 5,058 3,671 4,314 3,457

Finance costs 7 (133,202) (137,396) (140,209) (146,841)
Net finance costs 7 (128,144) (133,725) (135,895) (143,384)
Profit before taxation 8 53,970 83,964 64,623 80,802
Income tax expense 9 (13,951) (27,660) (17,873) (27,882)
Profit for the year 40,019 56,304 46,750 52,920
Profit for the year attributable to:

Equity holders of the company 40,019 56,304 43,237 54,014
Non-controlling interests - - 3,513 (1,094)
Earnings per share 10 2.92 4.11 3.16 3.94
The accounting policies and notes on pages 60 through 104 form an integral part of these financial statements
Figures in brackets indicates deductions.
55
Statements of Profit or Loss and other Comprehensive Income

COMPANY GROUP
For the year ended 31st March,
Note 2020 2019 2020 2019
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
Other comprehensive income

Items that will not be reclassified to profit or loss
Actuarial gains / (losses) on retirement benefit obligations 23 (129) 2,758 (214) 2,787
Tax on other comprehensive income 9.2 36 (772) 60 (780)
Equity investments at FVOCI - net change in fair value 15 (1,469) (8,124) (1,469) (8,124)
Other comprehensive income for the year, net of tax (1,562) (6,138) (1,623) (6,117)
Total comprehensive income for the year 38,457 50,166 45,127 46,804
Total comprehensive income attributable to:

Equity holders of the Company 38,457 50,166 41,639 47,889
Non-controlling interests - - 3,486 (1,085)
Total comprehensive income for the year 38,457 50,166 45,127 46,804

Figures in brackets indicates deductions.
56
Statements of Financial Position
COMPANY GROUP
As at 31st March, 2020 2019 2020 2019
Note Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
ASSETS

Non-Current Assets
Property, plant and equipment 11 1,469,985 1,494,205 1,582,854 1,608,680
Right-of-use assets 12 40,234 - 37,223 -
Intangible assets 13 1,226 1,480 1,226 1,480
Investments in subsidiaries 14 3,600 3,600 - -
Other non-current financial assets 15 9,648 11,117 9,648 11,117
1,524,693 1,510,402 1,630,951 1,621,277
Current Assets
Inventories 16 531,159 523,512 596,194 568,570
Trade and other receivables 17 605,995 614,608 667,917 666,401
Amounts due from related parties 18 100,640 69,867 5,031 4,646
Income tax recoverable 19 15,335 12,652 16,576 13,665
Other current financial assets 20 - - 31,309 28,420
Cash and cash equivalents 21 24,828 22,492 27,549 23,622
Total Current Assets 1,277,957 1,243,131 1,344,576 1,305,324
Total Assets 2,802,650 2,753,533 2,975,527 2,926,601
EQUITY AND LIABILITIES

Equity
Stated capital 22 137,028 137,028 137,028 137,028
Reserves 437,901 439,370 517,928 519,397
Retained earnings 668,187 648,815 689,341 666,785
Total equity attributable to the equity holders of the company 1,243,116 1,225,213 1,344,297 1,323,210
Non-controlling interests - - 14,440 10,954
Total Equity 1,243,116 1,225,213 1,358,737 1,334,164
Non-Current Liabilities
Loans and borrowings 27 11,968 45,372 21,968 58,372
Lease liabilities 28 24,789 - 23,090 -
Retirement benefit obligations 23 57,427 51,529 58,615 52,292
Deferred tax liabilities 24 320,373 313,016 327,488 317,270
414,557 409,917 431,161 427,934
Current Liabilities
Trade and other payables 25 152,370 164,742 162,063 173,092
Amounts due to related party 26 4,770 3,980 - -
Income tax payable 19 - - 356 260
Loans and borrowings 27 855,894 849,003 883,005 877,871
Lease liability 28 16,618 - 15,120 -
Bank overdrafts 21 115,325 100,678 125,085 113,280
Total Current Liabilities 1,144,977 1,118,403 1,185,629 1,164,503
Total Liabilities 1,559,534 1,528,320 1,616,790 1,592,437
Total Equity and Liabilities 2,802,650 2,753,533 2,975,527 2,926,601
I certify that these financial statements are in compliance with the requirements of Companies Act No 7 of 2007.
(Sgd.)
A F Feroze Noon
Group General Manager - Finance & Administration
The Board of Directors is responsible for the preparation and the presentation of these financial statements.
Approved and signed for and on behalf of the Board;

(Sgd.) (Sgd.)
J D Peiris R. Seevaratnam
Executive Chairman Director
Colombo
57
Statements of Changes in Equity

Fair Value
Stated Revaluation Retained Total
COMPANY Capital Reserve*
Through
Earnings Equity
OCI**
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000

Balance as at 1st April, 2018 137,028 455,391 (7,897) 618,937 1,203,459
Adjustment of initial application of SLFRS 9 (1,007) (1,007)
Adjusted balance as at 1st April 2018 137,028 455,391 (7,897) 617,930 1,202,452
Profit for the year - - - 56,304 56,304
Other Comprehensive Income
Equity Investments at FVOCI - net change in fair value - - (8,124) - (8,124)
Actuarial gains/(losses) on retirement benefit obligation (net of tax) - - - 1,986 1,986
Total comprehensive income for the year - - (8,124) 58,290 50,166
Dividend declared - - - (27,405) (27,405)
Balance as at 31st March, 2019 137,028 455,391 (16,021) 648,815 1,225,213
Profit for the year - - - 40,019 40,019
Equity investments at FVOCI - net change in fair value - - (1,469) - (1,469)
Actuarial gains/(losses) on retirement benefit obligation (net of tax) - - - (93) (93)
Total comprehensive income for the year - - (1,469) 39,926 38,457
Dividend declared - - - (20,554) (20,554)
Balance as at 31st March, 2020 137,028 455,391 (17,490) 668,187 1,243,116
Attributable to equity holders of the company

Fair Value Non
Stated Revaluation Retained
GROUP Through Total Controlling Total Equity
Capital Reserve* Earnings
OCI** Interests
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
Balance as at 01st April, 2018 137,028 535,418 (7,897) 638,352 1,302,901 12,039 1,314,940
Adjustment of initial application of SLFRS 9 (174) (174) - (174)
Adjusted balance as at 1st April 2018 137,028 535,418 (7,897) 638,178 1,302,727 12,039 1,314,766
Profit for the year - - - 54,014 54,014 (1,094) 52,920
Equity Investments at FVOCI - net change in fair value - - (8,124) - (8,124) - (8,124)
Actuarial gains/(losses) on retirement benefit obligation
- - - 1,998 1,998 9 2,007
(net of tax)
Other Comprehensive Income for the year
Total comprehensive income for the year - - (8,124) 56,012 47,888 (1,085) 46,803
Dividend declared - - - (27,405) (27,405) - (27,405)
Balance as at 31st March, 2019 137,028 535,418 (16,021) 666,785 1,323,210 10,954 1,334,164
Profit for the year - - - 43,237 43,237 3,513 46,750
Equity Investments at FVOCI - net change in fair value - - (1,469) - (1,469) - (1,469)
Actuarial gains/(losses) on retirement benefit obligation
- - - (127) (127) (27) (154)
(net of tax)
Total comprehensive income for the year - - (1,469) 43,110 41,641 3,486 45,127
Dividend declared - - - (20,554) (20,554) - (20,554)

Balance as at 31st March, 2020 137,028 535,418 (17,490) 689,341 1,344,297 14,440 1,358,737
* Revluation Reserves: Revaluation reserves relates to revaluation of land & building and represents the increase in the fair value of the land & buildings.
** Fair Value Reserve : - The cumulative net change in the fair value of equity securities designated at FVOCI
Figures in brackets indicates deduction
58
Statements of Cash Flows
COMPANY GROUP

Note Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
CASH FLOW FROM OPERATING ACTIVITIES

Profit before tax 53,970 83,964 64,623 80,802
Adjustment for
Depreciation on property, plant and equipment 11 104,250 96,253 107,760 99,311
Amortisation of intangible assets 13 1,737 254 1,737 254
Amortisation of right-of-use assets 12 24,446 - 22,940 -
Provision for retirement benefit obligations 23 10,101 9,365 10,440 9,572
Provision for impairment/(reversal of provision) of trade and other receivables 17 11,846 5,185 13,290 6,358
Impairment of property, plant and equipment 11 377 477 377 477
Impairment of inventories 16 4,310 - 4,310 -
Provision for impairment of amounts due from related parties - 532 - 136
Unclaimed dividend written back (376) - (376) -
Gain on disposal of property, plant & equipment 6 (10,279) (3,150) (10,279) (3,150)
Interest income 7 (3,881) (3,251) (3,004) (3,037)
Interest expense 7 133,202 137,396 139,630 146,610
Operating profit before working capital changes 329,703 327,023 351,448 337,333
(Increase )/Decrease in inventories (11,957) (123,061) (31,934) (113,081)

(Increase )/Decrease in trade and other receivables (3,233) 98,618 (14,808) 123,606
(Increase )/Decrease in amount due from related parties (26,959) (886) (385) (1,353)
Increase/(Decrease) in trade and other payables (12,266) (43,109) (10,917) (67,783)
Increase in amount due to related parties 790 254 - -
Cash generated from/(used in) operations 276,078 258,839 293,404 278,722
Income tax paid 19 (9,241) (22,970) (10,412) (23,903)

Interest expense paid (124,843) (137,396) (131,751) (146,610)
Retiring gratuity paid 23 (4,332) (1,829) (4,332) (1,829)
Net cash generated from/(used in) operations 137,662 96,645 146,909 106,380
CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition and construction of property, plant and equipment 11 (81,378) (89,767) (83,283) (90,882)
Purchase intangible assets 13 (1,483) - (1,483) -
Interest income received 7 67 66 3,004 3,037
Proceeds from disposal of property, plant & equipment 11,250 3,150 11,250 3,150
Investments made in short term deposit - - (2,889) (2,714)
Net cash flow from / (used in) investing activities (71,544) (86,551) (73,401) (87,409)
CASH FLOWS FROM FINANCING ACTIVITIES

Dividends paid to equity holders of the parent (20,284) (34,706) (20,284) (34,706)
Loans obtained during the year 27.1 2,529,387 2,606,299 2,634,985 2,727,545
Loans repayments during the year 27.1 (2,560,041) (2,611,201) (2,670,396) (2,731,763)
Repayment of lease liabilities 28 (27,491) - (25,691) -
Net cash flow from/(used in) financing activities (78,429) (39,608) (81,386) (38,924)
Net increase /(decrease) in cash and cash equivalents (12,311) (29,514) (7,878) (19,953)
Cash and cash equivalents at the beginning of the year (78,186) (48,672) (89,658) (69,705)
Cash and cash equivalents at the end of the year (Note 21) (90,497) (78,186) (97,536) (89,658)
The accounting policies and notes on pages 60 through 104 form an integral part of these financial statements Figures in brackets indicates
deductions.
59
Notes to the Financial Statements
1. REPORTING ENTITY
2.2 Responsibility for Financial Statements

1.1 Domicile and Legal Form The Board of Directors is responsible for the preparation and fair
Lanka Aluminium Industries PLC (the “Company”) is a public Limited presentation of these financial statements in accordance with Sri Lanka
liability company incorporated and domiciled in Sri Lanka under the Accounting Standards and as per the provisions of the Companies Act
Companies Act. No 07 of 2007 and the ordinary shares of the Company No. 07 of 2007. This responsibility includes: designing, implementing
are listed on the Colombo Stock Exchange. and maintaining internal controls relevant to the preparation and
fair presentation of financial statements that are free from material
The Company’s registered office is located at 1st Floor, Lakshman’s
misstatement, whether due to fraud or error; selecting and applying
Building, 321, Galle Road, Colombo 03, and the principal place of
appropriate accounting policies; and making accounting estimates
business is located at No.20, Temple Road, Ekala, Ja-ela.
that are reasonable in the circumstances.
The consolidated financial statements of the company as at, and for
2.3 Approval of Financial Statements by Directors
the year ended 31st March 2020 comprise the financial statements of
Company and its subsidiaries (together referred to as the “Group” and The Financial statements of the Group and the company for the year
individually as “Group entities”). ended 31st March 2020 were authorised for issue by the Board of
Directors on the 29th of September 2020.
1.2 Principal Activities and Nature of Operations
2.4 Basis of Measurement
COMPANY
The principal activity of the Company is the manufacture and sale of The Consolidated Financial Statements have been prepared on the
aluminium extrusions. accrual basis, the historical cost basis and applied consistently which no
adjustments being made for inflationary factors affecting the financial
SUBSIDIARIES statements, except for the following material items in the statement of
The principal activities of the Company’s subsidiaries are as follows:
financial position.
Comark Lanka (Pvt) Ltd - Trading in aluminium extrusions and
accessories. • Equity Instruments at FVTOCI are measured at fair value;
Castalloys (Pvt) Ltd. - Investment property • Land, building and machinery are measured at revalued
Comark Engineers (Pvt) Ltd. - Manufactures of Builders Hardware and amounts; and.
Undertaking contracts for aluminium fabrication.
• Liability for employee benefits is recognized as the present value
There were no significant changes in the nature of the principal
of the defined benefit obligation less the net total of fair value of
activities of the Group during the financial year under review other
the plan assets.
than mentioned above.
These Financial Statements have been prepared on the basis that
1.3 Parent Enterprise the Company / Group would continue as a going concern for the
The Company’s ultimate parent company is “Clovis Company Limited” foreseeable future.
(Bermuda) which holds 50% of voting rights.
2.5 Functional Currency
The Financial statements are presented in Sri Lankan Rupees, which is
2. BASIS OF PREPARATION the Group’s functional currency. All financial information presented in
2.1 Statement of Compliance rupees has been rounded to the nearest thousand unless otherwise
The consolidated financial statements of the Group and the separate stated.
financial statements of the Company have been prepared in accordance 2.6 Use of Estimates and Judgments
with the Sri Lanka Accounting Standards (herein referred to as SLFRSs/

The preparation of these Financial Statements in conformity with SLAS’s
LKASs) effective from 1st January 2012, laid down by The Institute of
requires management to make judgments, estimates and assumptions
Chartered Accountants of Sri Lanka (ICASL) and in compliance with the
that affect the application of accounting policies and the reported
requirements of the Companies Act No. 07 of 2007 and the Sri Lanka
amounts of assets, liabilities, income and expenses. Actual results may
Accounting and Auditing Standards Act No. 15 of 1995.
differ from these estimates. Estimates and underlying assumptions are
These Financial Statements also provide appropriate disclosures as reviewed on an ongoing basis. Revisions to accounting estimates are
required by the listing rules of the Colombo Stock Exchange. recognised in the period in which the estimates are revised and in any
future periods affected.
60
Notes to the Financial Statements contd
Information about critical judgments in applying accounting policies When measuring the fair value of an asset or liability, the Group uses

that have the most significant effect on the amounts recognised in the observable market data as far as possible. Fair values are categorized
Financial Statements is included in the following notes: into different levels in a fair value hierarchy based on the inputs used in
the valuation techniques as follows:
• Valuation of Land and Building (Note 11)
• Level 1 - Quoted prices (unadjusted) in active markets for identical
• ROU Assets and ROU Liability (Note 12)
assets or liabilities
• Provision for Inventories (Note 16)
• Level 2 - Inputs other than quoted prices included in Level 1 that
• Impairment of Financial assets (Note 15) are observable for the asset or liability either directly (i.e. prices) or
indirectly (i.e. derived from prices)
• Current taxation (Note 9)
• Deferred taxation and utilisation of tax losses (Note 9) • Level 3 - Inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
• Measurement of Employee benefits (Note 23)
If the inputs used to measure the fair value of an asset or liability fall
• Provisions and contingencies (Note 30)
into different levels of the fair value hierarchy, then the fair value
• Financial Instrument (Note 37) measurement is categorized in its entirety in the same level of the fair
value hierarchy as the lowest input level that is significant to the entire
2.6.1. Estimation Uncertainty in Preparation of Financial
measurement.
Statements due to the post-lock-down Economic Implications
of COVID-19 Pandemic The Group recognizes transfers between levels of the fair value
The post-lock-down implications have increased the uncertainty hierarchy at the end of the reporting period during which the change
of estimates made in preparation of the Financial Statements. The has occurred.
estimation uncertainty is associated with; the extent and duration of
2.6.3 Useful lives of depreciable assets
the disruption to businesses arising from the actions of stakeholders
such as government, businesses and customers to contain the spread Management reviews its estimation of the useful lives of depreciable
of virus. The extent and duration of the expected economic downturn asset at each reporting date based on the expected utility of the assets.
due to impact on GDP, export markets, credit risk of our customers, Uncertainties in these estimates relate to technical obsolescence that
impact of unemployment and possible decline in consumer may change the useful life of certain property, plant and equipment.
discretionary spending. The effectiveness of government and central 2.6.4 Business combinations
bank measures that have and will be put in place to support businesses
Business combinations are accounted for using the acquisition
through this disruption and economic downturn.
method at the acquisition date, which is the date on which control is
2.6.2 Measurement of Fair Value transferred to the Group. Control exists when the Company is exposed,
A number of the Group’s accounting policies and disclosures require or has rights, to variable returns from its involvement with the investee
the measurement of fair value for both financial and nonfinancial assets and has the ability to affect those returns through its power over the
and liabilities. investee.
The Group/Company regularly reviews significant unobservable inputs 2.6.5 Defined Benefit Obligation
and valuation adjustments. If third party information is used to Measure
Management’s estimate of the defined benefit obligation is based on
fair values, The Group/ Company assesses the evidence obtained from
a number of critical underlying assumptions such as standard rates
the third parties to support the conclusion that such valuations meet
of inflation, mortality, discount rate and anticipation of future salary
the requirements of SLFRSs/LKASs, including the level in the fair value
hierarchy in which such valuations should be classified. increases. Variation in these assumptions may significantly impact the
defined benefit obligation amount and the annual defined benefit
Further, the external valuers are involved for valuation of significant expense.
assets, such as land and building. Selection criteria for external valuers
include market knowledge, reputation, independence and whether 2.6.6 Fair value of financial instruments
professional standards are maintained. The Group decides, after Management applies valuation techniques to determine the fair value
discussions with the external valuers, which valuation techniques and of financial instruments where active market quotes are not available.
inputs to use for individual assets. This requires management to develop estimates and assumptions
Significant valuation issues are reported to the Group’s Audit based on market inputs, using observable data that market participants
Committee. would use in pricing the instrument. Where such data is not observable,
61
management uses its best estimate. Estimated fair values of financial 2.11 Current versus non-current classification
instruments may vary from the actual prices that would be achieved in The Group presents assets and liabilities in the statement of financial
an arm’s length transaction at the reporting date. position based on current/non-current classification.
2.6.7 Recognition of deferred tax assets An asset is current when it is expected to be realised or intended to be
Management applies significant judgment on the extent to which sold or consumed in the normal operating cycle and held primarily for
deferred tax assets can be recognised based on an assessment of the the purpose of trading.
probability of the Group’s future taxable income against which the Or
deferred tax assets can be utilised. In addition, significant judgment
is required in assessing the impact of any legal or economic limits or Is cash or cash equivalent unless restricted from being exchanged or
uncertainties in various future tax jurisdictions. used to settle a liability for at least twelve months after the reporting
period.
2.7 Materiality and Aggregation
All other assets are classified as non-current.
Each material class of similar items is presented separately in the
Financial Statements. Items of dissimilar nature or function are A liability is current when it is expected to be settled in the normal
presented separately unless they are immaterial as permitted by the operating cycle and is held primarily for the purpose of trading and is
Sri Lanka Accounting Standard – LKAS 1 on ‘Presentation of Financial due to be settled within twelve months after the reporting period
Statements’ and amendments to the LKAS 1 on ‘Disclosure Initiative’ Or
which was effective from January 01, 2016.
There is no unconditional right to defer the settlement of the liability
Notes to the financial statements are presented in a systematic manner
for at least twelve months after the reporting period.
which ensures the understandability and comparability of financial
statements of the Group and the Company. Understandability of The Group classifies all other liabilities as non-current.
the financial statements is not compromised by obscuring material 2.12 Changes in Significant Accounting Policies
information with immaterial information or by aggregating material
The Group initially applied SLFRS 16 Leases from 1st April 2019. A
items that have different natures or functions.
number of other new standards are also effective from 1st April
2.8 Offsetting 2019 but they do not have a material effect on the Group’s Financial
Financial assets and financial liabilities are offset and the net amount Statements.
reported in the statement of financial position, only when there is a
On transition to SLFRS 16, the Group elected to apply the practical
legally enforceable right to offset the recognised amounts and there
expedient to grandfather the assessment of which transactions
is an intention to settle on a net basis or to realise the assets and settle
are leases. The Group applied SLFRS 16 only to contracts that were
the liabilities simultaneously. Income and expenses are not offset
previously identified as leases. Contracts that were not identified as
in the income statement, unless required or permitted by Sri Lanka
leases under LKAS 17 and IFRIC 4 were not reassessed for whether there
Accounting Standards and as specifically disclosed in the significant
is a lease under SLFRS 16. Therefore, the definition of a lease under IFRS
accounting policies.
16 was applied only to contracts entered into or changed on or after
2.9 Comparative Information 1 April 2019.
Comparative information has been reclassified wherever necessary to Impact on transition

conform to the current year’s presentation in order to provide a better
The Group applied SLFRS 16 using the modified respective approach
presentation.
under which no cumulative effect of initial application is recognized in
2.10 Going Concern retained earnings as at 1st April 2019. Accordingly the reported under
LKAS 17 and related interpretations, the details of changes in accounting
The Directors have made an assessment of the Group’s ability to
policy are disclosed below. Additionally, the disclosure requirement in
continue as a going concern, and being satisfied that it has the
SLFRS 16 have not generally been applied to comparative information.
resources to continue in business for the foreseeable future, confirm
that they do not intend either to liquidate or to cease operations of any
business unit of the Group other than those disclosed in the notes and
Covid 19 impact given on Note 33 to the financial statements.
62
amount equal to the lease liability, adjusted by the amount of prepaid

lease rentals. The details of the changes in accounting policies are
STATEMENT OF FINANCIAL POSITION AS AT 1ST APRIL
disclosed in Note 3.7 Additionally, the disclosure requirements in SLFRS
2019
16 have not generally been applied to comparative information.
COMPANY Rs ’000
Right-of-use Assets 23,872 Except for the above, the accounting policies set out below have
Lease Liability 23,872 been applied consistently to all periods presented in these Financial
Retained Earnings - Statements.
3.1 Basis of Consolidation

3.1.1 Business combinations and Goodwill
STATEMENT OF FINANCIAL POSITION AS AT 1ST APRIL Business combinations are accounted for using the acquisition
2019
method as at the acquisition date, which is the date on which control
GROUP Rs ’000 is transferred to the Group.
Right-of-use Assets 19,355
The Group measures goodwill at the acquisition date, as excess of
Lease Liability 19,355
the aggregate of the fair value of the consideration transferred; the
Retained Earnings -
recognised amount of any non-controlling interests in the acquisition;
the fair value of the pre- existing interest in the acquire if the business
When measuring lease liabilities for leases that were classified as
combination is achieved in stages; and the net recognised amount
operating leases, the Group discounted lease payments using its
(generally fair value) of the identifiable assets acquired and liabilities
incremental borrowing rate at 1st April 2019. The weighted average
assumed measured at the acquisition date.
rate applied is 12.72%.
Transaction costs, other than those associated with the issue of debt or
equity securities, that the Group incurs in connection with a business
Operating lease commitments at 31st
combination are expensed as incurred.
March 2019 as disclosed under LKAS 17
Rs. 19,407,499
in the Group’s Consolidated Financial Any contingent consideration payable is measured at fair value at the
Statements
acquisition date. If the contingent consideration is classified as equity,
Discounted using the incremental
then it is not re-measured and settlement is accounted within equity.
borrowing rate as at 1st April 2019 12.72%
Otherwise, subsequent changes in the fair value of the contingent
Finance lease liabilities recognised as at consideration are recognised in the statement of profit or loss and
31st March 2019 - other comprehensive income.
Recognition exemption for leases of low- The goodwill arising on acquisition of subsidiaries is presented as an
value assets - intangible asset.
Recognition exemption for leases with After initial recognition, goodwill is measured at cost less any
less than 12 months of lease term at - accumulated impairment losses. Goodwill is tested for impairment
transition annually as at 31 March and when circumstances indicate that the
Extension options reasonably certain to carrying value may be impaired. For the purpose of impairment testing,
be exercised -
goodwill acquired in a business combination is, from the acquisition
date, allocated to each of the Group’s cash-generating units that are
Lease liabilities recognised as at 1st April
2019 Rs. 19,354,655 expected to benefit from the combination, irrespective of whether
other assets or liabilities of the acquiree are assigned to those units.
For the impact of SLFRS 16 on profit or loss for the year, see Note 3.7 If the Group’s interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities of the entity acquired exceed
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
the cost of the acquisition of the entity, the surplus, which is a gain
The Group has adopted SLFRS 16 using modified retrospective method on bargain purchase is recognised immediately in the consolidated
from 1 April 2019, without restating comparatives for the 2018/19 statement of profit or loss and other comprehensive income.
reporting period, as permitted under the specific transitional provisions
Where goodwill has been allocated to a cash-generating unit and part
in the standard. At the date of adoption, right of use was recognized as
63
of the operation within that unit is disposed of, the goodwill associated Subsidiaries consolidated are:
with the operation disposed of is included in the carrying amount of Holding

Name of the Subsidiaries
the operation when determining the gain or loss on disposal of the %
operation. Goodwill disposed of in this circumstance is measured Comark Lanka (Pvt) Ltd. 100
based on the relative values of the operation disposed of and the Castalloys (Pvt) Ltd. 100
portion of the cash generating unit retained.
Comark Engineers (Pvt) Ltd. 51
3.1.2 Subsidiaries
Subsidiaries are those entities controlled by the Group. Control is 3.1.3 Non-Controlling Interest
achieved when the Group is exposed, or has rights, to variable returns The proportion of the profits or losses after taxation applicable to
from its involvement with the investee and has the ability to affect outside shareholders of subsidiary companies is included under the
those returns through its power over the investee. The Group controls heading “Non–controlling interest“ in the Consolidated Statement of
an investee if, and only if, the Group has: Profit or Loss and Other Comprehensive Income. Losses applicable
•• Power over the investee (i.e., existing rights that give it the to the non- controlling interests in a subsidiary is allocated to the
current ability to direct the relevant activities of the investee) non- controlling interest even if doing so causes the non-controlling
•• Exposure, or rights, to variable returns from its involvement interest to have a deficit balance.
with the investee
The interest of the minority shareholders in the net assets employed
•• The ability to use its power over the investee to affect its
of these companies are reflected under the heading “Non–controlling
returns
interest” in the Consolidated Statement of Financial Position.
The Group considers all relevant facts and circumstances in assessing
whether it has power over an investee which includes; The contractual Acquisitions of non-controlling interests are accounted for as
arrangement with the other vote holders of the investee, Rights arising transactions with the equity holders in their capacity as owners and
from other contractual arrangements and the Group’s voting rights therefore no goodwill is recognised as a result of such transactions.
and potential voting rights over the investee. Adjustments to non-controlling interest arising from transactions
that do not involve the loss of control are based on a proportionate
The Group re-assesses whether or not it controls an investee if facts amount of the net assets of the subsidiary.
and circumstances indicate that there are changes to one or more of
the three elements of control. Consolidation of a subsidiary begins 3.1.4 Loss of Control
when the Group obtains control over the subsidiary and ceases when On the loss of control, the group immediately derecognises the
the Group loses control of the subsidiary. Assets, liabilities, income and assets including goodwill and liabilities of the subsidiary, any non-
expenses of a subsidiary acquired or disposed of during the year are controlling interest and the other components of equity related to
included in the consolidated financial statements from the date the the subsidiary. Any surplus or deficit arising on the loss of control is
Group gains control until the date the Group ceases to control the recognised in profit and loss. If the Group retains any interest in the
subsidiary. previous subsidiary, then such interest is measured at fair value at
the date that control is lost. Subsequently, it is accounted for as an
Entities that are subsidiaries of another entity which is a subsidiary of
equity- accounted investee or as an available-for sale financial asset
the company are also treated as subsidiaries of the Company.
depending on the level of influence retained.
The financial statements of subsidiaries are included in the consolidated
A change in the ownership interest of a subsidiary, without a loss of
financial statements from the date of acquisition, being the date on
control, is accounted for as an equity transaction.
which the Group obtains control, and continues to be consolidated
until the date when such control ceases. 3.1.5 Reporting Date
The accounting policies of subsidiaries have been changed when All the Group subsidiaries, and equity-accounted investees has the
necessary to align them to the policies adopted by the Group. same reporting period as the parent company.
Losses applicable to the non-controlling interests in a subsidiary is 3.1.6 Intra-Group Transactions

allocated to the non-controlling interest even if doing so causes the Transfer prices between Group entities are set on an arms-length
non-controlling interests to have a deficit balance. basis in a manner similar to transactions with third parties.
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3.1.7 Transactions Eliminated on Consolidation 3.4 Financial instruments

Intra-group balances and transactions, and any unrealised gains and 3.4.1 Recognition and measurement
losses or income and expenses arising from intra-group transactions, Trade receivables are initially recognised when they are originated.
are eliminated in preparing the consolidated financial statements. All other financial assets and financial liabilities are initially recognised
Unrealised losses are eliminated in the same way as unrealised gains, when the Company becomes a party to the contractual provision of
but only to the extent that there is no evidence of impairment. the instrument.
3.2 Operating Segment A financial asset (unless it is a trade receivable without a significant
financing component) or financial liability is initially measured at
An operating segment is a distinguishable component of the group
fair value plus, for an item not at FVTPL, transaction costs that are
that engages in business activities from which it earn revenues and
directly attributable to its acquisition or issue. A trade receivable
incurs expenses, including revenues and expenses that relate to
transactions with Group’s other segments. without a significant financing component is initially measured at the
transaction price.
The operations of the Group are categorized under five segments
3.4.2 Classification and subsequent measurement
based on the nature of the products or services provided by each
segment and the risks and rewards associated with the economic Financial assets
environment in which these segments operate. The performance of On initial recognition, a financial asset is classified as measured at:
the group is evaluated based on the performance of these five main amortised cost; FVOCI – debt investment; FVOCI – equity instrument;
segments by Group’s Managing Director (Chief operating decision or FVTPL.
maker). The internal management reports prepared on these segments
Financial assets are not reclassified subsequent to their initial
are reviewed by the Group’s Managing Director on a monthly basis.
recognition unless the Group changes its business model for
Details of the Group companies operating under each segment and managing financial assets, in which case all affected financial assets
the products and services offered under each segment are provided are reclassified on the first day of the first reporting period following
under Group Companies. the change in the business model.
3.3 Foreign Currencies A financial asset is measured at amortised cost if it meets both of the
following conditions and is not designated as at FVTPL:
3.3.1 Foreign Currency Transactions
- it is held within a business model whose objective is to
Transactions in foreign currencies are initially recorded by the Group’s
hold assets to collect contractual cash flows; and
entities at their respective functional currency spot rates at the date the
transaction first qualifies for recognition. - its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on
Monetary assets and liabilities denominated in foreign currencies are
the principal amount outstanding.
translated at the functional currency spot rates of exchange at the
reporting date. A debt investment is measured at FVOCI if it meets both of the
Non-monetary assets and liabilities denominated in foreign currencies following conditions and is not designated as at FVTPL:
that are measured based on historical cost in a foreign currency - it is held within a business model whose objective is
are translated using exchange rate at the date of transaction. Non- achieved by both collecting contractual cash flows and
monetary assets and liabilities denominated in foreign currencies that selling financial assets; and
are measured at fair value are retranslated to the reporting currency - its contractual terms give rise on specified dates to cash
at the exchange rate that prevailed at the date the fair value was flows that are solely payments of principal and interest on
determined. the principal amount outstanding.
Foreign currency differences arising on retranslation are recognised

On initial recognition of an equity investment that is not held for
in the statement of profit or loss, except for differences arising on the
trading, the Group may irrevocably elect to present subsequent
retranslation of available for sale equity investments, a financial liability
changes in the investment’s fair value in OCI. This election is made on
designated as a hedge of the net investment in a foreign operation,
an investment-by-investment basis.
or qualifying cash flow hedges, which are recognised in other
comprehensive income. All financial assets not classified as measured at amortised cost
Foreign currency gains and losses are reported on a net basis in the or FVOCI as described above are measured at FVTPL. This includes
statement of profit or loss and other comprehensive income. all derivative financial assets. On initial recognition, the Group may
irrevocably designate a financial asset that otherwise meets the
requirements to be measured at amortised cost or at FVOCI as at
65
FVTPL if doing so eliminates or significantly reduces an accounting - contingent events that would change the amount or
mismatch that would otherwise arise. timing of cash flows;
Financial assets - business model assessment: - terms that may adjust the contractual coupon rate,
including variable-rate features;
The Group makes an assessment of the objective of the business model
in which a financial asset is held at a portfolio level because this best - prepayment and extension features; and
reflects the way the business is managed and information is provided - terms that limit the Group claim to cash flows from
to management. The information considered includes: specified assets (e.g. non-recourse features)
- the stated policies and objectives for the portfolio and
A prepayment feature is consistent with the solely payments of
the operation of those policies in practice. These include
principal and interest criterion if the prepayment amount substantially
whether management’s strategy focuses on earning
represents unpaid amounts of principal and interest on the principal
contractual interest income, maintaining a particular interest
amount outstanding, which may include reasonable additional
rate profile, matching the duration of the financial assets
to the duration of any related liabilities or expected cash compensation for early termination of the contract. Additionally, for
outflows or realising cash flows through the sale of the a financial asset acquired at a discount or premium to its contractual
assets; par amount, a feature that permit or requires prepayment at an annual
- how the performance of the portfolio is evaluated and amount that substantially represent the contractual par amount plus
reported to the Company’s management; accrued (but unpaid) contractual interest (which may also include
- the risks that affect the performance of the business model reasonable additional compensation for early termination) is treated
(and the financial assets held within that business model) as consistent with this criterion if the fair value of the prepayment
and how those risks are managed; feature is insignificant at initial recognition.
- how managers of the business are compensated - e.g.
whether compensation is based on the fair value of the
assets managed or the contractual cash flows collected; and
- the frequency, volume and timing of sales of financial assets
in prior periods, the reasons for such sales and expectations
about future sales activity.
Transfers of financial assets to third parties in transactions that do not
qualify for derecognition are not considered sales for this purpose,
consistent with the Group continuing recognition of the assets.
Financial assets that are held for trading or are managed and whose
performance is evaluated on a fair value basis are measured at FVTPL.
Financial assets –assessment whether contractual cash flows are solely
payments of principal and interest:
For the purposes of this assessment, ‘principal’ is defined as the fair
value of the financial asset on initial recognition. ‘Interest’ is defined
as consideration for the time value of money and for the credit risk
associated with the principal amount outstanding during a particular
period of time and for other basic lending risks and costs (e.g. liquidity
risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of

principal and interest, the Group considers the contractual terms of the
instrument. This includes assessing whether the financial asset contains a
contractual term that could change the timing or amount of contractual
cash flows such that it would not meet this condition. In making this
assessment, the Group considers:
66
Financial assets - subsequent measurement and gains and losses:

These assets are subsequently measured at fair value. Net gains and losses including any
Financial assets at FVTPL
interest or dividend income, are recognized in profit or loss.
These assets are subsequently measured at amortized cost using the effective interest
method. The amortized cost is reduced by impairment losses. Interest income, foreign
Financial assets at amortized cost
exchange gains and losses and impairment are recognized in profit or loss. Any gain or
loss on derecognition is recognized in profit or loss.
These assets are subsequently measured at fair value. Interest income calculated using
the effective interest method, foreign exchange gains and losses and impairment are
Debt investments at FVOCI
recognized in profit or loss. Other net gains and losses are recognized in OCI.
On de-recognition gains and losses accumulated in OCI are reclassified to profit or loss.
These assets are subsequently measured at fair value. Dividends are recognized as income
in profit or loss unless the dividend clearly represents a recovery of part of the cost of the
Equity investments at FVOCI
investment. Other net gains and losses are recognized in OCI and are never reclassified to
profit or loss
Financial liabilities – classification, subsequent measurement and gains and losses

Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held- for-
trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains
and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost
using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on
derecognition is also recognised in profit or loss.
3.4.3 De-recognition
Financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights
to receive the, contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are
transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control
of the financial asset.
The Group enters into transactions whereby it transfers assets recognised in its statement of financial position, but retains either all or substantially
all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised.
Financial liabilities
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also derecognises
a financial liability when its terms are modified and the cash flows of the modified are substantially different, in which case a new financial liability
based on the modified terms is recognised at fair value.
On de-recognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any
non-cash assets transferred or liabilities assumed) is recognised in profit it or loss.
3.4.4 Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the
Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and
settle the liability simultaneously.
67
3.4.5 Impairment of financial assets C. Credit-impaired financial assets

A. Non-derivative financial assets At each reporting date, the Group assesses whether financial assets
The Group recognises loss allowances for ECLs on: carried at amortised cost are credit-impaired. A financial asset is
- financial assets measured at amortised cost; ‘credit-impaired’ when one or more events that have a detrimental
- debt investments measured at FVOCI. impact on the estimated future cash flows of the financial asset have
The Group measures loss allowance at an amount equal to lifetime occurred.
ECLs, except for the following, which are measured at 12-months ECLs;
Evidence that a financial asset is credit-impaired includes the
- debt securities that are determined to have low credit risk at
the reporting date; and following observable data
- other debt securities and bank balances for which credit risk - significant financial difficulty of the borrower or issuer;
(i.e. the risk of default occurring over the expected life of the
- a breach of contract such as default or being more than 90
financial instruments) has not increased significantly since
days past due;
initial recognition.
Loss allowance for trade receivables and related party receivables are D. Presentation of allowance for ECL in the statement of
always measured at an amount equals to life time ECLs. financial position
When determining whether the credit risk of a financial has increased Loss allowances for financial assets measured at amortised cost are
significantly since initial recognition and when estimating ECLs, the deducted from the gross carrying amount of the assets.
Group considers reasonable and supportable information that is
relevant and available without undue cost or effort. This includes E. Write-off
both quantitative and qualitative information and analysis, based on The gross carrying amount of a financial asset is written off when
the Group historical experience and informed credit assessment and the Group has no reasonable expectations of recovering a financial
including forward-looking information.
asset in its entirety or a portion thereof. For corporate customers, the
The Group assumes that the credit risk on a financial asset has increased Group individually makes an assessment with respect to the timing
significantly if it is more than 30 days past due. and amount of write-off based on whether there is a reasonable
The Group considers a financial asset to be in default when: expectation of recovery. The Group expects no significant recovery
- the borrower is unlikely to pay its credit obligation to the from the amount written off. However, financial assets that are written
Group in full, without recourse by the Group to actions such off could still be subject to enforcement activities in order to comply
as realising security (if any is held); or with the Group’s procedures for recovery of amounts due.
- The financial asset is more than 90 days past due.
3.4.6 Stated Capital
Lifetime ECLs are the ECLs that result from all possible default events
Ordinary shares are classified as equity. Incremental costs directly
over the expected life of a financial instrument.
attributable to the issue of ordinary shares are recognised as a
12-month ECLs are the portion of ECLs that result from default events deduction from equity.
that are possible within the 12 months after the reporting date (or
3.5 Property, Plant and Equipment
a shorter period if the expected life of the instrument is less than 12
3.5.1 Recognition and Measurement
months).
Items of Property, plant and equipment other than land and building,
The maximum period considered when estimating ECLs is the are measured at cost less accumulated depreciation and accumulated
maximum contractual period over which the Group is exposed to impairment losses.
credit risk.
The cost of an item of property, plant and equipment comprises its

B. Measurement of ECLs purchase price and any directly attributable costs of bringing the asset
to working condition for its intended use. The cost of self-constructed
ECLs are a probability-weighted estimate of credit losses. Credit
assets includes the cost of materials, direct labour and any other costs
losses are measured as the present value of all cash shortfalls (i.e. the
directly attributable to bringing the asset to the working condition
difference between the cash flows due to the entity in accordance with
for its intended use, and borrowing costs if the recognition criteria are
the contract and the cash flows that the Group expects to receive).
met. This also includes cost of dismantling and removing the items
ECLs are discounted at the effective interest rate of the financial asset. and restoring them in the site on which they are located.
68
Revaluation model is applied for Freehold properties owned by the

Depreciation Rates
Company and the Board has decided to revalue its Freehold Land - Group
and Building every 3-5 years thereafter to comply with requirement of Building 4% - 6%
Revaluation Model under the LKAS 16 “Property Plant and Equipment”. Motor Vehicles 25%
Furniture,Fittings & Equipment 12.5%
Where items of Property, Plant and Equipment are revalued, the entire
classes of assets are revalued. When an asset is revalued any increase Plant & Machinery
in the carrying value is recognised in other comprehensive income Long term 5%
and accumulated in equity as revaluation reserve, except to the extent Short term 10%
that it reverses a revaluation decrease of the same asset previously Dies 25%
recognised in the statement of profit or loss, in which case the increase Tools Replacement Basis
is recognised in the statement of profit or loss. Any revaluation
deficit that off-sets a previous surplus on the same asset is directly The replacement cost of tools (cutting tools, blades, etc) is capitalised
off-set against the surplus in the revaluation reserve and any excess and the difference between the replaced cost and the purchase cost
recognised as an expense. of the tools is charge to statement of profit or loss.
Upon disposal, any related revaluation reserve is transferred from the Depreciation methods, useful lives and residual values are reviewed
revaluation reserve to retained earnings and is not taken into account regularly.
in arriving at the gain or loss on disposal. The details of revaluation of
3.5.5 Borrowing Costs
Freehold Properties are disclosed in notes to the financial statements.
Interest and related costs incurred on external borrowings relating to
Property, Plant and Equipment other than Freehold land and buildings
property, plant and equipment under construction or installation is
are recorded at cost less accumulated depreciation and impairment
capitalised until the assets are ready for their intended use.
losses, in accordance with the “Cost Model” as set out in LKAS 16
“Property, Plant and Equipment”. 3.5.6 Impairment of Property, Plant and Equipment
The carrying value of property, plant and equipment is reviewed for
The carrying amount of an item of Property, Plant and Equipment is
derecognised on disposal or when no further economic benefits are impairment when events or changes in circumstances indicate the
expected from its use or disposal. carrying value may not be recoverable. If any such indication exists
and where the carrying value exceed the estimated recoverable
3.5.2 Significant Components of Property Plant and Equipment
amount the assets are written down to their recoverable amount.
When parts of an item of property, plant and equipment have different Impairment losses are recognised in the statement of profit or loss
useful lives than the underlying asset, they are identified and accounted and other comprehensive income unless it reverses a previous
separately as major components of property, plant and equipment and revaluation surplus for the same assets.
depreciated separately based on their useful life.
3.5.7 Capital work-in-progress
3.5.3 Subsequent Cost
Capital work-in-progress is stated at cost. These are expenses of a
The Group recognises in the carrying amount of property, plant and capital nature directly incurred in the construction of capital assets.
equipment the cost of replacing a part of an item, when it is probable
that the future economic benefits embodied in the item will flow to the 3.6 Investment Property
Group and the cost of the item can be measured reliably. The carrying 3.6.1 Recognition and Measurement
amounts of the parts that are replaced are derecognised from the cost A property that is held to earn rentals or for capital appreciation or
of the asset. The cost of day- today servicing of property, plant and both rather than for use in the production or supply of goods or
equipment are recognised in the statement of profit or loss and other
services or for administrative purpose; or sale in the ordinary course

comprehensive income as and when incurred. of business, by the Group are accounted for as investment properties.
3.5.4 Depreciation An Investment property is measured initially at its cost. The cost of a
Depreciation has been provided on a straight-line basis over periods purchased investment property comprises of its purchase price and
appropriate to the estimated useful lives of different types of assets, by any directly attributable expenditure. The cost of a self-constructed
applying the following percentages on their cost or revalued amounts. investment property is its cost at the date when the construction or
development is complete.
All assets (excluding land) are depreciated from the month the asset is
available for use and ceases at the earlier of the date that the asset is Subsequent to initial recognition the Investment Properties are stated
classified as held for sale or is derecognised. at fair values, which reflect market conditions at the reporting date.
69
Gains or losses arising from changes in fair value are included in the b. As a Lessee
Statement of Profit or Loss in the year in which they arise. At commencement or on modification of a contract that contains
Investment Properties are derecognised when disposed, or a lease component, the Group allocates the consideration in the
permanently withdrawn from use because no future economic contract to each lease component on the basis of its relative stand-
benefits are expected. Any gains or losses on retirement or disposal are alone prices. However, for the leases of property the Group has
recognised in the Statement of Profit or Loss in the year of retirement elected not to separate non lease components and account for the
or disposal. lease and non-lease components as a single lease component.
3.6.2 Subsequent Transfers to/from Investment Property The Group recognizes a right-of-use asset and a lease liability at
Transfers are made to investment property when, and only when, the lease commencement date. The right-of-use asset is initially
there is a change in use, evidenced by the end of owner occupation, measured at cost, which comprises the initial amount of the lease
commencement of an operating lease to another party or completion liability adjusted for any lease payments made at or before the
of construction or development. commencement date, plus any initial direct costs incurred and an
estimate of costs to dismantle and remove the underlying asset or to
For a transfer from investment property to owner occupied property or
restore the underlying asset or the site on which it is located, less any
inventories, the deemed cost of property for subsequent accounting
is its fair value at the date of change in use. If the property occupied lease incentives received.
by the Group as an owner occupied property becomes an investment The right-of-use asset is subsequently depreciated using the straight-
property, the Group, accounts for such property in accordance with line method from the commencement date to the end of the lease
the policy stated under property, plant and equipment up to the date term, unless the lease transfers ownership of the underlying asset to
of change in use. the Group by the end of the lease term or the cost of the right-of-
3.6.3 Determining Fair Value use asset reflects that the Group will exercise a purchase option. In
External and independent valuers, having appropriate recognized that case the right-of-use asset will be depreciated over the useful
professional qualifications and recent experience in the location and life of the underlying asset, which is determined on the same basis as
category of property being valued, values the investment property those of property and equipment. In addition, the right-of-use asset
portfolio once in three years. is periodically reduced by impairment losses, if any, and adjusted for
The fair values are based on market values, being the estimated certain re measurements of the lease liability.
amount for which a property could be exchanged on the date of the The lease payments that are not paid at the commencement date,
valuation between a willing buyer and a willing seller in an arm’s length discounted using the interest rate implicit in the lease or, if that rate
transaction after proper marketing wherein the parties had each acted cannot be readily determined, the Group’s incremental borrowing
knowledgeably. rate. Generally, the Group uses its incremental borrowing rate as the
3.7 Leased Assets discount rate.
The Group has applied SLFRS 16 using the modified retrospective The Group determines its incremental borrowing rate by obtaining
approach and therefore the comparative information has not been interest rates from various external financing sources and makes
restated and continues to be reported under LKAS 17 and IFRIC 4. The certain adjustments to reflect the terms of the lease and type of the
details of accounting policies under LKAS 17 and IFRIC 4 are disclosed asset leased.
separately.
Lease payments included in the measurement of the lease liability
Policy applicable from 1 April 2019 comprise the following:
a. Definition of Lease • fixed payments, including in-substance fixed payments.

• variable lease payments that depend on an index or a rate, initially

At inception of a contract, the Group assesses whether a contract is,
measured using the index or rate as at the commencement date.
or contains, a lease. A contract is, or contains, a lease if the contract
• amounts expected to be payable under a residual value
conveys the right to control the use of an identified asset for a period
guarantee; and
of time in exchange for consideration. To assess whether a contract
• the exercise price under a purchase option that the Group is
conveys the right to control the use of an identified asset, the Group
reasonably certain to exercise, lease payments in an optional
uses the definition of a lease in SLFRS 16.
renewal period if the Group is reasonably certain to exercise an
extension option, and penalties for early termination of a lease
unless the Group is reasonably certain not to terminate early.
70
The lease liability is measured at amortised cost using the effective the gross investment in the lease.

interest method. It is re measured when there is a change in future
The Group recognises lease payments received under operating
lease payments arising from a change in an index or rate, if there
leases as income over the lease term as part of ‘other revenue’.
is a change in the Group estimate of the amount expected to be
payable under a residual value guarantee, if the Group changes Generally, the accounting policies applicable to the Group as a lessor
its assessment of whether it will exercise a purchase, extension or in the comparative period were not different from SLFRS 16 except
termination option or if there is a revised in-substance fixed lease for the classification of the sub-lease entered into during current
payment. reporting period that resulted in a finance lease classification.
When the lease liability is re measured in this way, a corresponding Policy applicable before 1st April 2019
adjustment is made to the carrying amount of the right-of-use asset
e. As a Lessee
or is recorded in profit or loss if the carrying amount of the right-of-use
In the comparative period, as a lessee the Group classified leases that
asset has been reduced to zero.
transferred substantially all of the risks and rewards of ownership
The Group presents right-of-use assets that do not meet the definition as finance leases. When this was the case, the leased assets were
of investment property in right-of-use assets and lease liabilities in the measured initially at an amount equal to the lower of their fair value
statement of financial position. and the present value of the minimum lease payments. Minimum
c. Short term leases and leases of low-value assets lease payments were the payments over the lease term that the lessee
The Group has elected not to recognise right-of-use assets and lease was required to make, excluding any contingent rent. Subsequent to
liabilities for leases of low-value assets and short-term leases, including initial recognition, the assets were accounted for in accordance with
IT equipment. The Group recognises the lease payments associated the accounting policy applicable to property, plant and equipment.
with these leases as an expense on a straight-line basis over the lease Assets held under other leases were classified as operating leases and
term. were not recognized in the Group’s statement of financial position.
d. As a Lessor Payments made under operating leases were recognized in profit
At inception or on modification of a contract that contains a lease or loss on a straight-line basis over the term of the lease. Lease
component, the group allocates the consideration in the contract to incentives received were recognized as an integral part of the total
each lease component on the basis of their relative stand-alone prices. lease expense, over the term of the lease.
f. As a Lessor
When the group acts as a lessor, it determines at lease inception
whether each lease is a finance lease or an operating lease. The Group leases out its machinery to its individual company within
the Group which shall be eliminated in the Group level.
To classify each lease, the group makes an overall assessment of
whether the lease transfers substantially all of the risks and rewards The Group is not required to make any adjustments on transition to
incidental to ownership of the underlying asset. If this is the case, SLFRS 16 for leases in which it acts as a lessor.
then the lease is a finance lease; if not, then it is an operating lease. As 3.8 Intangible Assets
part of this assessment, the group considers certain indicators such as 3.8.1 Recognition and Measurement
whether the lease is for the major part of the economic life of the asset.
The Group recognizes intangible assets if it is probable that the
When the Group is an intermediate lessor, it accounts for its interests expected future economic benefits that are attributable to the asset
in the head lease and the sub-lease separately. It assesses the lease will flow to the entity and the cost of the asset can be measured
classification of a sub-lease with reference to the right-of use asset reliably.
arising from the head lease, not with reference to the underlying Separately acquired intangible assets are measured on initial
asset. If a head lease is a short-term lease to which the Group applies recognition at cost. The cost of such separately acquired intangible
the exemption described above, then it classifies the sub-lease as an assets include the purchase price, import duties, non-refundable
operating lease. purchase taxes and any directly attributable cost of preparing the
asset for its intended use.
If an arrangement contains lease and non-lease components, then the
Group applies SLFRS 15 to allocate the consideration in the contract. 3.8.2 Subsequent Costs
Subsequent expenditure on intangible assets is capitalised only when
The Group applies the derecognition and impairment requirements in
it increases the future economic benefits embodied in the specific
SLFRS 9 to the net investment in the lease. The Group further regularly
asset to which it relates.
reviews estimated unguaranteed residual values used in calculating
71
3.8.3 Subsequent Measurement •• Work in Progress - The process losses and subsequent
After initial recognition an intangible asset is stated at its costs less any realisation.
accumulated amortization and any accumulated impairment losses. When NRV cannot be determined a provision will be determined,
based on the past data and historical events.
Intangible assets with finite lives are amortised over the useful economic
life of the asset. The amortization period and the amortization method 3.10 Impairment – Non Financial Assets
for an intangible asset with a finite useful life is reviewed at least at The carrying amount of the Group’s non-financial assets, other than
the end of each reporting date. Changes in the expected pattern of inventories and deferred tax assets are reviewed at each reporting
consumption of future economic benefits embodied in the asset is date to determine whether there is any indication of impairment. If
accounted for by changing the amortization period or method, as
any such indication exists, the recoverable amounts of such assets
appropriate, and are treated and as changes in accounting estimates.
are estimated.
The amortization expense on intangible assets with finite lives is
recognised in the statement of profit or loss. An impairment loss is recognised if the carrying amount of an asset
or its cash-generating unit exceeds its recoverable amount. A cash-
Intangible assets with indefinite useful lives are not amortised, but
generating unit is the smallest identifiable asset group that generates
are tested for impairment annually, either individually or at the cash-
cash flows that are largely independent from other assets.
generating unit level. The assessment of indefinite life is reviewed
annually to determine whether the indefinite life continues to be Impairment losses are recognised in the statement of profit or loss
supportable. If not, the change in useful life from indefinite to finite is and other comprehensive income.
made on a prospective basis.
3.10.1 Calculation of Recoverable Amount
3.9 Inventories The recoverable amount of an asset or cash-generating unit is the
Inventories are valued at lower of cost or net realisable value (NRV), greater of its value in use and its fair value less costs to sell. In assessing
after making due allowance for obsolete and slow moving items. Net value in use, the estimated future cash flows are discounted to their
realisable value is the price in the ordinary course of business less the present value using a pre-tax discount rate that reflects current
estimated cost of completion and the estimated cost necessary to market assessments of the time value of money and the risks specific
make the sale. Any write down to NRV is recognised as an expense. Any to the asset or cash-generating unit.
inventory losses are also recognised as an expense. 3.10.2 Reversal of Impairment
The cost of each category of inventories is determined as follow: Impairment losses recognised in prior periods are assessed at each
reporting date for any indications that the loss has decreased or
Raw Material - At actual cost on first-in first-out basis.
no longer exists. An impairment loss is reversed if there has been a
Finished Goods and work-in-progress - At the cost of direct materials, change in the estimates used to determine the recoverable amount.
direct labor and an appropriate proportion of fixed production
An impairment loss is reversed only to the extent that the asset’s
overheads, based on normal operating capacity and at weighted
carrying amount does not exceed the carrying amount that would
average cost.
have been determined, net of depreciation or amortisation, if no
Spare Parts and Consumables - At weighted average cost. Goods in impairment loss had been recognised. Reversal of impairment
Transit - At actual cost losses are recognised in the statement of profit or loss and other
comprehensive income.
The Net Realisable Value (NRV) of inventories is determined through
comparison of cost with local and international market values and use 3.11 Liabilities and Provisions
of management assessments and judgments; Liabilities classified as current liabilities in the statement of financial
position are those obligations payable on demand or within one year

The following factors are considered in determining NRV by
from the reporting date. Items classified as non-current liabilities are
management:
those obligations, which expire beyond period of one year from the
•• Raw Material-Determination of the replacement cost of reporting date.
•• Similar raw material and selling price of finished goods;
All known liabilities have been accounted for in preparing the
•• Machinery Parts - The inventory movements, replacement
financial statements. Provision and liabilities are recognised when
cost and future use.
the Group has a legal or constructive obligation as a result of past
•• Finished Goods - The market patterns (based on actual
events and it is probable that an outflow of economic benefits will be
event taken place) the cost of disposing efforts (selling
required to settle the obligation.
cost etc.) and subsequent prices.
72
3.12 Employee Benefits 3.13 Provisions

a) Defined Contribution Plans – Employees’ Provident Fund and Employees’ A provision is recognised if, as a result of past events, the Group
Trust Fund has a present legal or constructive obligation that can be
A defined contribution plan is a post-employment benefit plan under estimated reliably, and it is probable that an outflow of economic
which an entity pays fixed contributions into a separate entity and will have benefits will be required to settle the obligation.
no legal or constructive obligation to pay further amounts. Obligations
Provisions are determined by discounting the expected
for contributions to defined contribution pension plans are recognised as
future cash flows at a pre-tax rate that reflects current market
an employee benefit expense in profit or loss in the periods during which
assessments of the time value of money and the risks specific
services are rendered by employees.
to the liability. The unwinding of the discount is recognised as
Employees are eligible for Employees’ Provident Fund Contributions and finance cost.
Employees’ Trust Fund Contributions in accordance with the respective
statutes and regulations. The Company contributes 12% and 3% of
gross emoluments of employees to the Employees’ Provident Fund and
Employees’ Trust Fund, respectively.
b) Defined benefits plans – Retirement gratuity
A defined benefit plan is a post-employment benefit plan other than a

defined contribution plan.
The Company’s net obligation in respect of defined benefit pension plans

is calculated separately for each plan by estimating the amount of future
benefit that employees have earned in return for their service in the current
and prior periods; that benefit is discounted to determine its present
value. Any unrecognised past service costs and the fair value of any plan
assets are deducted. The discount rate is the yield at the reporting date on
Treasury bonds that have maturity dates approximating the terms of the
Company’s obligations and that are denominated in the same currency in
which the benefits are expected to be paid. The calculation is performed
annually by a qualified actuary using the projected unit credit method.
When the calculation results in a benefit to the Company, the recognised
asset is limited to the total of any unrecognised past service costs and the
present value of economic benefits available in the form of any future
refunds from the plan or reductions in future contributions to the plan. In
order to calculate the present value of economic benefits, consideration is
given to any minimum funding requirements that apply to any plan in the
Company. An economic benefit is available to the Company if it is realisable
during the life of the plan, or on settlement of the plan liabilities.
However, according to the Payment of Gratuity Act, No. 12 of 1983, the

liability of employer arises only on completion of five years of continued
service.
The retiring gratuity is not externally funded.

The Group recognizes all actuarial gains and losses arising from defined
benefit plans in the other comprehensive income.
73
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

3.14 Revenue
The Group generates revenue primarily from manufacture and sale of aluminium extrusions, trading in aluminium extrusions and accessories,
manufacturing of builders hardware and undertaking contracts for aluminium fabrication.
3.14.1.1 Performance obligations and revenue recognition policies
The following table provides information about the nature and timing of the satisfaction of performance obligation in contracts with customers,
including significant payment terms and the related revenue recognition policies.
Type of product/service Nature and timing of satisfaction of Revenue recognition under SLFRS 15
performance obligations, including
significant payment terms
Manufacture and sale of aluminium Customers obtain control of products when “Revenue from contracts with customers”
extrusions / Trading in aluminium the goods are delivered to and have been ,establishes a comprehensive framework
extrusions and accessories/ accepted at their premises. Invoices are for determining whether, how much and
manufacturing of builders hardware and generated at that point in time. Invoices when revenue is recognised. The Group
undertaking contracts for aluminium are usually payable within 90 days. Cash recognises when a customer obtains
control of the goods or services.
fabrication discounts may provide for the products.
Judgement is used to determine the
As a policy Group does not accept any
timing of transfer of control - at a point
sales returns unless manufacturing defects.
in time or over time. Revenue from the
Returned goods are replaced only after the
sale of goods is recognized at the point
inspection by technical officers.-i.e. no cash in time when control of the goods is
refunds are offered. transferred to the customer, usually on
delivery of the goods. Sales are measured
at fair value of the consideration received
or receivable excluding amounts
collected on behalf of third parties (e.g.
Sales Taxes) and variable consideration
(e.g. discounts and rebates)
74
Other Income Sources Borrowing costs that are not directly attributable to the acquisition,

construction or production of a qualifying asset are recognised in
3.14.1.2 Gains from Disposal of Property, Plant and Equipment
profit or loss using the effective interest method. However, borrowing
Gains and losses on disposal of property, plant and equipment have costs that are directly attributable to the acquisition, construction or
been accounted for in the Statement of profit or loss and other production of a qualifying asset that takes a substantial period of time
comprehensive income. to get ready for its intended use or sale, are capitalised as part of the
asset. Borrowing costs capitalised are disclosed in respective notes to
3.14.2 Use by others of Entity Assets
the financial statements.
3.14.2.1 Interest Income
3.16 Income Tax Expense
Interest income is recognised in profit or loss as it accrues. For all
financial instruments measured at amortised cost and interest bearing Income tax expense comprises of current and deferred tax. The
income tax expense is recognised in profit or loss except to the extent
financial assets interest income is recorded using the effective interest
that it relates to the items recognised directly in other comprehensive
rate (EIR). EIR is the rate that exactly discounts the estimated future
income or statement of changes in equity, in which case it is recognised
cash payments or receipts through the expected life of the financial
directly in the respective statements.
instrument or a shorter period where appropriate, to the net carrying
amount of the financial asset or liability. For interest bearing financial 3.16.1 Current Tax
assets carried at fair value, interest is recognised on discounted cash The current tax is the expected tax payable on the taxable income
flow method. Interest income is included under net finance expense for the year, using tax rates enacted or substantially enacted at the
in the statement of profit or loss and other comprehensive income. reporting date, and any adjustments to tax payable in respect of
previous years.
3.14.2.2 Dividend Income
Taxation for the current and previous periods to the extent unpaid is
Dividend income is recognised in profit or loss on the date that the recognised as a liability in the financial statements. When the amount
Group’s right to receive payment is established, which is generally of taxation already paid in respect of current and prior periods exceeds
when the dividend is declared. the amount due for those periods, the excess is recognised as an asset
in the financial statement.
3.14.2.3 Rental Income
Provision for current taxation is based on the profit of the year adjusted
Rental income arising from renting of property, plant and equipment
to arrive at the taxable profit in accordance with the Inland Revenue
is recognised as revenue on a straight-line basis over the term of the
Act No. 24 of 2017 and amendments there to.
lease.
3.16.2 Deferred Tax
3.15 Expenditure Recognition
Deferred taxation has been provided for under the liability method
3.15.1 Operating Expenses
on temporary differences as at the reporting date between the tax
Expenses are recognised in the statement of profit or loss and other bases of assets and liabilities, and their carrying amounts for financial
comprehensive income on the basis of a direct association between reporting purposes.
the cost incurred and the earning of specific items of income. All Deferred tax assets are recognised for all temporary differences to the
expenditure incurred in the running of the business and in maintaining extent that it is probable that taxable profit will be available against
the property, plant and equipment in a state of efficiency has been which the deductible temporary differences can be utilized.
charged to income in arriving at the profit for the year. The carrying amount of deferred tax assets is reviewed at each
3.15.2 Finance Income/(Expenses) reporting date and reduced to the extent that is no longer probable
that sufficient taxable profit will be available to allow all or part of the
Finance income comprises interest income on funds invested, other
deferred tax assets to be utilized. Unrecognised deferred tax assets are
than the income from investments categorised under fair value
re-assessed at each reporting date and are recognised to the extent

through OCI financial assets, which income is recognised in other
that future taxable profit will be available to recover the deferred tax
comprehensive income. Gains on the disposal of interest generating
assets.
investments whether classified under fair value through profit or loss
on under fair value through OCI financial assets is recognised under Deferred tax assets and liabilities are measured at tax rates that are
finance income. expected to apply to the period when the asset is realized or the
liability is settled, based on tax rates that have been enacted or
Interest income is recognised as it accrues in profit or loss, using the
substantially enacted by the reporting date.
effective interest method.
Finance expenses comprise interest expense on borrowings and

leases, and impairment losses recognised on financial assets.
75
STATEMENT OF CASH FLOWS

The statement of cash flows is reported based on the “Indirect method”.
3.17 Earnings per Share

Basic earnings per share is calculated by dividing the profit or loss attributable
to ordinary shareholders of the Company by the weighted average number
of ordinary shares outstanding during the period.
3.18 Related Party Transactions

Disclosure has been made in respect of transactions in which one party
has the ability to control or exercise significant influence over financial and
operating policies/ decisions of the other, irrespective of whether a price is
charged or not.
3.19 Capital Commitments and Contingent Liabilities

All discernible risks are accounted for in determining the amount of all known
liabilities. The Group share of all contingencies and capital commitments of a
subsidiary for which the Company is also liable severally or otherwise are also
included with appropriate disclosure.
Contingent liabilities are possible obligations whose existence will be

confirmed only by uncertain future events or present obligations where the
transfer of economic benefit is not probable or cannot be reliably measured.
Contingent liabilities are not recorded in the Statement of financial position
but are disclosed in the notes to financial statements.
3.20 Events Occurring After the Reporting Period

All material events after the reporting period have been considered, disclosed
and adjusted where applicable.
4. Standards Issued but not yet Effective

A number of new standards are effective for annual periods beginning after
1st January 2019 and earlier application is permitted; however, the Group
has not early adopted the new or amended standards in preparing these
consolidated financial statements.
The following amended standards and the interpretations are not expected
to have a significant impact on the Group’s consolidated financial statements.
• Amendments to References to Conceptual Framework in SLFRS
Standards.
• Definition of a Business (Amendments to SLFRS 3).
• Definition of Material (Amendments to LKAS 1 and LKAS 8)
76
COMPANY GROUP

Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
5. Revenue
Gross revenue 2,009,411 2,276,731 2,149,160 2,375,605
Less:
Value Added Tax (227,995) (296,959) (246,856) (314,551)
Nation Building Tax (24,008) (38,818) (26,123) (41,140)
Net revenue 1,757,408 1,940,954 1,876,181 2,019,914
6. Other Income
Rental income 2,880 2,880 1,200 1,200
Gain on disposal of property, plant and equipment 10,279 3,150 10,279 3,150
Dividend income from subsidiaries - - - -
Sundry income 2,595 1,787 3,924 3,073
15,754 7,817 15,403 7,423
7. Net Finance Costs
Finance income
Interest income on fixed deposits - - 2,937 2,971
Interest income on foreign exchange earners account 67 66 67 66
Interest income on related party balances 3,814 3,185 133 -
Net foreign exchange gain 1,177 420 1,177 420
5,058 3,671 4,314 3,457
Finance costs
Interest expense on term loans 115,025 120,848 120,304 128,373
Interest expense on bank overdraft 13,959 16,548 15,588 18,237
Interest expense on lease liability (Note 28) 4,218 - 3,738 -
Net foreign exchange loss - - 579 231
133,202 137,396 140,209 146,841
Net finance costs (128,144) (133,725) (135,895) (143,384)
8. Profit Before Taxation
Profit before income tax is stated after charging / (crediting) all
expenses / (income) including the following;
Directors' emoluments 30,921 33,140 30,921 33,140
Auditors’ remuneration
Statutory audit 600 560 843 790
Non audit services 327 480 391 611
Depreciation on property, plant and equipment 104,250 96,253 107,760 99,311
Amortisation of intangible assets 1,737 254 1,737 254
Impairment /Write-off of property, plant and equipment 377 477 377 477
Provision for impairment/(reversal of provision) of trade and other receivables 11,846 5,185 13,290 6,358
Impairment of inventories 4,310 - 4,310 -
Amortisation of right-of-use assets 24,446 - 26,126 -
Unidentified debtors written back (1,609) - (1,609) -
Unclaimed dividend written back (376) - (376) -
Donations 38 106 38 106
Legal expenses 223 490 223 691
Professional fees 470 510 520 589
Staff Cost (Note 8.1) 278,224 293,321 303,964 312,884
77
COMPANY GROUP
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
8.1 Staff Cost
Salaries and related cost 245,715 262,258 269,166 279,948
Defined contribution plan cost - EPF and ETF 22,408 21,698 24,358 23,364
Retirement benefit plan cost - Retiring gratuity (Note 23) 10,101 9,365 10,440 9,572
278,224 293,321 303,964 312,884
Number of employees as at the year end 290 298 332 332
9. Income Tax Expense
COMPANY GROUP
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
9.1 Tax Recognised in Income Statement
Current Tax expense (Note 9)
Income tax on current year profits (Note 9.3) 6,558 - 7,595 280
Under/ (over) provision in respect of previous years - 1,752 - 1,738
6,558 1,752 7,595 2,018
Deferred Tax expense (Note 24)

Relating to origination and reversal of temporary differences 7,393 25,908 10,278 25,864
Income tax expense reported in the income statement 13,951 27,660 17,873 27,882
9.2 Tax Recognised in Other Comprehensive Income
For the year ended 31st March, 2020 2019

Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
COMPANY
Before tax Tax expense Net of tax Before tax Tax expense Net of tax
Actuarial gains/(losses) on defined benefit

(129) 36 (93) 2,758 (772) 1,986
obligations
(129) 36 (93) 2,758 (772) 1,986
For the year ended 31st March, 2020 2019

Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
Before tax Before tax Net of tax Before tax Tax expense Net of tax
GROUP
Actuarial gains/(losses) on defined benefit
(214) 60 (154) 2,787 (780) 2,007

obligations
(214) 60 (154) 2,788 (780) 2,007
78
A reconciliation between tax expense and the product of accounting profit multiplied by income tax rate for the years ended 31 March

2020 and 2019 is as follows:

COMPANY GROUP
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
9.3 Reconciliation of Accounting Profit to Income Tax Expense
Accounting profit before taxation 53,970 83,964 75,469 80,802
Non Business Income (3,881) (3,251) (3,137) (3,037)
Aggregate disallowable expenses and provisions 117,391 106,755 123,225 110,021

Aggregate allowable deductions (127,212) (203,843) (138,597) (215,482)
Profit/(Loss) from business 40,268 (16,375) 56,961 (27,696)
Other income 3,881 3,251 3,137 3,037

Utilisation of tax losses (Note 9.4) (10,759) (3,251) (10,511) (3,037)
Taxable Income 33,390 - 36,163 1,000
Current Tax on profit for the year 6,558 - 7,595 280
COMPANY GROUP
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
9.4 Analysis of Tax Losses
Balance at the beginning of the year 13,124 - 30,681 5,557
Adjustments to tax losses - - (2,365) (931)
Tax losses arising during the year - 16,375 (2,217) 29,092
Tax losses utilised during the year (10,759) (3,251) (10,511) (3,037)
Balance at the end of the year 2,365 13,124 15,588 30,681
79
9.5 The profits and income of the Company and its subsidiaries are liable for income tax at the following rates
a. Company
The profits and income of the company is liable for income tax at 28% and 18%
b. Subsidiaries
Comark Lanka (Pvt) Ltd is liable for income tax at 28% and 18% (2018/2019 -28%)
Castalloys (Pvt) Ltd is liable for income tax at 28% and 24% (2018/2019 -28%)
Comark Engineers (Pvt) Ltd is liable for income tax at 28% and 18% (2018/2019 -28%)
The income tax provision for Lanka Aluminium Industries PLC is calculated in accordance with the provisions of the Inland Revenue
Act No. 24 of 2017 and the notice issued by the Department of Inland Revenue on the instruction of the Ministry of Finance on
12th February 2020 (No. PN/IT/2020-03) on subject of “Implementation of Proposed Changes to the Inland Revenue Act, No. 24
of 2017”and further amended by the notice No. PN/IT/2020-03 (Revised) issued by the Department of Inland Revenue dated on
8th April 2020.
As the proposed changes are effective from 1st January 2020, the Department of Inland Revenue has issued a notice No.
PN/IT/2020-06 dated 6th May 2020, providing instructions on the subject of “Computation of Income Tax Payable and Payments for
the Year of Assessment 2019/2020”. As per instructions issued, taxable income computed for the full year needs to be apportioned
over the two periods by applying the pro rata basis based on the time (i.e. 9 months and 3 months) and the relevant tax rates for two
periods should be applied. Though the legislative process relating to the amendment to laws needs to be completed in order for the
tax rate to be considered as substantively enacted as at the reporting date.
However, Company has computed the current tax based on above instructions. The Company has adopted the above on the basis
that formal amendments to the Inland Revenue Act No. 24 of 2017 would be made in the near future. In terms of above, income tax
shall be calculated by applying the relevant rate set out under the First Schedule and the subsequent amendment notices issued
by the Department of Inland Revenue dated on 8th April 2020. As per the First Schedule and the subsequent notices, company with
income from a business is liable to income tax at a rate of 28% & 18%. (2019 - 28%). Also if the Company’s current tax liability on
business profit and the profits of investment income are calculated using the currently enacted tax rate of 28%. The additional liability
would have been Rs. 2.6mn.
10. EARNINGS PER SHARE - CONTINUING OPERATIONS

Basic earnings per share is calculated by dividing the profit for the year attributable to the ordinary shareholders by the weighted average number
of ordinary shares outstanding during the year.
The following reflects the earnings and share data used for the computation.
COMPANY GROUP
Amounts used as Numerator
Net Profit attributable to Ordinary Shareholders (Rs.‘000) 40,019 56,304 43,236 54,014
Number of Ordinary Shares in issue used as the Denominator
Weighted Average Number of Ordinary shares 13,702,823 13,702,823 13,702,823 13,702,823
Basic earnings per share (Rs.) 2.92 4.11 3.16 3.94
There are no potential dilutive ordinary shares outstanding at anytime during the year. Therefore, diluted earnings per share is same as basic
earnings per share as shown above.
80
11. PROPERTY, PLANT AND EQUIPMENT

11.1 Company
Furniture &
Machinery
Fittings
& Generator Capital
Motor Lab
Land Buildings Electrical & work in Total
Vehicles Equipment
Sub Equipment progress
Tools
station
& Dies
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
Cost/Valuation
Balance as at 1st April 2018 349,485 460,639 885,896 48,271 308,208 10,768 4,498 2,067,765
Additions - 1,168 14,737 27,180 36,812 - 9,870 89,767
Capitalized during the year - 3,805 3,951 - 150 - (7,906) -
Disposals/Impairment - - - (4,415) (477) - - (4,892)
Balance as at 31st March 2019 349,485 465,612 904,584 71,036 344,693 10,768 6,462 2,152,640
Additions - 2,375 10,561 5,299 23,900 - 39,243 81,378

Capitalized during the year - 902 43,107 - 1,696 - (45,705) -
Balance as at 31st March 2020 349,485 468,889 958,252 64,865 369,912 10,768 - 2,222,171
Accumulated Depreciation
Balance as at 1st April 2018 - - 290,075 28,286 237,923 10,313 - 566,597
Charge for the year - 18,333 39,302 11,303 27,233 82 - 96,253
Disposals/Impairment - - - (4,415) - - - (4,415)
Balance as at 31st March 2019 - 18,333 329,377 35,174 265,156 10,395 - 658,435

Carrying amount
As at 31st March 2020 349,485 432,084 586,978 26,746 74,401 291 - 1,469,985
As at 31st March 2019 349,485 447,279 575,207 35,862 79,537 373 6,462 1,494,205
There were no property, plant and equipment pledged by the Company as securities for facilities obtained from bank.
Property, plant and equipment as at 31.03.2020 includes fully depreciated assets having a gross carrying amount of Rs. 452,765,374/-
( 31.03.2019- 418,050,559/-) that is still in use.
81
11.2 Group
Machinery Furniture &

& Fittings Generator Capital
Motor Lab
Land Buildings Electrical Equipment & Work in Total
Sub Vehicles
Tools Equipment Progress
Station & Dies

Cost/Valuation
Balance as at 1st April 2018 421,485 471,888 917,679 48,272 306,649 18,511 4,498 2,188,982
Additions - 1,168 15,344 27,180 37,320 - 9,870 90,882
Capitalized during the year - 3,805 3,951 - 150 - (7,906) -
Balance as at 31st March 2019 421,485 476,861 936,974 71,037 343,642 18,511 6,462 2,274,972
Additions - 2,375 11,001 5,299 25,365 - 39,243 83,283

Capitalized during the year - 902 43,107 - 1,696 - (45,705) -
Balance as at 31st March 2020 421,485 480,138 991,082 64,866 370,326 18,511 - 2,346,407
Accumulated Depreciation
Balance as at 1st April 2018 - - 295,167 28,286 232,382 15,562 - 571,396

Carrying amount
As at 31st March 2020 421,485 442,021 611,274 26,747 78,542 2,785 - 1,582,854
As at 31st March 2019 421,485 457,872 600,816 35,863 83,314 2,867 6,462 1,608,680
Plant and machinery of Comark Engineers (Pvt) Ltd is pledged as securities as at reporting date for obtaining banking facilities from Hatton
National Bank PLC.
Property plant and equipment as at 31.3.2020 includes fully depreciated assets having a gross carrying amount of Rs. 453,210,954/- ( 31.03.2019 -
418,456,639/-) that is still in use.
Land and buildings are stated at fair value. The fair value of land and buildings was determined by an external, independent qualified property
valuer, Mr. L. J. D. K. Silva who have recent experience in the location category of the property being valued.
82
Fair value of land and buildings as at 31st March 2018 have been based on valuation carried out by Mr. L. J. D. K. Silva, a member of the Institute

of Valuers of Sri Lanka, with appropriate qualifications and recent experience in the valuation of properties in the relevant locations. The book
values of land and buildings were written up to correspond with the valuation and the surplus/deficit on revaluation has been credited/debited
respectively to the Revaluation Reserve.
Name of the Carrying Amount Carrying Amount

Company Location Extent as at 31.03.2020 at cost
Rs.‘000 Rs.‘000
Lanka Aluminium No 20, Freehold land 808.63 P 349,485 722

Industries PLC Temple Road, Ekala, Ja-ela Building 139,032 (Sq Ft) 432,084 232,218
No 60, Freehold land 160 P 72,000 800

Castalloys (Pvt) Ltd
Temple Road, Ekala, Ja-ela. Building 3,444 (Sq Ft) 9,937 3,002
Land and building are considered under level 3 of the fair value hierarchy.
The Group has 11 buildings as at 31st March 2020.
12. RIGHT-OF-USE ASSETS
COMPANY GROUP
2020 2019 2020 2019
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
Carrying value of right of use asset

Cost
Origination from initial application of SLFRS 16 23,872 - 19,355 -
Additions during the year 40,808 - 40,808 -
At the end of the year 64,680 - 60,163 -
Accumulated Amortisation
Amortisation for the year 24,446 - 22,940 -
Carrying amount at the end of the year 40,234 - 37,223 -
13. INTANGIBLE ASSETS
COMPANY GROUP
2020 2019 2020 2019
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
Balance as at 1st April 1,480 1,734 1,480 1,734

Accquired during the year 1,483 - 1,483 -
Amortization (1,737) (254) (1,737) (254)
Balance on 31st March 1,226 1,480 1,226 1,480
Intangible assets includes the product performance license acquired and it is stated at cost less accumulated amortisation and impairement
losses.The license acquired will be amortised over the validity period of 10 years. During the year company has purchased accounting
software and amortised in full.
83
14. INVESTMENT IN SUBSIDIARIES

2020 2019
No of Shares Holding Cost No of Shares Holding Cost
‘000 % Rs.‘000 ‘000 % Rs.‘000
Unquoted
Comark Lanka (Pvt) Ltd 100 100% 1,000 100 100% 1,000
Comark Engineers (Pvt) Ltd 200 51% 2,000 200 51% 2,000
Castalloys (Pvt) Ltd 780 100% 600 780 100% 600
3,600 3,600
There were no shares pledged by the Group / Company as securities for facilities obtained from bank.
14.1 Non-Controlling Interest (NCI) In Subsidiary
COMARK ENGINEERS (PVT) LTD

As at 31st March 2020 2019
Rs.‘000 Rs.‘000
NCI Percentage (%) 49% 49%

Total Assets 154,243 130,579
Total Liabilities 124,774 108,227
Net Assets 29,469 22,352
Carrying Amount of NCI 14,440 10,954
Profit/(Loss) for the period 7,170 (2,233)

Other Comprehensive Income (55) 18
Total Comprehensive Income for the period 7,115 (2,215)
Total Comprehensive Income /(Loss) allocated to NCI 3,486 (1,085)
Net Cash flow generated from Operating Activities 10,936 6,636

Net Cash flow used in Investing Activities (1,857) (858)
Net Cash flow (used in) / from Financing Activities (5,957) 684
Net Decrease in Cash and Cash Equivalents 3,122 6,462
15. OTHER NON-CURRENT FINANCIAL ASSET
COMPANY GROUP
2020 2019 2020 2019
As at 31st March Equity Shares Equity Shares Equity Shares Equity Shares
- at - at - at - at
FVOCI FVOCI FVOCI FVOCI
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
Unquoted investments in equity shares (15a ) 5,104 5,104 5,104 5,104

Quoted investments in equity shares (15b) 30,958 30,958 30,958 30,958
36,062 36,062 36,062 36,062
Change in fair value of investments (26,414) (24,945) (26,414) (24,945)
Carrying amount as at 31st March 9,648 11,117 9,648 11,117
84
15.a Unquoted investments in equity shares (Company/Group)

2020 2019
As at 31st March No of Carrying No of Holding Carrying
Shares Holding Value Shares Value
‘000 % RS. ‘000 ‘000 % RS. ‘000
Timpex (Pvt) Ltd 510 1.67 4,690 510 1.67 4,690
15. b Quoted Investments in equity shares (Company/Group)

2020 2019
As at 31st March NO OF CARRYING NO OF HOLDING CARRYING
SHARES HOLDING VALUE SHARES VALUE
‘000 % RS. ‘000 ‘000 % RS. ‘000
ACME Printing & Packaging PLC 1,836 4.46 4,958 1,836 4.46 6,427
The Market value of ACME Printing & Packaging PLC on 31st March 2020 was Rs. 2/70 per share (2019 - Rs. 3/50 per share).
There were no shares pledged by the Group / Company as securities for facilities obtained from bank.
16. INVENTORIES
COMPANY GROUP
As at 31st March 2020 2019 2020 2019
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
Raw materials 113,519 79,583 138,716 98,345

Work in progress 66,871 53,953 79,749 62,699
Project work in progress - 15,822 - 15,822
Finished goods 278,087 289,400 299,600 303,089
Spare parts & consumables 36,571 31,791 40,737 34,862
Goods in transit 9,567 11,980 9,567 11,980
Others 30,854 40,983 32,135 41,773
535,469 523,512 600,504 568,570
Impairment of inventories (4,310) - (4,310) -
531,159 523,512 596,194 568,570
17. TRADE AND OTHER RECEIVABLES
COMPANY GROUP
As at 31st March 2020 2019 2020 2019
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
Trade receivables 607,385 605,572 661,384 654,822

Other receivables 10,855 13,529 23,212 26,580
Advances & deposits 22,025 17,931 34,594 22,982

640,265 637,032 719,190 704,384
Impairment of trade receivables (31,631) (20,785) (45,733) (33,443)
Impairment of other receivables (2,639) (1,639) (5,540) (4,540)
605,995 614,608 667,917 666,401
85
18. AMOUNTS DUE FROM RELATED PARTIES

COMPANY GROUP
As at 31st March 2020 2019 2020 2019
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
Comark Lanka (Pvt) Ltd 34,695 22,630 - -

Comark Engineers (Pvt) Ltd 62,644 44,321 - -
ACME Printing & Packaging PLC 887 808 1,389 1,310
Texpro Industries Limited 3,952 3,646 3,952 3,646
102,178 71,405 5,341 4,956
Impairment of amounts due from related parties (1,538) (1,538) (310) (310)
100,640 69,867 5,031 4,646
Lanka Aluminum Industries PLC charge interest at the rate of 12% (2018/2019- 12%) per annum from Comark Lanka (Pvt) Ltd.
19. INCOME TAX RECOVERABLE/(PAYABLE)
COMPANY GROUP
As at 31st March 2020 2019 2020 2019
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
Balance at the beginning of the year 12,652 (8,566) 13,405 (8,481)

Economic Service Charge paid during the year 9,241 10,439 9,755 10,439
Tax paid during the year - 12,531 657 13,464
Provision for the year (6,558) - (7,595) (280)
(Under)/over provision in respect of previous years - (1,752) - (1,737)
Income Tax Recoverable 15,335 12,652 16,576 13,665
Income Tax Payable - - (356) (260)
15,335 12,652 16,220 13,405
20. OTHER CURRENT FINANCIAL ASSETS
COMPANY GROUP
As at 31st March 2020 2019 2020 2019
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
Fixed deposit at Hatton National Bank PLC - - 31,309 28,420

- - 31,309 28,420
Group own three Fixed deposits at Hatton National Bank PLC with a maturity period of three months, six months and one year.
Maturity Period Fixed Deposit Maturity Date Interest Rate

In Months Rs.’000 %
3 12,086 4th April 2020 8.50
6 9,585 3rd May 2020 8.50
12 9,638 10th August 2020 9.83
31,309
86
21. CASH AND CASH EQUIVALENTS

Components of Cash and Cash Equivalents comprise the following;
COMPANY GROUP
As at 31st March 2020 2019 2020 2019
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
Cash in hand 4,437 1,151 4,815 2,106

Cash at bank 20,391 21,341 22,734 21,516
Cash and cash equivalents in the statement of financial position 24,828 22,492 27,549 23,622
Banks overdrafts for cash management purposes and payable on
demand (115,325) (100,678) (125,085) (113,280)
Cash and cash equivalent for the purpose of statement of cash flows (90,497) (78,186) (97,536) (89,658)
22. STATED CAPITAL
COMPANY GROUP
As at 31st March 2020 2019 2020 2019
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
Issued & Fully Paid Number of Shares

13,702,823 Ordinary Shares 137,028 137,028 137,028 137,028
The holder of Ordinary Shares are entitled to receive dividends as declared from time to time and are entitled to one vote per individual
present at meetings of the shareholders or one vote per share in the case of poll.
All ordinary shares rank equally with regard to the Company’s residual assets.
COMPANY GROUP
As at 31st March 2020 2019 2020 2019
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
23. RETIREMENT BENEFIT OBLIGATIONS

Present value of unfunded liability 57,427 51,529 58,615 52,292
Total present value of the obligation 57,427 51,529 58,615 52,292
23.1Movement in present value of the retirement benefit obligations

Retirement benefit obligations as at 1st April 51,529 46,751 52,292 47,336
Expenses recognised in income statement

Current service cost 4,433 4,222 4,688 4,387
Interest cost 5,668 5,143 5,752 5,185
10,101 9,365 10,440 9,572
Expenses recognised in other comprehensive income

Acturial (gains)/losses 129 (2,758) 214 (2,787)
Others
Benefits paid by the plan (4,332) (1,829) (4,331) (1,829)

Retirement benefit obligations as at 31st March 57,427 51,529 58,615 52,292
87
The provision for retirement benefits obligations for the year is based on the actuarial valuation carried out by professionally qualified actuaries,
Messrs. Actuarial and Management Consultants (Pvt) Ltd., as at 31st March 2020. The actuarial present value of the promised retirement benefits
as at 31st March 2020 amounted to Rs. 58,615,427/- (Company - Rs 57,427,059/-). The liability is not externally funded.
The principal actuarial assumptions used in determining the cost are given below;
- Discount rate 10.50%. (2018/2019 - 11%)
- Salary increments - 8% p.a. (2018/2019 - 8%)
- Retirement age of 55 years.
- The company will continue in business as a going concern
Assumptions regarding future mortality are based on published statistics and mortality tables.
Demographic Assumption
In addition to the above, demographic assumptions such as mortality, withdrawal and disability, and retirement age were considered for the
In addition to the above, demographic assumptions such as mortality, withdrawal and disability, and retirement age were considered for the
actuarial valuation. “A 67/07 mortality table” issued by the Institute of Actuaries, London was used to estimate the gratuity liability for the Company.
Sensitivity of assumptions employed in actuarial valuation

The following table demonstrates the sensitivity to a reasonable possible change in the key assumptions employed with all other variables held
constant in the employment benefit liability measurement, in respect of the year 2019/2020.
The sensitivity of the Income Statement and Statement of Financial Position is the effect of the assumed changes in discount rate and salary
increment rate on the profit or loss and employment benefit obligation for the year. increment rate on the profit or loss and employment benefit
obligation for the year.
2020 2019
Discount Rate Salary Increment Discount Rate Salary Increment
COMPANY 1% "1% "1% "1% 1% "1% "1% "1%
INCREASE DECREASE" INCREASE" DECREASE" INCREASE DECREASE" INCREASE" DECREASE"
Impact on statement of financial position (982) 1,044 897 (853) (1,165) 1,264 1,151 (1,071)
Impact on statement of profit or loss and
982 (1,044) (897) 853 1,165 (1,264) (1,151) 1,071
other comprehensive income
2020 2019
Discount Rate Salary Increment Discount Rate Salary Increment
GROUP 1% "1% "1% "1% 1% "1% "1% "1%
INCREASE DECREASE" INCREASE" DECREASE" INCREASE DECREASE" INCREASE" DECREASE"
Impact on statement of financial position (1,041) 1,109 963 (914) (1,197) 1,298 1,187 (1,105)
Impact on statement of profit or loss and
1,041 (1,109) (963) 914 1,197 (1,298) (1,187) 1,105
other comprehensive income
88
24. DEFERRED TAX LIABILITIES

COMPANY GROUP
As at 31st March 2020 2019 2020 2019
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
As at the beginning of the year 313,016 286,336 317,270 290,626

Origination / (reversal) of temporary differences during the year
Recognised in income statement 7,393 25,908 10,278 25,864
Recognised in other comprehensive income (36) 772 (60) 780
Deferred tax assets (16,408) (18,103) (20,652) (23,232)

Deferred tax liabilities 336,781 331,119 348,140 340,502
320,373 313,016 327,488 317,270
Deferred income tax and liabilities are offset when there is a legally enforceable right to offset assets against tax liabilities and when the
deferred income taxes relate to the same fiscal authority.
Composition of deferred tax assets and liabilities:

COMPANY GROUP
As at 31st March 2020 2019 2020 2019
Temporary Deferred Temporary Deferred Temporary Deferred Temporary Deferred
Difference Tax Difference Tax Difference Tax Difference Tax
RS.’000 RS.’000 RS.’000 RS.’000 RS.’000 RS.’000 RS.’000 RS.’000
Deferred tax liabilities

Property, plant and equipment
856,143 239,721 835,925 234,059 896,716 251,079 869,440 243,442
excluding land
Revaluation surplus on land 346,644 97,060 346,644 97,060 346,644 97,060 346,644 97,060
Deferred tax assets
Retirement benefit obligation (57,427) (16,080) (51,529) (14,428) (58,614) (16,412) (52,292) (14,642)
SLFRS 16 Adjustment (1,173) (328) - - (1,173) (328) - -
Tax losses carried forward - - (13,124) (3,675) (13,973) (3,912) (30,681) (8,590)
Net deferred tax liabilities 1,144,187 320,373 1,117,916 313,016 1,169,600 327,488 1,133,111 317,270
89
Movement of deferred tax asset and liabilities:

Recognised Recognised
Recognised in other Recognised in other
in income comprehensive in income comprehensive
Balance as at Statement income Balance as at Statement income Balance as at
01.04.2018 2018/2019 2018 / 2019 31.03.2019 2019/2020 2019 / 2020 31.03.2020
RS.’000 RS.’000 RS.’000 RS.’000 RS.’000 RS.’000 RS.’000
COMPANY
Property, plant and equipment 202,366 31,693 - 234,059 5,662 - 239,721
Retirement benefit obligations (13,090) (2,110) 772 (14,428) (1,616) (36) (16,080)
Tax losses carried forward - (3,675) - (3,675) 3,675 - -
SLFRS 16 Adjustment - - - - (328) - (328)
Revaluation surplus on land 97,060 - - 97,060 - - 97,060
286,336 25,908 772 313,016 7,393 (36) 320,373
GROUP
Property, plant and equipment 208,376 35,066 - 243,442 7,638 - 251,079
Retirement benefit obligations (13,255) (2,168) 780 (14,642) (1,710) (60) (16,412)
SLFRS 16 Adjustment - - - - (328) - (328)
Tax losses carried forward (1,556) (7,034) - (8,590) 4,678 - (3,912)
Revaluation surplus on land 97,060 - - 97,060 - 0 97,060
290,626 25,864 780 317,270 10,277 (60) 327,488
25. TRADE AND OTHER PAYABLES
COMPANY GROUP
As at 31st March 2020 2019 2020 2019
RS.’000 RS.’000 RS.’000 RS.’000
Trade payables 70,414 52,817 76,049 57,855

Other payables 44,627 70,947 45,347 71,599
Payable to contractors - 2,414 - 2,414
Unclaimed dividend 1,874 1,980 1,874 1,980
Accrued expenses 35,455 36,584 38,793 39,244
152,370 164,742 162,063 173,092
26. AMOUNT DUE TO RELATED PARTY
COMPANY GROUP
As at 31st March 2020 2019 2020 2019
RS.’000 RS.’000 RS.’000 RS.’000
Castalloys (Pvt) Ltd 4,770 3,980 - -

4,770 3,980 - -
90
27. LOANS AND BORROWINGS

27.1 Movement of Interest Bearing Borrowings
COMPANY GROUP
As at 31st March 2020 2019 2020 2019
RS.’000 RS.’000 RS.’000 RS.’000
Balance at the beginning of the year 888,141 893,043 930,009 934,227

Obtained during the year 2,529,387 2,606,299 2,634,985 2,727,545
Repayments during the year (2,560,041) (2,611,201) (2,670,396) (2,731,763)
Balance at the end of the year (before adjusting interest payable) 857,487 888,141 894,598 930,009
Interest payable (reclassification from trade and other payables) 10,375 6,234 10,375 6,234
At the end of the year 867,862 894,375 904,973 936,243
Payable within one year (after adjusting interest payable) 855,894 849,003 883,005 877,871
Payable after one year 11,968 45,372 21,968 58,372
867,862 894,375 904,973 936,243
Short term bank borrowings have been obtained to fulfill working capital requirements. No securities have been offered for these
borrowings.
27.2 Analysed by lending institution
Obtained
Balance As At During The Capital Balance As At
01.04.2019 Year Repayment 31.03.2020
RS. ‘000 RS. ‘000 RS. ‘000 RS. ‘000
DFCC Bank PLC 168,355 668,169 (620,362) 216,162

Hatton National Bank PLC 514,676 798,690 (889,348) 424,018
National Development Bank PLC 205,110 1,062,528 (1,050,331) 217,307
888,141 2,529,387 (2,560,041) 857,487
27.3 Analysed by Capital Repayment
Payable Payable
in less than with in Payable after
3 months 4 to 12 months 1 year Total
RS. ‘000 RS. ‘000 RS. ‘000 RS. ‘000
DFCC Bank PLC 116,170 99,992 - 216,162

Hatton National Bank PLC 198,493 213,558 11,968 424,019
National Development Bank PLC 206,801 10,505 - 217,306
521,464 324,055 11,968 857,487
These loans bear interest rate between 10.97% to 13% and due for settlement at maturity.
91

COMPANY GROUP
2020 2019 2020 2019
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
28. LEASE
LIABILITIES
Cost
Impact from initial application of SLFRS 16 23,872 - 19,355 -
Additions during the year 40,808 - 40,808 -
Accretion of interest 4,218 - 3,738 -
Payments to lease creditors (27,491) - (25,691) -
Amounts recognised in profit or loss
Interest on lease liabilities - Leases under SLFRS 16 4,218 - 3,738 -
4,218 - 3,738 -
Operating Lease Liabilities are presented in Financial position as

follows;
Classified as non current liabilities 24,789 - 23,090 -
Classified as current liabilities 16,618 - 15,120 -
41,407 - 38,210 -
Maturity Analysis of lease payments

-Less than 1 year 16,618 - 15,120 -
-1 to 5 years 24,789 - 23,090 -
41,407 - 38,210 -
Group rent expense for the financial year 2018/2019 was Rs. 24,745,881/- and the contingent liability recognized amounting to
Rs. 19,407,499/- as at 1st April 2019 as the initial recognition of SLFRS16.
29. CAPITAL COMMITMENTS
There are no material capital commitments, except for amounts mentioned below as at 31st March 2020.
COMPANY
2020 2019
As at 31st March
RS. ‘000 RS. ‘000
Approximate amount approved but not contracted for 212,387 249,482
GROUP
There are no capital expenditure approved by the Board as at 31st March 2020 which would require to disclosure in the Financial Statements
other than those disclosed under the Company.
92
30. CONTINGENT LIABILITIES

There were no contingent liabilities as at reporting date which would require adjustments to or disclosure in the financial statements of the
Company or Group other than followings.

COMPANY GROUP
As at 31st March 2020 2019 2020 2019
RS.’000 RS.’000 RS.’000 RS.’000
Performance bond - 1,066 - 1,066

Bid bond 122 1,098 122 1,098
Letter of credit (USD '000) 94 30 94 30
31. RELATED PARTY DISCLOSURES

31.1 Key Management Personnel Information
Key Management Personnel (KMP) are those persons having authority and responsibility for planning, directing and controlling the activities
of the Company directly or indirectly.
The Company has identified the Board of Directors (including Executive and Non-Executive Directors) as KMP of the Company.
Close Family Members (CFM) of a KMP are those family members who may be expected to influence, or be influenced by, that KMP in their
dealings with the Company.
Accordingly the Board of Directors and their CFMs have been identified as the KMP of the Company.
As the Company is parent of the Subsidiaries, the Board of Directors of the Company have the authority and responsibility for planning,
directing and controlling the activities of the Group directly or indirectly. Accordingly the Board of Directors of the Company (Including
Executive and Non-Executive) and their CFMs are KMPs of the Group.
Compensation paid to/on behalf of key management personnel of the company/Group are as follows,
COMPANY GROUP
RS. RS. RS. RS.
Short term employee benefits 28,330 30,600 28,330 30,600

Post employment benefits 2,591 2,540 2,591 2,540
30,921 33,140 30,921 33,140
In addition to the above, the company has not provided non cash benefits during last two years to the key Management Personnel.
Mr. S.T. Nagendra, Mr. J.D. Peiris, Mr. P. Chandaria, Dr. J.M. Swaminathan, Mr. R. Seevaratnam, Mr. H.D.S. Amarasuriya, Mr. D.S. Weerakkody and
Mr. S. Kumar the directors of the Company are also directors of the following companies as set out below and with transactions in Note 31.2
have been carried out.
There were no loans given to Directors of the Company during the financial year or as at the year end.
93

NAME OF THE RELATED PARTY NAME OF THE DIRECTOR
CASTALLOYS (PVT) LIMITED Mr. J D Peiris

Dr. J M Swaminathan
Mr. R Seevaratnam
COMARK LANKA (PVT) LIMITED Mr. J D Peiris

Dr. J M Swaminathan
Mr. R Seevaratnam
ACME PRINTING & PACKAGING PLC Mr. H D S Amarasuriya

Dr. J M Swaminathan
Mr. R Seevaratnam
Mr. S Kumar
ACME PACKAGING SOLUTIONS (PVT) LIMITED Mr. H D S Amarasuriya

Dr. J M Swaminathan
Mr. R Seevaratnam
TEXPRO INDUSTRIES LIMITED Mr. J D Peiris
METECNO LANKA (PVT) LIMITED Mr. S T Nagendra

Mr. J D Peiris
Dr. J M Swaminathan
Mr. R Seevaratnam
Mr. S Kumar
COMARK ENGINEERS (PVT) LIMITED Mr. J D Peiris
Dr. J M Swaminathan
Mr. R Seevaratnam
HATTON NATIONAL BANK PLC Mr. D S Weerakkody
31.2 Transactions with Related Entities

31.2 (a) Transactions with Subsidiaries
‘The Group carries out transactions in the ordinary course of its business with parties who are defined as related parties in Sri Lanka
Accounting Standard 24 “Related Party Disclosure” the details of which are reported below.
AMOUNT AMOUNT
NATURE OF
NAME OF RELATED ENTITIES RELATIONSHIP 2020 2019
TRANSACTION
RS. '000 RS. '000
CASTALLOYS (PVT) LIMITED Subsidiary Opening balance (3,980) (3,726)

Expense recovery 534 457
Settlements 650 1,400

Rent expense (inclusive of taxes) (1,974) (2,111)
Closing balance (4,770) (3,980)
94

AMOUNT AMOUNT
NATURE OF
TRANSACTION
RS. '000 RS. '000
COMARK LANKA (PVT) LIMITED Subsidiary Opening balance 22,630 35,096
Rent income (inclusive of taxes) 512 563
Interest received (inclusive of taxes) 4,186 3,736
Expense recovery 6,108 5,113
Service charges receivable 4,309 4,588
Purchase of Scrap - (12)
Sale of extrusions (12,420) (9,099)
Funds transferred net 9,370 (17,355)
Closing balance 34,695 22,630
COMARK ENGINEERS (PVT) LTD Subsidiary Opening balance 44,321 29,137

Rent income (inclusive of taxes) 1,279 1,408
Sale of extrusions 55,947 28,724
Service charges receivable 2,824 2,491
Sale of spare parts 595 569
Purchase of Scrap (1,420) (1,550)
Expenses charges (294) (834)
Settlements (40,608) (15,624)
Closing balance 62,644 44,321
31.2 (b) Transactions with Other Related Entities - Company
AMOUNT AMOUNT
NATURE OF
TRANSACTION
RS. '000 RS. '000
ACME PRINTING & PACKAGING PLC KMP with Expenses reimbursements 1,361 2,475
Significant Expenses settled (1,282) (2,470)
influence
TEXPRO INDUSTRIES LIMITED Expenses reimburesments 1,244 1,591

KMP with Rent income (inclusive of taxes) 1,370 1,408
Significant
influence Settlements (2,308) (1,853)
Purchase of fabrics - (127)
KMP with
METECNO LANKA (PVT) LIMITED Expenses reimburesments 4,223 4,223
Significant
influence Expenses charged (4,223) (4,223)
HATTON NATIONAL BANK PLC KMP with Loans Obtained 798,690 1,082,291
Significant Loans settled 889,348 (1,027,625)
influence
Overdraft outstanding as at year end 62,895 72,237
Amount Receivable from/ Payable to Related Parties are disclosed in Note No.18 and 26 respectively to the financial statements.
95
31.2 (c) Transactions with Other Related Entities - Group

AMOUNT AMOUNT
NATURE OF
TRANSACTION
RS. '000 RS. '000
KMP with
ACME PRINTING & PACKAGING PLC Expenses charged 1,361 2,475
Significant
influence Expenses settled (1,282) (2,470)
HATTON NATIONAL BANK PLC KMP with Loans Obtained 865,514 1,167,959
Significant Loans settled 817,148 (1,108,222)
influence
Overdraft outstanding as at year end 65,765 79,990
31.3 Terms and conditions of transactions with related parties

The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm’s length. All related party transactions
are carried out in the normal course of business and transacted at normal business terms. transactions and comparable with those that would
have been charged from un-related companies. All related party outstanding balances at the year-end are unsecured and are to be settled in
cash. The Group does not have any material commitments to related parties, other than those disclosed in note 31 to the financial statements.
31.4 Other transactions - banking facilities
Lanka Aluminium Industries PLC has sub-allocated a banking facility amounting to Rs. 250 Mn. obtained from National Development Bank PLC
to its related Company, Comark Lanka (Pvt) Ltd. The entire facility was available for utilisation by Comark Lanka (Pvt) Ltd as at 31st March 2020.
32. EVENTS AFTER REPORTING PERIOD
There were no material events occurring after the reporting date as at 31st March 2020 that require adjustments to or disclosure in the
Financial Statements, other than those disclosed below.
The Board of Directors has proposed a First and Final Dividend of Rs. 1/- per share amounting to Rs. 13,702,823/- on 29th September 2020 for
the year ended 31st March 2020.
33. IMPACT ON COVID-19
In light of COVID-19 pandemic situation, the company has assessed its going concern and is satisfied that it has the resources to continue
in business for the foreseeable future. COVID - 19 pandemic has resulted in a substantive shift in management’s focus towards ensuring the
continued safety of people, uninterrupted services to customers, compliance with guidelines issued by various government authorities and
continuity of critical business operations in line with the re-assessed business continuity plan. The outbreak and the associated developments
impacted the business, our customers and staff due to restrictions on movement and economic slowdown. The current unprecedented
situation is yet evolving and the future impact will heavily depend on the duration of current restrictive environment and time taken for
economic activity to rebound to pre COVID - 19 levels. The key impact on the outbreak is temporary suspension of business operation, delays
in collecting cashflows. After the consideration of risks and outcomes, the Board of Directors have satisfied that the company has adequate
liquidity and business plans to continue to operate the business and mitigate the risks connected to the lockdown for next 12 months from
the date of these financial statements.
34. LITIGATION CLAIM
There are no litigations and claims against the Company and its subsidiaries as at the reporting date other than disclosed below.
District Court of Colombo - Case No. DMR/01699/2014
This case had been instituted on 16th July 2014 by the plaintiff, Isha Alu Design & Distributors (Private) Limited against Lanka Aluminium
Industries PLC for the recovery of Rs.4,950,000/- for the purported breach of contract. Lanka Aluminium Industries PLC has filed answer denying
the said the claim and in doing so has preferred a counter claim in a sum of Rs.15 Mn. against the plaintiff as damages. As at 31st March 2020,
this matter was stood fixed for further trial on the 21st May 2020.
There are no unasserted claims and assessments that are probable assertions which are required to be provided in the Financial Statements as
at reporting date.
Following 31st March 2020, this matter came up for further trial on the 21st May 2020, 20th July 2020 and the 9th September 2020.On 21st May
2020 and 20th July 2020, this matter was refixed for further trial due to the backlog created by COVID-19 pandemic and on the 9th September
2020 the further trial was refixed due to the Defendant’s Counsel being indisposed.
At present the matter stands fixed for further trial on 23rd November 2020.
96
35. SEGMENTAL INFORMATION GROUP
The Primary Segments (Business Segments)
Imported Investment Fabrication &

Extrusions Eliminations Group
Extrusions Property Builders Hardware
For the year ended 31st March, 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
(a) Segment Results
Total revenue 1,757,408 1,940,954 58,373 49,498 1,800 1,800 127,719 67,752 (69,119) (40,090) 1,876,181 2,019,914
Profit before taxation 53,970 83,964 - (1,615) 231 330 10,062 (2,273) 360 396 64,623 80,802
(b) Segment Assets and Liabilities

Property, plant and equipment 1,469,985 1,494,205 - - 80,554 81,210 32,315 33,265 - - 1,582,854 1,608,680
Right-of-use assets 40,234 - 803 - - - 2,007 - (5,821) - 37,223 -
Intangible assets 1,226 1,480 - - - - - - - - 1,226 1,480
Investments in subsidiaries 3,600 3,600 - - - - - - (3,600) (3,600) - -
Other non-current financial assets 9,648 11,117 - - - - - - - - 9,648 11,117
Deferred tax assets - - - - - - - - - - - -

Total current assets 1,277,957 1,243,131 41,717 29,624 6,337 5,483 119,917 97,314 (101,352) (70,227) 1,344,576 1,305,324
Total segment assets 2,802,650 2,753,533 42,250 29,624 86,891 86,693 154,243 130,579 (110,777) (73,827) 2,975,527 2,926,601
Segment Liabilities
Non current liabilities 414,557 409,917 453 - 3,248 3,182 16,188 14,836 (3,285) - 431,161 427,934
Total current liabilities 1,144,977 1,118,403 37,024 23,794 518 373 108,586 93,389 (105,476) (71,455) 1,185,629 1,164,503
Total Segment Liabilities 1,559,534 1,528,320 37,477 23,794 3,766 3,555 124,774 108,225 (108,761) (71,455) 1,616,790 1,592,437
Other Information
Cost incurred during the Year to acquire
81,378 89,767 - - - - 1,905 1,114 - - 83,283 90,882
property, plant and equipment
Depreciation 104,250 96,253 - - 656 656 2,854 2,403 - - 107,760 99,311
Amortization of right-of-use assets 24,446 - 402 - - - 1,004 - (2,912) - 22,940 -
Amortization of intangible assets 1,737 254 - - - - - - - - 1,737 254
Retiring gratuity 10,101 9,365 - - 67 58 272 149 - - 10,440 9,572
The above segmentation for the group is based on the business segments. However, the company does not distinguish its products into different Geographical Segments as they are insignificant.
Extrusions : Manufacture and sale of aluminium extrusions. Imported Extrusions : Trading in aluminium extrusions and accessories.
Investment Property : Renting land and building. Fabrication & Builders Hardware : Manufactures of Builders Hardware and Undertaking contracts for aluminium fabrication.
97
Lanka Aluminium Industries PLC Annual Report 2019-2020
36. FINANCIAL RISK MANAGEMENT.

The risk management structures, processes and procedures are explained in the risk report on pages 30 to 35 of the annual report. The
objective of the financial risk management strategy of the Group is to minimize the impact of risks that arise due to the use of financial
instruments. The risks that are unmanaged can potentially result in the Group being unable to achieve its budgeted profits in a given
financial year. Hence, importance is given by the Group to manage risk.
36.1 Market risk management
“Market risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate due to the change in market factors
such as exchange rates and interest rates. Such risks could affect Group’s income and expenses and could have a potentially adverse
impact on the profits attributable to the shareholders. The objective of market risk management is to manage and control market risk
exposure within acceptable limits while optimizing returns.”
Currency Risk
The group exposed to currency risk on sales, purchases, the main foreign currencies in which the Group transacts is the USD and the Euro
while its exposures to other foreign currencies are not material. Amount subject to foreign currency risk was USD 260,625/- at the exchange
rate of 185.06 as at 31st March 2020 and SGD 32,726/- at the exchange rate of 135.49 as at 31st March 2020.
Foreign Currency Sensitivity
“An estimation of the impact of the currency risk with respect of financial instruments with a 5% change in US Dollar exchange rate and
Singapore Dollar are given below in calculation of risk it’s assumed that all other variable factors are held constant. The calculation of
sensitivity has been performed only on the assets and liabilities denominated in foreign currency of the Group as at 31st March 2020.”
GROUP
USD BY 5% SGD BY 5%
As at 31st March 2019 Effect on Profit Effect on Effect on Effect on
Before Tax Equity Profit Equity
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
LKR Depreciated against (2,412) (2,412) (222) (222)

LKR appreciated against 2,412 2,412 222 222
Interest rate risk

“Interest rate risk is the risk that the fair value of the cash flows of financial instruments will fluctuate because of changes in market interest
rates; interest rate risk arises on interest bearing financial instruments recognized in the statement of financial position.”
“The interest rate risk of the company and the group arises from financial instruments which are exposed to variable or fixed rate interest
rates. Variable interest rates expose the company and the group to cash flow due to the impact on the quantum of interest payable.
Financial instruments with fixed interest rates are subject to variations in fair values due to market interest movements.”
“The group closely monitors market interest rate movements and implement appropriate strategies in order to minimize the interest rate risk
associated with financial instruments with rates.”
GROUP COMPANY
INTEREST BEARING DEPOSITS & LOANS Financial Financial Financial Financial
Assets Liabilities Assets Liabilities
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Fixed rate 31,309 - - -

Floating rate - 1,019,683 - 972,812
Interest rate sensitivity

At the reporting date the interest rate sensitivity profile of the Group’s financial instruments were as follows,
GROUP COMPANY
IMPACT ON PROFIT AND LOSS Effect on Profit Effect on Effect on Effect on
Before Tax Equity Profit Equity
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Decrease of 100 Basis Points in Rupee Interest Rate (313) 10,197 - 9,728
Increase of 100 Basis Points in Rupee Interest Rate 313 (10,197) - (9,728)
98
Equity Price risk

“The Group has adopted that its investment on subsidiaries at cost as per; SLFRS 10 - Consolidated Financial Statement Separate financial
statements and therefore it is scoped out from LKAS 39- Financial instruments: recognition and measurement.”
“All the investments made by the group that are classified as a financial asset are categorized as available for sale asset at the reporting
date the value of these investments are as follows,”
Quoted equity investments = Acme Printing & Packaging PLC. (4.9 Mn.)
Unquoted equity investments = Timpex (Pvt.) Ltd. (4.7 Mn.)
36.2 Liquidity management

“The liquidity risk of the group arises from having insufficient cash resources to meet its obligations as they arise. Insufficient liquidity
resources could have an adverse impact on the Group’s operations while impairing investor, customer and supplier confidence
thereby weakening its competitive position. The Group had adopted a number of strategies in order to ensure that sufficient
cash resources are available to meet both operational and investment liquidity whilst meeting its debt servicing obligations.”
“The Group closely monitors cash inflows and outflows both at consolidated and sector levels to ensure matching of cash flows wherever
possible.”
The Company has sufficient approved banking facilities in reserve and had over Rs. 150 Mn undrawn facilities as at the end of the financial
year, which could be utilized at a short notice. The Group evaluates its funding requirements at frequent intervals and access debt and
capital markets at appropriate times.
“The Group has implemented a strategic working capital management plan across all sectors whereby the receivables
are closely monitored and debtor’s period is minimized. Careful vender evaluations and procurement strategies ensure
that correct prices are paid for inputs and maximum credit periods are negotiated to optimize the working capital cycle.”
“The Group ensures its liquidity is maintained by investing in short, medium and long term financial instruments to support operational
and other funding instruments.”
The table below summarizes the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments.
GROUP COMPANY
As at 31st March 2020 On Less than 3 – 12 1–2 On Less than 3 – 12 1–2
Demand 3 Months Months Years Demand 3 Months Months Years
RS. ‘000 RS. ‘000 RS. ‘000 RS. ‘000 RS. ‘000 RS. ‘000 RS. ‘000 RS. ‘000
Interest bearing loans - 555,950 327,055 21,968 - 531,839 324,055 11,968
Lease liabilities - 4,493 10,627 23,090 - 4,886 11,732 24,789
Bank overdrafts 125,085 - - - 115,325 - - -
Amounts due to related party - - - - 4,770 - - -
Trade payable 1,874 160,189 - - 1,874 150,496 - -
Credit Risk Management

“Credit risk refers to the risk carried out by the Group owing to a counter party defaulting on its contractual obligations in relation to a
financial instrument or customer contract. The total carrying amount of the credit risk pertaining to the group as at 31st March 2020 is the
summation of balances under the following categories of financial assets.”
The maximum credit risk of the Group and the company is limited to the carrying value of these financial assets as at 31st March 2020.
COMPANY GROUP
As at 31st March 2020
RS. ‘000 RS. ‘000
Trade receivables 575,754 615,651
Amounts due from related parties 100,640 5,031
Other financial assets 9,648 9,648
99

EXPOSURE TO CREDIT RISK
COMPANY GROUP
2020 2019 2020 2019
As at 31st March
Note RS. ‘000 RS. ‘000 RS. ‘000 RS. ‘000
Trade receivables 17 575,754 584,787 615,651 621,379
Amount due from related companies 18 100,640 69,867 5,031 4,646
Other non-current financial assets 15 9,648 11,117 9,648 11,117
Total 686,042 665,771 630,330 637,142
Impairment losses on financial assets recognized in profit or loss were as follows,

COMPANY GROUP
2020 2019 2020 2019
As at 31st March
Note RS. ‘000 RS. ‘000 RS. ‘000 RS. ‘000
Expected loss allowance - trade receivables 17 11,846 5,185 13,290 6,358
Expected loss allowance - related parties 18 - 532 - 136
11,846 5,717 13,290 6,494
TRADE AND OTHER RECEIVABLES

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management
also considers the demographic of the Company’s customer base, including the default risk of the industry and area in which customer
operate, as these factors may have an influence on credit risk.
The Company is closely monitoring the economic environment in the country and is taking necessary measures to limit its exposure to
customers experiencing particular economic volatility.
The Company establishes an allowance for impairment that represents its estimate of expected losses in respect of trade and other
receivables. The main components of this allowance are specific loss component that relates to individually significant exposures, and a
collective loss component established for group of similar assets in respect of losses that have been incurred but not yet identified. The
collective loss allowance is determined based on historical data of payment statistics of those receivables and the future macro economic
conditions.
The Company applies the SLFRS 9 simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance
for trade receivables.
The movement in the allowance for impairment in respect of trade receivables during the year
COMPANY GROUP
2020 2019 2020 2019
As at 31st March
RS. ‘000 RS. ‘000 RS. ‘000 RS. ‘000
At 1st April 20,785 15,600 33,443 27,085
Provision for the year 10,846 5,185 12,290 6,358
At 31st March 31,631 20,785 45,773 33,443
AMOUNTS DUE FROM RELATED PARTIES

Impairment on amounts due from related parties has been measured on a 12 month expected credit loss basis and reflect the short
maturities of the exposures.
100
The movement in the allowance for impairment in respect of amounts due from related parties during the year

COMPANY GROUP
2020 2019 2020 2019
As at 31st March
RS. ‘000 RS. ‘000 RS. ‘000 RS. ‘000
At 1st April 1,538 - 310 -
Adjustment due to initial application of SLRS 9 - 1,007 - 174
Adjusted balance - 1,007 - 174
Provision for the year - 532 - 136
At 31st March 1,538 1,538 310 310
“The credit risk arising from the deposits made in financial institutions are managed by the group policy directions provided by the board
of Directors.”
”Lanka Aluminum industries transacts only with a limited number of institutions all of which have stable credit ratings. The group’s exposure
and credit rating of counterparties are continuously monitored and a diversified investment portfolio is minimizing the unsystematic risk.”
“The majority of the trade receivable is due to settlement within 90 days comprising 45% (Company - 44%) of the total receivable as at the
end of the financial year. The credit policy of SBU’s are prepared subsequent to analyzing the credit profile of a customer. In this regard
factors such as the credit history, legal status, market share, geographical locations of operation, and industry information are considered.
Each SBU’s has identified credit limits for each of its customers and if the customer does not meet the criteria or the stipulated benchmark
on a transaction, then the business is carried out with such customers only up to the value of the guarantee value or advance obtained.
The Total Guarantee received on trade receivable is Rs 210 Mn.”
As at 31st March 2020 COMPANY GROUP

RS. ‘000 RS. ‘000
Less than 30 days 34,413 36,714

More than 30 days but less than 60 days 154,308 169,292
More than 60 days but less than 90 days 78,399 90,027
More than 90 340,265 365,351
Total gross trade receivable 607,385 661,384
Impairment provision for trade receivable (31,631) (45,733)
Total net trade receivable 575,754 615,651
As at 31st March 2020 COMPANY GROUP

RS. ‘000 RS. ‘000
Movement of impairment provision for trade receivable

Balance at the beginning of the year 20,785 33,443
Provision for the year 10,846 12,290
Balance at the end of the year 31,631 45,733
36.3 Capital Management

The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future
development of the business. Capital consists of total equity. The Board of Directors monitors the return on capital as well as the level of
dividends to ordinary shareholders.
The Board of Directors seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings
and the advantages and security afforded by a sound capital position.
The Group monitors capital using a net debt to equity ratio, which is net debt divided by equity. For this purpose, net debt is defined as
total liabilities (which includes interest bearing loans and borrowings) less cash and cash equivalents. Equity comprises all components
of equity.
101
The Company’s and Group’s net debt to equity ratio at the end of the reporting period is as follows.
which could be utilized at a short notice. The Group evaluates its funding requirements at frequent intervals and access debt and capital
markets at appropriate times.
COMPANY GROUP
As at 31st March 2020 2019 2020 2019
RS.'000 RS.'000 RS.'000 RS.'000
Total liabilities 1,559,534 1,528,320 1,616,790 1,592,437

Less: Cash and cash equivalents (24,828) (22,492) (27,549) (23,622)
Net debt 1,534,706 1,505,828 1,589,241 1,568,815
Total equity 1,243,116 1,225,213 1,344,297 1,323,210
Net debt to equity ratio at 31st March (Times) 1.23 1.23 1.18 1.19
37. Financial Instruments

The value of financial assets and financial liabilities, together with the carrying amounts in the statement of financial position as follows:
37.1 Accounting classifications and fair value - Company

Loans Fair value Other Total
and through financial carrying Fair
receivables OCI liabilities amount value
NOTE RS.' 000 RS.' 000 RS.' 000 RS.' 000 RS.' 000
31st March 2020
Cash and cash equivalents 21 - - - 24,828 -
Trade and other receivables 17 605,995 - - 605,995 -
Amounts due from related parties 18 100,640 - - 100,640 -
Other non-current financial assets 15 - 9,648 - 9,648 9,648
706,635 9,648 - 741,111 9,648
Loans and borrowings 27 - - 867,862 867,862 -

Trade and other payables 25 - - 152,370 152,370 -
Amount due to related party 26 - - 4,770 4,770 -
Bank overdrafts 21 - - 115,325 115,325 -
- - 1,140,327 1,140,327 -

NOTE RS.' 000 RS.' 000 RS.' 000 RS.' 000 RS.' 000
31st March 2019
684,475 11,117 - 718,084 11,117

Amounts due to related party 26 - - 3,980 3,980 -
Bank overdrafts 21 - - 100,678 100,678 -
- - 1,163,775 1,163,775 -
The Company has not disclosed the fair values for financial instruments such as cash and cash equivalents (including bank overdrafts),
trade and other receivables, amounts due from related parties, loans and borrowings, trade and other payables and amounts due to related
parties, because their carrying amounts are a reasonable approximation of fair value.
102
37.2 Accounting classifications and fair value - Group

NOTE RS.' 000 RS.' 000 RS.' 000 RS.' 000 RS.' 000
31st March 2020

Other current financial assets 20 31,309 - - 31,309 -
704,257 9,648 - 741,454 9,648

Bank overdrafts 21 - - 125,085 125,085 -
- - 1,192,121 1,192,121 -

NOTE RS.' 000 RS.' 000 RS.' 000 RS.' 000 RS.' 000
31st March 2019
Other current financial assets 20 28,420 - - 28,420 -
699,467 11,117 - 734,206 11,117

Bank overdrafts 21 - - 113,280 113,280 -
- - 1,222,615 1,222,615 -
The Company has not disclosed the fair values for financial instruments such as cash and cash equivalents (including bank overdrafts),
trade and other receivables, amounts due from related parties, loans and borrowings, trade and other payables and amounts due to related
parties, because their carrying amounts are a reasonable approximation of fair value.
38. FAIR VALUE MEASUREMENT

The Group and the Company uses the following hierarchy for determining and disclosing the fair value of assets and liabilities
by valuation techniques:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within level 1 that are observable for the assets or liabilities, either directly or indirectly
Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market
data or indirectly
103
The following table provides the fair value measurement hierarchy of the Group’s and Company’s assets and liabilities.
Level 1 Level 2 Level 3

2020 2019 2020 2019 2020 2019
RS. ‘000 RS. ‘000 RS. ‘000 RS. ‘000 RS. ‘000 RS. ‘000
COMPANY
Recurring fair value measurements - Assets
measured at fair value
Freehold land - - - - 349,485 349,485
Building - - - - 432,084 447,279
Other non-current financial assets-
4,958 6,427 - - 4,690 4,690
(Fair value through OCI)
GROUP
Recurring fair value measurements - Assets
measured at fair value
Freehold land - - - - 421,485 421,485
Building - - - - 442,021 457,872
Other non-current financial assets-
4,958 6,427 - - 4,690 4,690
(Fair value through OCI)
Valuation techniques and significant unobservable inputs

Assets and liabilities for which fair values are disclosed - Recurring
Significant “Sensitivity of the

Assets Valuation Technique
Unobservable Inputs Input to the fair value”
Property, Plant Market comparable method;

and equipment Considers the selling price of a similar
- Freehold land property within a reasonably recent period Price per perch of land Estimated fair value would
increase/(decrease) if ;Price per
of time in determining the fair value of
perch increases/(decreases).
property being revalued. This involves
evaluation of recent active market prices
of similar assets, making appropriate
adjustments for difference in size, nature
and location of the property.
- Freehold building Market comparable method Depreciated Value per square feet The estimated fair value would
replacement cost method. determined based on increase (decrease) if price per
similar properties value square feet value was higher /
and (lesser). The estimated fair value
depreciated for period would (decrease) / increase if
used. depreciation was higher

/ (lower).
Other non- current Net assets basis Carrying value of assets The estimated fair value of
financial assets and liabilities adjusted investment would increase
for market participant (decrease) if fair value of assets
assumptions. and liabilities in investees
changed based on market
participant assumptions.
104
Annual Report 2019-2020 Lanka Aluminium Industries PLC
105
Supplementary
Information
SUPPLEMENTARY INFORMATION
Statement of Value Addition

COMPANY GROUP
For the year ended 31st March, 2019/2020 2018/2019 2019/2020 2018/2019
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
Turnover 1,757,408 1,940,954 1,876,181 2,019,914

Other Income 15,754 7,817 15,403 7,423
1,773,162 1,948,771 1,891,584 2,027,338
Less:
Cost of material & services purchased 1,208,667 1,339,521 1,282,982 1,388,040
Value Added 564,495 609,250 608,602 639,298
Value addition as a percentage on turnover & other income 31.84% 31.26% 32.17% 31.53%
COMPANY GROUP
For the year ended 31st March, 2019/ As a % of 2018/ As a % of 2019/ As a % of 2018/ As a % of
2020 Total 2019 Total 2020 Total 2019 Total
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
To employees as remuneration 278,224 49 293,321 48 303,964 51 312,884 50

To shareholders as dividends 20,554 4 27,405 4 20,554 3 27,405 4
To the state as taxes 13,951 3 27,660 5 17,873 3 27,881 4
To bank as interest 128,144 23 133,725 22 135,895 22 143,384 22
Retained in the business -
104,250 18 96,253 16 107,760 17 99,311 16
as depreciation
Retained in the business -
19,372 3 30,885 5 22,556 4 28,433 4
as revenue reserve
564,495 609,250 608,602 639,299
3%
18% To Employees as Remuneration

49% To Shareholders as Dividends
COMPANY 22%
To the State as Taxes
23% To Bank as Interest

Retained in the Business - as Depreciation
3% Retained in the Business - as Revenue Reserve

4%
4%
17% To Employees as Remuneration
51% To Shareholders as Dividends
GROUP 22%
To the State as Taxes
22% To Bank as Interest

Retained in the Business - as Depreciation
3% Retained in the Business - as Revenue Reserve

3%
106
Real Estate Portfolio

No. of Building in Value
Classification Name of the Company Location Land Perches
Buildings (Sq.ft.) (Rs.’000)
Lease Free
Hold Hold
Property, plant and equipment Lanka Aluminium Industries PLC Ekala, Ja-ela Nil 808.63 10 139,032 781,569
Property, plant and equipment Castalloys (Pvt) Ltd Ekala, Ja-ela Nil 160.00 1 3,444 81,937
107
Five Year Summary

For the year ended 31st March, 2020 2019 2018 2017 2016
Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
A). Summary of operations

Revenue 1,876,181 2,019,914 2,217,901 1,900,471 1,540,846
Gross Profit 476,951 500,266 667,195 553,259 417,376
Profit before finance expenses and tax 200,518 224,186 396,710 304,735 213,415
Net finance expenses (135,895) (143,384) (123,424) (87,428) (61,273)
Taxation (17,873) (27,881) (78,589) (53,387) (28,725)
Profit after taxation 46,750 52,920 194,697 163,920 114,494
Profit attributable to equity holders of the Company 43,237 54,014 192,303 161,068 111,204
Gross dividend 20,554 27,405 34,257 54,814 13,702
As at 31st March
B). Summary of Financial Position
Capital & Reserve
Stated capital 137,028 137,028 137,028 137,028 137,028
Retained earnings 689,341 666,785 638,352 482,145 375,053
Shareholders' funds 1,344,297 1,323,210 1,302,901 1,077,618 970,594

Minority interest 14,440 10,954 12,039 9,836 7,483
Total equity 1,358,737 1,334,164 1,314,940 1,087,454 978,077
Liabilities
Non-current liabilities 431,161 427,934 442,554 201,105 209,514
Current liabilities 1,185,629 1,164,503 1,190,942 1,147,600 871,727
Total liabilities 1,616,790 1,592,437 1,633,496 1,348,705 1,081,241
Total equity & liabilities 2,975,527 2,926,601 2,948,436 2,436,159 2,059,318
Assets
Property, plant and equipment 1,582,854 1,608,680 1,617,586 1,239,678 908,878
Right-of-use assets 37,223 - - - -
Intangible assets 1,226 1,480 1,734 1,988 2,242
Investments 9,648 11,117 19,241 14,769 14,837
Deferred tax assets - - - - 8
Current assets 1,344,576 1,305,324 1,309,875 1,179,724 1,133,353
Total assets 2,975,527 2,926,601 2,948,436 2,436,159 2,059,318
C) Key Indicators
Earnings per share (Rs.) 3.16 3.94 14.03 11.75 8.12
Net profit margin (%) 2.49 2.62 8.78 8.63 7.43
Net assets per share (Rs.) 98.10 96.57 95.08 78.64 70.83
Dividend paid per share (Rs.) 1.50 2.00 2.50 4.00 1.00
Dividend payout (%) 47.46 50.74 17.81 34.03 12.32
Dividend cover (Times) 2.10 1.97 5.61 2.94 8.12
Interest cover (Times) 1.48 1.56 3.21 3.49 3.48
Current ratio (Times) 1.13 1.12 1.10 1.03 1.30
Gearing ratio (%) 1.62 4.38 7.96 2.86 7.19
Return on equity (%) 3.44 3.97 14.82 15.07 11.71
108
Twenty (20) Major Shareholders

31st March 2020 31st March 2019
Number of Number of
Name of the Shareholder Shares Percentage Shares Percentage
1 Clovis Company Limited 6,863,429 50.09 6,863,429 50.09
2 Mr. K. D. D. Perera 3,962,999 28.92 3,962,999 28.92
3 Sandwave Limited 850,618 6.21 861,198 6.28
4 Mr. R. S. A. Silva 334,930 2.44 334,930 2.44
5 Mr. K. C Vignarajah 107,618 0.79 107,616 0.79
6 Mrs. P. N Bhatt 78,613 0.57 78,613 0.57
7 Sri Lanka Insurance Corporation Ltd - Life Fund 69,838 0.51 69,838 0.51
8 People’s Leasing & Finance PLC/ L. P. Hapangama 66,759 0.49 63,388 0.46
9 Hatton National Bank PLC / Mr. R. S. A Silva & Mrs. G. J Nirmalie 66,350 0.48 66,350 0.48
10 People’s Leasing & Finance PLC/ Mr. D. M. P. Disanayake 54,580 0.40 21,096 0.15
11 Dr. A. C. Visvalingam / Mrs. Y. I. Visvalingam 49,395 0.36 61,445 0.45
12 Mr. Z. G. Carimjee 49,100 0.36 49,100 0.36
13 People’s Leasing & Finance PLC/ Mrs. C. M. P. Disanayake 43,752 0.32 - -
14 Mr. U. W. J. P. A Sumathipala 43,000 0.31 43,000 0.31
15 People's Leasing & Finance PLC/ C. D. Kohombanwickramage 35,013 0.26 35,013 0.26
16 Mr. T. M. Sumithrarachchi 30,237 0.22 30,237 0.22
17 People’s Leasing & Finance PLC/ L. H. L. .M. P. Haradasa 25,281 0.18 - -
18 Mrs. Adamally Zenab Mohamedi 22,800 0.17 22,800 0.17
19 Merchant Bank of Sri Lanka and Finance PLC / R. R. S Ananda 22,634 0.17 25,000 0.18
20 Mr. D. S. Pathmasiri, Joint With Mrs. M. N. K Pathirana 22,500 0.16 22,500 0.16
Percentage of shares held by the public 49.85 49.85
Number of shareholders representing the public holding 1,140 1,141
The directors do not hold any shares
PUBLIC HOLDING
•• The percentage of shares held by public as per the Colombo Stock Exchange Rules as at 31st March 2020, was 49.85% (2019 – 49.85%)
held by 1,140 ordinary shareholders (2019 – 1,141).
•• The float adjusted market capitalization of the Company as at 31st March 2020 was Rs. 293,726,862/- under Option 5 of Rule 7.13.1
(a) of the Listing Rules of the Colombo Stock Exchange and the Company has complied with the minimum public holding requirement
applicable under the said option
109
Analysis of Shareholders According to the Number of Shares

as at 31st March 2020
Resident Non Resident Total

Shareholding No. of No. of No. of
Range Share No. of Share No. of Share No. of
holders Shares % holders Shares % holders Shares %
1-1000 938 213,536 1.56 9 4,718 0.03 947 218,254 1.59

1001-10,000 159 510,586 3.73 7 33,079 0.24 166 543,665 3.97
10,001-100,000 24 821,310 5.99 - - - 24 821,310 5.99
100,001-1,000,000 2 442,548 3.23 1 850,618 6.21 3 1,293,166 9.44
Over 1,000,000 1 3,962,999 28.92 1 6,863,429 50.09 2 10,826,428 79.01
Total 1,124 5,950,979 43.43 18 7,751,844 56.57 1,142 13,702,823 100.00
Number of
Categories of Shareholders Number of
Share
Shares
holders
Individual 1,072 5,444,430

Institutional 70 8,258,393
Total 1,142 13,702,823
Share Trading Information from 1st April 2019 to 31st March 2020
Share Trading Information 2019/2020 2018/2019
No of trades 792 637

No of shares traded 171,267 117,679
Value of shares traded (Rs.) 9,993,208 7,087,618
110
Glossary of Financial Terms
Asset Turnover Credit Risk Effective Rate of Interest

Total revenue divided by average total assets. Risk that the counter party to a transaction Total long-term and short-term interest
fails to meet its contractual obligations divided by average long-term and shortterm
AWDR
in accordance to the agreed terms and liabilities at the beginning and end of the year.
The Average Weighted Deposit Rate is
conditions.
calculated by the Central Bank monthly and Employee Turnover
half yearly based on the weighted average Current Ratio Number of employees who leave an
of all outstanding interest bearing deposits Current assets divided by current liabilities. organization over a year expressed as a
of commercial banks and the corresponding percentage of total workforce.
Debt/Equity Ratio
interest rates.
Non-current interest bearing borrowing Fair Value
AWPLR divided by the total equity and minority The amount at which an asset is exchanged or
The Average Weighted Prime Lending Rate interest. It shows the extent to which the firm a liability settled, between knowledgeable and
is calculated by the Central Bank weekly, is financed by debt. willing parties in an arm’s length transaction.
monthly and half yearly based on commercial
bank’s lending rates offered to their prime
Dividend Cover Fair Value Through Profit or Loss (FVTPL)
customers. Net profit attributable to the ordinary Financial instruments that are held for trading
shareholders divided by the total dividend. and are designated as at fair value through
Basis Point
Dividend – Payout Ratio profit and loss.
One basis point is equal to 1/100th of 1%.
Dividends per share divided by earnings Financial Asset
Business Model
per share. This indicates the percentage of Any asset that is cash or an equity instrument
The process adopted by a company to the Company’s earning that is paid out to of another entity or a contractual right to
generate revenue and make a profit from shareholders in cash. receive cash or another financial asset from
operations.
Dividend Yield another entity or a contractual right to
Capital Expenditure exchange financial instruments with another
Dividend per share divided by the market
The total of additions to property, plant & entity under conditions that are potentially
value of a share.
equipment, intangible assets, investment favorable.
property and the purchase of outside Dividend per Share (DPS)
Financial Instruments
investments. Dividend paid and proposed, divided by the
Any contract that gives rise to financial assets
number of issued shares, which ranked for
Capital Reserves of one entity and financial liability or equity
those dividends.
Identified for specific purposes and considered instrument of another entity.
not available for distribution. Earnings per Share (EPS)
Financial Leverage
Net profit for the period attributable to
Carrying Amount Total average assets divided by total average
ordinary shareholders divided by the
The amount at which as asset is recognised in equity.
weighted average number of ordinary shares
the statement of financial position. in issue during the period. Financial Liability
Collective Impairment provision EBITDA A contractual obligation to deliver cash or
Impairment provision is measured on a another financial asset to another entity or
Earnings before interest, tax, depreciation and
collective basis for homogeneous groups of exchange financial instruments with another
amortization.
debtors that are not considered individually entity under conditions that are potentially
significant. Effective Rate of Dividend unfavorable.
Rate of dividend per share paid on the number Goodwill on Consolidation
Contract
of shares ranking for dividend at the time of
An agreement between two or more parties The excess of the cost of acquisition over the
each payment.
that has clear economic consequences that fair value of the share of net assets acquired
the parties have little, if any discretion to avoid when purchasing an interest in a company.
usually because the agreement is enforceable
by law.
111
Glossary of Financial Terms contd
Guarantees Loans and receivables Related Parties

A contractual obligation made by a third party A financial asset with fixed and determinable Parties who could control or significantly
(Guarantor), who is not a party to a contract payments that are not quoted in an active influence the financial and operating
between two others, that the guarantor market and do not qualify as trading assets. decisions of the business.
will be liable if the guarantee fails to fulfill
Market Capitalisation Return on Equity
the contractual obligations under that said
The number of ordinary shares in issue Profit after taxation of the Group divided by
contract.
multiplied by the market price per share. total equity.
Held-to-Maturity (HTM)
Market Risk Revaluation Surplus
A financial asset with fixed and determinable
Possibility of loss arising from changes in the Surplus amount due to revaluing assets in
payments and fixed maturity, other than loan
value of a financial instrument as a result of accordance with its fair value.
and receivables, for which there is a positive
changes in market variables such as interest
intention and ability to hold to maturity. Revenue Reserves
rates, exchange rates, credit spreads and other
Gearing Reserves set aside for future distributions and
asset prices.
investments.
Long term Loans to total equity.
Net Assets per Share
Impairment Total Equity
Total assets less total liabilities including
Total of share capital, reserves, retained
Occurs when recoverable amount of an asset minority interest divided by the number of
earnings and non-controlling interest.
is less than its carrying amount. shares in issue as at 31st March.
Intangible Assets Net Profit Margin Total Shareholder Return (TSR)

Change in market price of the share between
An identify able non-monetary asset without Net prof t for the period divided by the
end and beginning of the financial year, plus
physical substance held for use in the revenue.
dividend for the year, divided by the market
production or supply of goods or services for
Non-controlling Interests price of the share at the beginning of the
rental to others or for administrative purposes.
Part of the net results of operations and of net financial year.
Interest Cover assets of a subsidiary attributable to interest
Unquoted Shares
Operating profit before interest divided by the which are not owned, directly or indirectly
Shares which are not listed in the Stock
net interest. through subsidiaries, by the parent Operating
Exchange.
Profit Margin (EBIT Margin) Earnings before
Investment Property
interest and tax divided by revenue. Yield to Maturity
Investments in land and buildings that are
Price Earnings Ratio (PER) The discount rate that equals present value
held to earn rentals or for capital appreciation
of all expected interest payment and the
or for both. Market value per share divided by the earnings
repayment of principal.
per share.
Internal Rate of Return (IRR)
Price to Book Value Ratio (PBV) Weighted Average Cost of Capital
Rate of return used in capital budgeting to
(WACC)
measure and compare the profitability of Market price per share divided by net assets
The rate that a company is expected to pay
investments. per share.
on average to all its equity and debt holders.
LIBOR Quantitative Easing
Working Capital
The London Inter Bank Offer Rate is an interest A type of monetary policy used by Central
Current assets less current liabilities.
rate at which banks can borrow funds, in Banks to stimulate the economy when the
marketable size, from other banks in the standard monetary policy has become
London interbank market. ineffective.
Liquidity Risk Quick Asset Ratio

The risk of an entity having constrains to settle Total current assets less inventories divided by
its financial liabilities. total current liabilities.
112
Annual Report 2019-2020 Lanka Aluminium Industries PLC
113
Notes
Lanka Aluminium Industries PLC Annual Report 2019-2020
114
Notes
FORM OF PROXY
I/We*........................................................................................................................................................................................................................................................(NIC No...............................................)/

(Company Reg. No....................................................) of...................................................................................................................................................................................................................................
being a member of the above Company, hereby appoint: Mr/Mrs/Miss*...........................................................................................................................................................................
(NIC No....................................................) of.................................................... as my proxy to represent me/us and failing him/her.

Mr. Jude Dinal Peiris of Colombo or failing him
Dr. Jayantha Mootatamby Swaminathan of Colombo or failing him
Mr. Ranjeevan Seevaratnam of Colombo or failing him
Mr. Paras Chandaria of London or failing him
Mr. Hemaka Devapriya Senarath Amarasuriya of Colombo or failing him
Mr. Dinesh Stephen Weerakkody of Colombo or failing him
Mr. Sanjeev Kumar of India
to represent me/us and vote on my/our* behalf at the Annual General Meeting of the Company to be held on Thursday 29th October 2020 at 10.00 a.m at the hall
(Cinema) of Block 2 of BMICH, Bauddhaloka Mawatha, Colombo-07, and at any adjournment thereof and at every poll which may be taken in consequence
of the aforesaid meeting and to VOTE as indicated below:
FOR AGAINST
1 To receive and consider the Audited Financial Statements for the year ended 31st March 2020 together with the
Annual Report of the Board of Directors and of the Auditors thereon.
2 To declare a First and Final Dividend of Rs. 1/- per share for the financial year ended 31st March 2020 as recommended
by the Board of Directors.
3 To re-elect as a Director Mr. D. S. Weerakkody, who retires by rotation in terms of Article No.86 of the Articles of
Association as recommended by the Board of Directors
4 To re-appoint Dr. J.M. Swaminathan who is over 70 years of age as a Director of the Company, by passing the ordinary
resolution set out in the Notice of Meeting.
5 To re-appoint Mr. R. Seevaratnam who is over 70 years of age as a Director of the Company, by passing the ordinary
resolution set out in the Notice of Meeting.
6 To re-appoint Mr. Hemaka D.S. Amarasuriya who is over 70 years of age as a Director of the Company, by passing the
ordinary resolution set out in the Notice of Meeting.
7 To authorise the Board of Directors to determine the Remuneration of the Auditors, Messrs KPMG, Chartered Accountants
who are deemed to have been re-appointed as Auditors.
8 To authorise the Board of Directors to determine contributions to charities.
Signed this............................................................................................................................................................................day of .................................................. Two Thousand and Twenty.

Signature: ..................................................
* Please delete the inappropriate words.
Note:
1. Instructions for completion of Form of Proxy are given overleaf.
2. Every alternation or addition to the Form of Proxy must be duly authenticated by the full signature of the Shareholder signing the Form of
Proxy. Such signature should as far as possible be placed in proximity to the alteration or addition intended to be authenticated.
3. A proxy need not be a member of the Company.
115
FORM OF PROXY
INSTRUCTIONS FOR COMPLETION OF FORM OF PROXY
1. K indly perfect the Form of Proxy by filling in legibly your full name and address, and your instructions as to voting,
by signing in the space provided and filling in the date of signature.
2. lease indicate with a ‘X’ in the cages provided how your proxy is to vote on the Resolutions. If no indication is
P
given or if there is any doubt as to how the Proxy should vote by reason of the manner in which the instructions
are carried out, the proxy in his/her discretion may vote as he/she thinks fit.
3. T he completed Form of Proxy should be deposited at the Registered Office of the Company at 1st Floor,
Lakshman’s Building, 321, Galle Road, Colombo – 03, not less than 48 hours before the time appointed for holding
the meeting.
4. I f the Form of Proxy is signed by an attorney, the original power of attorney should accompany the completed
form of proxy for registration, if such power of attorney has not already been registered with the Company.
Note:
If the shareholder is a Company or body corporate, Section 138 of the Companies Act No.7 of 2007 applies to corporate shareholders of Lanka
Aluminium Industries PLC. Section 138 provides for representation of Companies at meetings of other Companies. A Corporation, whether a
Company within the meaning of this Act or not, may, where it is a member of another Corporation, being a Company within the meaning of this
Act, by resolution of its Directors or other governing body authorise such person as it thinks fit to act as its representative at any meeting of the
Company. A person authorised as aforesaid shall be entitled to exercise the same power on behalf of the Corporation which it represents as that
Corporation could exercise if it were an individual shareholder of that other Company.
116
SALES AND SERVICE CENTRES
COLOMBO KURUNEGALA
545 1A, Sri Sangaraja Mawatha, 132B, Baudhaloka Mawatha,

Colombo. Kurunegala.
011-2388216 037-5705705
MAHARAGAMA NITTAMBUWA
132, Dehiwala Road, 39/1, Kandy Road,

Maharagama. Nittambuwa.
011-5553301 033-5200200
MALABE KADAWATHA
484, Kaduwela Road, 315/B1, Kandy Road,
Thalangama North, Malabe. Kadawatha.
011-5299045 011-5991111
CONCEPT CENTRE - SALES AND SERVICE CENTRES
DEHIWALA
34, Galle Road,

Dehiwala.
011-3691697
Produced & Printed by Printel (Pvt) Ltd.

w w w . a l u m i n i u m . l k

HEAD OFFICE
1st Floor, Lakshman’s Building, 321, Galle Road, Colombo 03, Sri Lanka.
Tel: 5503300 | 2565951-53 Fax: 5503381 | 2576944
Email: [email protected] | [email protected]
REGIONAL SALES & SERVICES CENTRE

545 1/A, Sri Sangaraja Mawatha, Colombo 10, Sri Lanka.
Tel/Fax: 2388216
FACTORY
20, Temple Road, Ekala, Ja-Ela, Sri Lanka.
Tel: 2236941-4 | 5354709 Fax: 2236942

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L A NK A A LU M I N I UM

ANNUAL REPORT 2019/2020

Board of Directors Website

Mr. Sri Theagarajah Nagendra www.aluminium.lk

Registered Office KPMG, Chartered Accountants

Statement of Directors’ Responsibility for Financial Reporting .......................................49

AGENDA Ordinary Resolution

of this resolution is 76 years of age (having reached 70 years

Annual Report 2019-2020

7. To authorize the Board of Directors to determine the remuneration

8. To authorise the Board of Directors to determine contributions to

By Order of the Board of Directors of Lanka Aluminium Industries PLC

1. A shareholder entitled to attend, speak and vote at the above

2. A Form of Proxy is enclosed.

3. The completed Form of Proxy should be deposited at the Registered

NET ASSETS PER SHARE EARNINGS PER SHARE

1500 2000 200

Mr. S T Nagendra Mr. R Seevaratnam

Annual Report 2019-2020

Mr. Paras Chandaria is a graduate from the London School of Economics

from the Chartered Institute of Marketing, U.K. and a Diploma in

Board of Directors contd

Mr. Sanjeev Kumar

Mr. Dinesh Weerakkody

Annual Report 2019-2020

29th September 2020

Annual Report 2019-2020

very valuable contribution extended to the Company and the

Report of the Directors on the State of Affairs of the Company contd

11. Board Sub-Committees 14. Dividends

As far as the Board of Directors is aware, the Auditors do not

24. Major Shareholders

Annual Report 2019-2020

Company are also Directors. 29th September, 2020

However, in the opinion the Board of Directors, , Dr. J.M.

The Chairman meets with the Independent Non‑Executive Directors

Annual Report 2019-2020

Responsibilities of the Board

•• Approving budgets and major capital investments.

•• Establish a process of monitoring and evaluation of progress

•• Ensuring Compliance with Highest Ethical and Legal Standards

•• Ensuring all stakeholders interests are considered in corporate

•• Approval of the Annual and Interim Financial Statements prior

Requirement to appoint a “Senior Non‑Executive Director” is not

Corporate Governance contd

The Board Balance Board Committees

Mr. Dinesh Weerakkody

Annual Report 2019-2020

Mr. H D S Amarasuriya – Chairman Availability of a Nomination Committee

(Pvt) Ltd functions as the Secretary of the Board.

Corporate Governance contd

The Board responsibility to present the Financial Statements accepts in Section A

The Board acknowledges its overall responsibility for maintaining

Annual Report 2019-2020

responsible to the Board for ensuring that Board

Corporate Governance contd

Code of Best Practice on Corporate Compliance Details of Compliance

Annual Report 2019-2020