VISION
To be the leading corporate stakeholder in the nation's
transportation infrastructure
MISSION
To cultivate a flexible and productive workforce centered on
our customer's needs and requirements, capable of swily adapting and
innovating transport solutions to become the most trusted partner for
mobility solutions in the Country
ANNUAL REPORT 2021 / 2022
1
About the Company ................................................................................. 4
Financial Highlights ................................................................................. 5 - 7
Chief Executive Oicer's Review ............................................................ 9 - 10
Board of Directors .................................................................................... 11 - 13
Management Discussion and Analysis ................................................. 14 - 17
Annual Report of the Board of Directors .............................................. 18 - 22
Corporate Governance ............................................................................ 23 - 30
Audit Committee Report ......................................................................... 31
Remuneration Committee Report ........................................................ 32
Nomination Committee Report ............................................................ 33
Related Party Transaction Review Committee Report ..................... 34 - 35
Directors' Statement on Internal Controls .......................................... 36
Management of Risk ................................................................................ 37 - 40
The Statement of Directors' Responsibilities ..................................... 41
Financial Calendar ................................................................................... 42
Independent Auditor's Report ............................................................... 43 - 45
Statement of Profit or Loss and Other Comprehensive Income ..... 46
Statement of Financial Position ............................................................ 47
Statement of Changes in Equity ............................................................ 48
Statement of Cash Flows ........................................................................ 49
Notes to the Financial Statements ....................................................... 50 - 97
Value Added Statement .......................................................................... 98
Share Information .................................................................................... 99 - 100
Decade at a Glance .................................................................................. 101 - 102
Distribution Network ............................................................................... 103
Glossary ...................................................................................................... 104 - 105
Notice of Meeting ..................................................................................... 106
Corporate Information ............................................................................ 107
Form of Proxy ............................................................................................ 109 - 110
CONTENTS
ANNUAL REPORT 2021 / 2022
4
MAIN ACTIVITIES
The main activities are:
• Import of Semi-Knocked-Down (SKD) Chassis and assembly of Ashok Leyland
commercial vehicles, with technical assistance from Ashok Leyland Limited, India.
• Import and marketing of Commercial Vehicles, Spare Parts and Power Generators.
• Fabrication of steel and aluminum bodies for Trucks.
• Truck body fabrication for special requirements.
• Rehabilitation of old and accidental vehicles.
• Provide day to day running repairs and services.
• Let vehicles on hire
Lanka Ashok Leyland PLC is an ISO 9001:2015 certified Company on Quality
Management System of Marketing, Body Building and Repair of Commercial
Vehicles.
ABOUT THE COMPANY
Lanka Ashok Leyland PLC was incorporated in 1982, with 41.77% of Share Capital held by
Lanka Leyland Limited, a fully owned Company of the Government of Sri Lanka and 27.85%
of the Share Capital held by Ashok Leyland Limited - India. The Company was Listed in
Colombo Stock Exchange in 1983. The registered oice and the main factory compound is
located at Panagoda, Homagama with 16 sales outlets and 22 authorized service centers
spread throughout the country.
ANNUAL REPORT 2021 / 2022
4
ANNUAL REPORT 2021 / 2022
5
FINANCIAL HIGHLIGHTS
Rs.3,696.64Mn
Rs.7,642.83Mn
Rs.
3,946.19Mn
NET WORTH
TOTAL ASSETS
TOTAL LIABILITIES
INVESTMENTS / OTHER NON CURRENT ASSETS
VALUE (Rs.)
Fixed Assets 647,642,072
Right-of-use Assets 42,894,834
Intangible Assets 3,054,331
Financial Investments 11,550,475
Deferred Tax Asset 213,558,928
SUBTOTAL 918,700,640
INVENTORY VALUE (Rs.)
Vehicles 1,929,448,690
Spare Parts & Consumables 365,420,375
Generators 27,774,558
Cab/ Bodies & Work in Progress 269,740,495
Goods in Transit 360,037,047
SUBTOTAL 2,952,421,165
TRADE DEBTORS VALUE (Rs.)
Lease Customers 1,379,801,988
Other Customers 132,575,453
SUBTOTAL 1,512,377,441
OTHER CURRENT ASSETS VALUE (Rs.)
VAT Receivable 75,217,714
Advance/ Deposit/ Margin/ Prepayment 107,435,055
Other Receivables 9,608,734
Cash and Cash Equivalent 2,067,069,039
SUBTOTAL 2,259,330,542
UNSECURED VALUE (Rs.)
Employee Benefits 96,937,072
Trade Payables 357,729,705
Amounts due to Related Party 2,146,013,053
Accrued Expenses 132,585,164
Income Tax Liability 39,528,436
Other Payables & Warrenty Provision 656,775,974
Lease Liability 67,972,501
SUBTOTAL 3,497,541,905
SECURED VALUE (Rs.)
Short Term Borrowings 378,205,767
Bank Overdra 70,437,430
SUBTOTAL 448,643,197
Investments /
Other Non Current Assets
Inventory
Trade Debtors
Other Current Assets
12.02%
19.79%
29.56%
38.63%
Secured
Unsecured
11.37%
88.63%
ANNUAL REPORT 2021 / 2022
6
FINANCIAL HIGHLIGHTS (Contd.)
20,000 1,400
700.00
800.00
900.00
1,000.00
1,100.00
1,200
1,000
800
600
400
200
0
Revenue (Rs. Mn)PAT (Rs. Mn)
Dividend Per Share (Rs.)
Gross Profit (Rs. Mn)
Net Asset Per Share (Rs.)
TURNOVER
PROFIT AFTER
TAX
DIVIDEND PER
SHARE
GROSS PROFIT OPERATING PROFIT
NET ASSET PER
SHARE
Rs.
6,860,962,989
Rs. 342,975,015 Rs. 10.00
Rs. 814,265,656 Rs. 451,617,924
Rs. 1,020.93
15,000
10,000
5,000
Year
Year Year
Year
Year
2017//182017//18
2017//18
2017//18
2017//18
2018//192018//19
2018//19
2018//19
2018//19
2019//202019//20
2019//20
2019//20
2019//20
2020//212020//21
2020//21
2020//21
2020//21
2021//222021//22
2021//22
2021//22
2021//22
0
600
40.00
30.00
20.00
10.00
0
500
400
300
200
100
0
0
100
200
300
400
500
600
700
800
Operating Profit (Rs. Mn)
Year
2017//18
2018//19
2019//20
2020//21
2021//22
ANNUAL REPORT 2021 / 2022
7
KEY PERFORMANCE
INDICATORS
THIS YEAR
(2021/22)
LAST YEAR
(2020/21)
%
CHANGE
5 YEAR TREND
OPERATING RESULTS
TURNOVER (Rs.)
6,860,962,989 2,973,106,405 131%
GROSS PROFIT (Rs.)
814,265,656 241,509,930 237%
OPERATING PROFIT (Rs.)
451,617,924 193,708,929 133%
PROFIT BEFORE TAX (Rs.)
448,648,262 19,075,722 2252%
PROFIT AFTER TAX (Rs.)
342,975,015 4,505,303 7513%
DIVIDEND PROPOSED / PAID (Rs.)
36,208,430 7,241,686 400%
CAPITAL STRUCTURE
EQUITY (Rs.)
3,696,644,686 3,356,342,705 10.1%
DEBT (Rs.)
378,205,767 863,724,158 -56%
PROFITABILITY INDICATOR RATIOS
GROSS PROFIT MARGIN (%)
11.9% 8.1% 3.8%
NET PROFIT MARGIN (%)
5.0% 0.2% 4.8%
RETURN ON ASSETS (%)
4.5% 0.1% 4.4%
RETURN ON EQUITY (%)
9.3% 0.1% 9.2%
RETURN ON CAPITAL EMPLOYED (%)
11.1% 4.6% 6.5%
LIQUIDITY MEASUREMENT RATIOS
CURRENT RATIO (NO OF TIMES)
1.54 1.39 11%
QUICK RATIO (NO OF TIMES)
0.76 0.21 262%
DEBT RATIOS
GEARING RATIO (%)
9% 20% -11%
INTEREST COVER (NO OF TIMES)
19.67 1.11 1672%
EQUITY RATIOS
NET ASSET VALUE PER SHARE (Rs.)
1,020.93 926.95 10%
EARNINGS PER SHARE (Rs.)
94.72 1.24 7539%
DIVIDEND PER SHARE (Rs.)
10.00 2.00 400%
PRICE EARNINGS RATIO
7.50 674.49 -99%
DIVIDEND PAYOUT (%)
11% 161% -150%
MARKET VALUE PER SHARE (Rs.)
710.00 839.25 -15%
HIGHEST MARKET VALUE (Rs.)
1,029.50 1,000.00 3%
LOWEST MARKET VALUE (Rs.)
551.00 541.00 2%
MARKET CAPITALIZATION (Rs.)
2,570,798,530 3,038,792,488 -15%
Semi-Knocked-Down chassis
assembled locally with enhanced
local value addition.
ANNUAL REPORT 2021 / 2022
9
Dear Stakeholder,
I am pleased to present the financial performance review of Lanka
Ashok Leyland PLC for the year 2021/22. In a period of unprecedented
socioeconomic and political uncertainty, Lanka Ashok Leyland PLC
has shown great resilience, commitment, and flexibility in delivering
a strong performance.
The Economy in 2021
The Covid-19 crisis continued into its second year as more virulent
strains of the virus emerged driving a spike in infections. By the end
of December 2020, Sri Lanka's case load of 42,000 COVID cases rose
exponentially to over 660,000 cases by 31
st
March 2022 despite an
eective vaccination drive by the government. Similar to 2020, the
government imposed travel restrictions and two hard lockdowns -
the first at the end of May 2021 and then again in August 2021 for
several weeks each, which negatively impacted all sectors of the
economy.
Following a contraction of the economy in 2020, the economy
managed to record GDP growth of 3.7% in 2021. Beyond the
pandemic, the Sri Lankan economy faced an acute foreign exchange
crisis that worsened and resulted in disastrous socioeconomic and
political crisis. The crisis reached a tipping point whereby Sri Lanka
has oicially suspended its foreign debt obligations that are due.
Sri Lanka's foreign reserves are depleted leading to a shortage of
essentials like fuel, gas, medicine and food items. This has led to
social and political upheaval as people have to spend long time in
queues at supermarkets, filling stations, LPG Gas Stations and for
medicines coupled with long electricity cuts has created enormous
social unrest and anxiety.
The currency which was pegged throughout most of the year at
LKR 203 to the USD was floated in March 2022 and subsequently
depreciated by over 80% to around LKR 365 per US Dollar. The
knock-on eects of such a rapid fall in the value of the currency has
resulted in price increases across the board impacting consumers
and businesses. This coupled with rising commodity prices has
amplified an already dire situation. Inflation is in double digits and as
of April 2022 stood at almost 30% with indications that the situation
will get worse before it gets better in the coming months.
Travel restrictions and the lockdowns negatively impacted road
passenger transportation in 2021. While the passenger kilometrage
of the Sri Lanka Transport board declined 28.4%, the average number
of buses operated increased to 4,449 buses from 4,045 buses in 2020.
The private sector saw a 16.1% decline in average number of buses
operated from 10,787 buses in 2020 to 9,053 buses in 2021. School
and Sta transportations were remain under-utilized due to closure
of the schools and work from home.
The country is expected to see a contraction in its GDP for the new
fiscal year as priorities shi towards achieving macroeconomic
stability. Spending cuts, tax increases, and a focus away from
investment in infrastructure and development towards supporting
the vulnerable will most likely be the way forward.
Financial Highlights
Despite the continued import restrictions, the company managed
to get special approvals to import trucks in Semi-Knocked-Down
condition for local assembly with enhanced local value addition.
Resilient and strong demand for our locally assembled vehicles
resulted in revenue growing a remarkable 131% to LKR 6.8 Bn against
LKR 2.9 Bn in 2020. Vehicle sales accounted for 92% of total revenue
with the balance 8% coming from our other verticals.
Across other revenue sources, generator sales grew 458% to LKR
62.4mn, whilst repair and service income rose by 36% to LKR 171.1
Mn. This oset a slight decrease in spare part sales which fell 11% to
LKR 211 Mn.
The gross profit margin increased to 11.9% against 8.1% achieved
through better margins on local value additions as well as a stable
exchange rate for most of the fiscal year. However the sharp
depreciation of the currency in the last quarter and increased costs
of local inputs negatively impacted our fourth quarter earnings.
Though turnover for the fourth quarter increased 292% to LKR 2.3
Bn, the gross profit fell 129% to a loss of LKR 14.0 Mn.
Other income which consists of our profitable lease hiring and other
sales and disposals stood at LKR 367.4 Mn, down 16% year on year.
Low interest rates and aggressive deleveraging of our balance sheet
helped lower interest expense to LKR 24 Mn, a 86% improvement over
2020/21. As of 31
st
March 2022, the company retains a very healthy
balance sheet with inventories of LKR 2.9 Bn and cash deposits of
LKR 2.0 Bn while interest bearing liabilities fell sharply to LKR 448.6
Mn from LKR 917.6 Mn a year earlier with LKR 2.1 Bn payable to the
principal Ashok Leyland India as interest free supplier credit.
The company was able to close a very challenging financial year with
a remarkable bottom line of LKR 342.98 Mn, a 7,513 % increase over
last year's net profit of LKR 4.51 Mn.
During the year, the company has upgraded plant and machinery
for the chassis assembly and commissioned a state of the art truck
and tipper bodybuilding plant equipped with the latest heavy
duty hydraulic presses, shot blast, primer, paint booth and other
machineries at the factory premises. This will significantly improve
the productivity and finishing quality of our products.
Corperate Social Responsibility
Lanka Ashok Leyland's investment in its training institute continued
unabated. As we continue to improve the academic oering, our
institute has now satisfied all the requirements to qualify and receive
the NVQ-5 level accreditation.
Lanka Ashok Leyland continued several of its ongoing CSR
partnership projects throughout the year. We continue to operate
and maintain Mobile Clinic buses in partnership with the Colombo
Friend-In-Need Society utilized to screen and deliver prosthetic limbs
to disabled people all over the island in interior areas.
THE CHIEF EXECUTIVE
OFFICER’S REVIEW
ANNUAL REPORT 2021 / 2022
10
THE CHIEF EXECUTIVE OFFICER’S REVIEW (Contd.)
The company continued to operate buses to transport cataract
surgery patients between NethSetha - Lions Vision for Sight Hospital
in Ratnapura and Colombo.
To support cancer patients during the lockdowns and travel
restrictions, a bus was gied to the Apeksha Cancer Hospital in
Maharagama to transport patients.
As the country is going through an economic crisis, Lanka Ashok
Leyland is planning to increase its social outreach eorts this year to
support and mitigate the hardships people face.
Going beyond the traditional social welfare partnerships and projects
we engage in, Lanka Ashok Leyland PLC has empowered all their
sta from senior management to factory worker to become change
makers with the backing of the company to support and upli the
communities they live in.
As a commitment, the company ensured a continuity of work for all
its suppliers, contractors and external support sta. During these
diicult periods, we continue to provide financial support to our
dealers across the country.
In light of rising food costs, the company sourced and supplied food
items within its factory premises at subsidized rates to anyone in the
community whilst we oer our generators aer working hours during
power cuts to provide lights and a space for students in the area to
study as and when required.
Given the fuel shortages we further extended assistance to our
customers by arranging supply of fuel for their vehicles and mobile
service to maintain their smooth operation.
As a matter of pride and commitment, Lanka Ashok Leyland
retained all its sta with increased perks to mitigate rising costs and
furthermore, provided new employment opportunities during the
year.
Outlook
Sri Lanka faces an unprecedented and complex challenge in the
coming years. The silver lining at this juncture is that there is a
collective awareness of the size and scope of the challenge ahead,
and an understanding of the eort, sacrifice and coordination that is
required to meet the challenge.
Sri Lanka's way forward lies in its ability to deliver a roadmap to
achieve macroeconomic stability that will boost confidence and
open up multilateral and bilateral sources of foreign exchange.
The government is expected to present a budget that will raise taxes,
cut infrastructure spending, and allocate more towards providing
relief to the vulnerable.
The probable case is that import restrictions will continue until
the foreign exchange crisis is resolved however it is possible that
restrictions will be relaxed as a precondition of the IMF. Regardless,
we will rely on our sizeable inventory position to meet demand over
the next year while remain confident in the performance of the other
business verticals such as lease hiring, aer-sales service, and spare
parts sales to generate suicient revenue.
While we expect great challenges over the next twelve months, we
remain confident that Sri Lanka will overcome the acute phase of
the crisis. The investments we have made and continue to make
at the factory for local assembly of chassis and bodies will further
consolidate our position as the market leader and we will be in the
best position to capitalize when the economy improves.
Our ability to deliver value has relied on the strength of our
relationships with our customers, suppliers, employees and
communities we serve. Our commitment to grow together with our
stakeholders will help maintain our market leadership position as
the country navigates the crisis.
Acknowledgements
I would like to thank the Chairman and Board of Directors for their
valuable guidance and support. I feel extremely privileged to lead
a management team, together with employees who have shown
unwavering commitment and dedication during the year. They have
not only risen to the challenge but gone above and beyond to support
the company, fellow employees and the broader community. I am
humbled to have such a professional team to work with and it gives
me great confidence in our ability to meet the challenges ahead.
We thank Ministry of Industries (Government of Sri Lanka) and Joint
Venture Partner Lanka Leyland Limited for the support and special
note of thanks to Ashok Leyland India for their invaluable support
and trust in providing interest free credit for the import of SKD
packs throughout the year. In a diicult period, Ashok Leyland came
forward in the true spirit of partnership and we all at Lanka Ashok
Leyland remain grateful. A special thanks to our shareholders for
their continued trust and confidence in the management. We hope
our performance this year has repaid your faith in us. We understand
that this crisis has aected everybody yet we continue to prove that
we are stronger when we work together in partnership.
To our bankers, auditors, suppliers, contractors, and well-wishers, a
big thank you for your faith in us.
Finally I would like to thank our customers whose trust in us
inspires and drives us to greater heights. We remain grateful for your
patronage and with your continued support, we are confident in
weathering the storm ahead and growing stronger together.
Umesh Gautam
Chief Executive Oicer
30
th
May 2022
ANNUAL REPORT 2021 / 2022
11
BOARD OF DIRECTORS
MR. A K S A JAYASENA
Chairman
Mr. Jayasena was appointed as the Non-Executive Non-Independent Chairman to the Board of Lanka
Ashok Leyland PLC on 29
th
January 2020 and he also serves as the Chairman of Lanka Leyland Limited.
Mr. Jayasena has served as the Director-Business Development at Susten Energy New York and prior to
that he was the Managing Director of Global Group of Companies in Sri Lanka and Singapore.
He has over 20 years' of experience in mobile telecommunication industry, high tech digital technology,
solar energy and security solutions.
Mr. Jayasena holds a Honorary Doctor rate from Holistic Medical Academy Chennai-India and Bachelor's
Degree from the University of Sabaragamuwa.
MR. D P KUMARAGE
Independent Director
Mr. Kumarage was appointed as a Non-Executive Independent Director to the Board of Lanka Ashok
Leyland PLC in July 2009.
Mr. Kumarage has over 40 years' experience in Banking and Finance industry. He is the former CEO of
People's Leasing & Finance PLC and also the Managing Director of many other subsidiary companies of
People's Leasing & Finance PLC. Prior to joining People's Leasing & Finance PLC Mr. Kumarage served as
the Deputy General Manager of People's Bank. He was the former chairman of the Leasing Association
of Sri Lanka and former Vise President of the Asian Leasing and Finance Association.
Mr. Kumarage holds a Postgraduate Diploma in Modern Banking and is a passed Finalist of the Chartered
Institute of Management Accountants, UK.
MR. N SUNDARARAJAN
Independent Director
Mr. Sundararajan was appointed in July 2009, as a Non-Executive Independent Director to the Board
of Lanka Ashok Leyland PLC. Mr. Sundararajan was formerly the Executive Director and Company
Secretary of Ashok Leyland, India.
He is currently also an Independent Director of CMIFPE Ltd, India, (Manufacturers of cold rolling mills,
etc. for steel plants).
He is a Commerce Graduate, Cost Accountant, and a Management Professional, with background in
Law also. He has over 41 years of fulltime industrial experience in varied industries such as iron & steel,
textiles, rubber, batteries, and transport, and has handled several international acquisitions, joint
ventures, etc. He has also been a Senior Assessor of Business Excellence, and has been a member of
several all-India Committees on General Insurance.
ANNUAL REPORT 2021 / 2022
12
BOARD OF DIRECTORS (Contd.)
MR. GOPAL MAHADEVAN
Non-Executive Director
Mr. Gopal Mahadevan was appointed as a Non-Executive Director to the Board of Lanka Ashok
Leyland PLC in September 2013. He is the whole time Director and Chief Financial Oicer of Ashok
Leyland Limited, India. Mr. Gopal also serves as a director of Gro Digital Platforms Limited.
Prior to Ashok Leyland, Mr. Gopal was working with Thermax Ltd, Pune, as Group CFO, where he
had a 7 year stint. Prior to Thermax, he was Group CFO of Amara Raja Batteries Ltd, an equal Joint
Venture with Johnson Controls Inc, USA, for over 5 years. During his career Gopal has worked in Sify,
Sanmar Group as well as in TTK Pharma.
Mr. Gopal Mahadevan is a Chartered Accountant and a Company Secretary with over 30 years'
experience in Finance function across a variety of industries. He was awarded The Best CFO (Capital
Goods & Engineering Industry) by the Institute of Chartered Accountants of India in 2011. He was
also awarded the best CFO in the year 2010 by YES Bank Business Today and in 2012 by CNBC TV18
respectively.
MR. D A ABEYAWARDENE
Independent Director
Mr. Abeyawardene was appointed as a Non-Executive Independent Director to the Board of Lanka
Ashok Leyland PLC in November 2016. He is the Proprietor of D A Abeyawardene Associates,
Chartered Accountants and is also a Partner at Hulangamuwa & Cooray, Chartered Accountants.
Mr. Abeyawardene is the Managing Director of Siyasee (Pvt) Limited and also a Director of Corporate
Strategic Solutions (Pvt) Limited.
Mr. Abeyawardene has over 50 years' of experience in Financial Management positions in several
disciplines including manufacturing, shipping, garment industry, government boards etc. He joined
Lanka Ashok Leyland PLC at the time of inception as the Finance Manager / secretary and held the
position of General Manager / Secretary till 1999.
Mr. Abeyawardene is a Fellow member of the institute of Chartered Accountants of Sri Lanka.
MR. W H C P S WIJESEKARA
Non-Executive Director
Mr. Wijesekara was appointed as a Non-Executive Non-Independent Director to the Board of Lanka
Ashok Leyland PLC on 29
th
January 2020 and he also serves as a Director of Lanka Leyland Limited.
Mr. Wijesekara has over 20 years of experience in holding managerial positions in multiple hotels
in Dubai and Maldives and also expertise in purchasing, supply chain management and logistics.
Further he has experience in handling Health and Safety aspects in the Hospitality industry.
ANNUAL REPORT 2021 / 2022
13
BOARD OF DIRECTORS (Contd.)
MR. AMANDEEP SINGH ARORA
Non-Executive Director (Appointed w.e.f 24
th
December 2021)
Mr. Amandeep Sigh Arora was appointed as a Non-Executive Director to the Board of Lanka Ashok
Leyland PLC on 24
th
December 2021. He is the Head of International Operations, Ashok Leyland
Limited and has overall responsibility of Ashok Leyland's Global Sales & Distribution business.
Mr. Amandeep commenced his career with Ashok Leyland in 1992 through campus placement as
management trainee and has worked with the company in various capacities across India.
Mr. Amandeep completed his MBA from Institute of Management Technology, Ghaziabad, post his
Masters in Operations and is a trained business professional from IIM Ahmedabad and Kellogg
School of Management, Chicago.
MR. NITIN SETH
Non-Executive Director (Resigned w.e.f 10
th
November 2021)
Mr. Nitin Seth was appointed as as Non-Executive Director to the Board of Lanka Ashok Leyland
PLC on 29
th
January 2020. He is the former Chief Operating Oicer of Ashok Leyland Limited, India.
Mr. Nitin Seth also served as a director of switch mobility Automative Limited.
Mr. Nitin Seth completed his Bachelors in Engineering from Birla Institute of Technology and
Science, Pilani and Post-Graduation in Business Management from University of Mumbai. He is a
recipient of Full bright - CII fellowship from Carnegie Mellon University, Pittsburg (USA) and has also
undergone leadership Training at the Harvard Business School, Wharton School in USA.
Mr. Nitin Seth has over 30 years of experience in the automotive industry in the realms of sales and
marketing in Domestic and International Markets & Product Development. Prior to joining Ashok
Leyland, he was the Head (Sales and Marketing) of Cars (Indica, Indigo & Nano) at Tata Motors
and has additionally held various key leadership positions. He was one of the key members in
launching the passenger car business at Tata Motors in 1999.
ANNUAL REPORT 2021 / 2022
14
MANAGEMENT DISCUSSION AND
ANALYSIS
Overview
Lanka Ashok Leyland PLC (LAL) was incorporated in 1982 as a joint
venture Company between Lanka Leyland Limited, a fully owned
Company of the Government of Sri Lanka and Ashok Leyland Limited,
India.
Lanka Ashok Leyland PLC operates in the Commercial Vehicle industry
and is primarily engaged in assemble and sale of buses and trucks.
As such, the business is primarily driven by the market dynamics of
the commercial vehicle industry. Currently the main business of the
Company includes assembling of chassis, build bodies and sale of
Ashok Leyland range of trucks and busses and import and sales of
spare parts and power generators. The Company also carries out
repairs and restoration of commercial vehicles.
LAL is managed by a Board comprised of seven non-executive
directors who has significant corporate acumen, skills, knowledge
and experience aided by astute and knowledgeable support from
senior management and external specialists. The Company has
established a governance structure that remains aligned to the
laws of the country and ensures compliance to various regulatory
mandates. The governance structure therefore includes committees
responsible for specific tasks and setting strategy and future direction
for the Company.
Our mission is to cultivate a flexible and productive workforce
centered on our customer's needs and requirements, capable of
quickly adapting and innovating transport solutions to become the
most trusted partner for mobility solutions in the Country.
In light of above, the Company makes all strategies focusing on
following key points;
Economic Overview
Sri Lanka has been suering from a dollar shortage with reserves
dropping to USD 2.2 Bn at the yearend 2022. The country is struggling
to pay for critical imports including fuel, food and medicines. Further,
the significant depreciation of the rupee following the rupee float is
contributing to inflation substantially.
On 8
th
of March, 2022 the government decided to float the rupee.
The rupee fell by 30% against the US dollar immediately aer it
was floated. The depreciation was possibly done to encourage
remittances by expatriates, a major source of foreign exchange in Sri
Lanka, which dropped to a 10-year low of USD 5.5 Bn in 2021 as a
result of the COVID-19 pandemic.
Sri Lanka's international reserves are inadequate to make the
country's upcoming external debt service payments. International
reserves are likely to remain inadequate, despite the authorities'
ongoing eorts to secure Forex financing from external sources.
Therefore, the government initiated seeking debt restructuring along
with an appropriate IMF program.
While Sri Lanka has to service external debts averaging USD 4 Bn a
year restrictions imposed on outflow of foreign exchange from the
country continues and importation of essential commodities are
permitted only with 90-180 days credit.
The Dollar shortage has brought in frequent disruptions to the
availability of fuel, gas, and food items and interruptions to the
supply of electricity due to the shortage of diesel. These impediments
have adversely aected businesses and all sectors of the economy.
Therefore, there will be downward pressure on the GDP growth rate
for 2022.
Free flotation of Rupee w.e.f. 08th March 2022 had depreciated the
rupee by 47% against the US dollar by the year end. The closing spot
rate recorded Rs.298.99 per US dollar on 31
st
March 2022.
Further more the War in Ukraine is creating the largest economic
shock world over aer the World War II. The impact on Sri Lanka
would be mainly through increase in oil, gas prices and adverse
impact on tourism and export earnings. Coupled with the ongoing
exchange crisis this geopolitical crisis could worsen the inflationary
and commodity supply situation in Sri Lanka.
Value Action
Giving our shareholders
the confidence and trust
that we will always do
what is best, thus ensuring
consistent growth in
shareholder value and
returns.
Responding to the restriction on
import of vehicles and focusing
on the encouragements on local
industries by the government, the
Company realigned its operational
strategy towards local assembly of
vehicles.
Create a knowledge
sharing culture where
our customers grow and
develop individually and
as a group.
The Company passes the knowledge
to our customers to get the best
out of our products by conducting
classroom and hands on training
to enhance the knowledge and the
experience of our products.
Make our planet healthy
and green by contributing
towards sustainable
development.
The Company launched ecofriendly
BS IV emission standard vehicles.
ANNUAL REPORT 2021 / 2022
15
MANAGEMENT DISCUSSION AND ANALYSIS (Contd.)
2020/21
Rs.
2021/22
Rs.
Revenue 2,973,106,405
6,860,962,989
Gross Profit
241,509,930
814,265,656
Other Income
435,406,681
367,472,452
EBITDA
330,112,524
565,681,039
Net Finance Cost
174,633,207
2,969,662
Profit Before Tax 19,075,722
448,648,262
Profit Aer Tax 4,505,303
342,975,015
Gross Profit Margin
During the year GP Margin has gone up by 3.8%. Considerable increase
in GP Margin is due to local assembly of chassis, manufacturing of
bodies, cabin equipment and other ancillary items.
Profitability
LAL maintained a sustainable profitability over the past years and was
successful in its eorts to exploit the same in 2021/22. Accordingly,
net profit increased by Rs. 338.47 Mn to Rs. 342.98 Mn in the year
under review compared to Rs. 4.51 Mn recorded in the previous year.
Interest Cost and Borrowings
Drop of imports and eicient cash flow management enabled the
Company to aggressively bring down the borrowings by 56% to Rs.
378.21 Mn as opposed to Rs. 863.72 Mn last year.
Financial Review
Revenue and Earnings
With the government encouragements on local manufacturing and
restrictions on imports, the Company restarted the local assembly
of semi-knocked-down (SKD) chassis and build bodies in Sri Lanka.
During the year the Company has recorded Rs. 6.8 Bn revenue which
is 131% increase compared to previous year. Commercial Vehicle
sales made up 92% of total turnover with the balance 8% attributable
to generator sales, repair income, spare parts sale, hiring income and
local agency commission.
Contributed by the local assembly of semi-knocked-down (SKD)
chassis and comparatively low performance during 2020/21 due to
pandemic, EBITDA of the Company increased by 71% compare to
previous year.
2020/21
2021/22
0%
10%
20%
Rs. Mn
Rs. Mn
0
0
200
500
400
2020/21
2020/21
2021/22
2021/22
Profit Before Tax
Profit Aer Tax
Rs. Mn
Rs. Mn
0
0
50
200
100
400
150
600
200
800
1,000
2020/21
2020/21
2021/22
2021/22
Finance Expense
Borrowings
Rs. Mn
2,000
4,000
6,000
8,000
2020/21 2021/22
Revenue
EBITBA
ANNUAL REPORT 2021 / 2022
16
MANAGEMENT DISCUSSION AND ANALYSIS (Contd.)
Leverage and Capital Structure
Total assets of the company have increased by 5.7% to Rs.7.64 Bn,
during the year largely due to increase short term investments.
Return on Assets for the year was 4.5% compared to 0.1%in the
previous year.
The total assets of the Company as at the period end, were funded by;
31.03.2021
Rs.
31.03.2022
Rs.
Current Assets
5,165,568,181 5,859,272,677
Current Liabilities 3,717,057,127 3,804,507,529
Working Capital 1,448,511,054 2,054,765,148
Working Capital/ Liquidity
Current Assets: Whilst the cash and cash equivalents record an
increase of Rs. 2.05 Bn, inventory dropped by Rs. 1.43 Bn resulting a
marginal increase in Current Assets.
Current Liabilities: Current liabilities recorded a marginal increase,
owing to increase in trade, related party and other payables which
was osetted by a decrease in short-term borrowings.
Value Created to Shareholders
LAL's value creation is formed on balanced approach towards all
stakeholders focusing on shareholder wealth maximization. The
Company was able to grow shareholder equity to at Rs. 3.69 Bn, a
Rs. 340.30 Mn increase from the previous year [2020/21: Rs. 3.36 Bn].
The contributors were profit aer tax of Rs. 342.98 Mn and other
comprehensive income of Rs. 3.26 Mn, which were partially oset by
dividend payment of Rs. 7.2 Mn during the year.
2020/21 2021/22 %
Change
Return On Equity (%) 0.1%
9.3% 9.2%
Return On Capital Employed (%) 4.6% 11.1% 6.5%
Net Asset Per Share (Rs.)
926.95
1,020.93 10%
Earnings Per Share (Rs.)
1.24
94.72 7,539%
Dividend Payout (%)
161%
11% (150%)
Price Earnings Ratio 674.49
7.50 (99%)
Dividend Per Share (Rs.) 10.00
2.00 400%
Rs. Mn
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
31.03.2021 31.03.2022
Current Assets
Current Liabilities
ANNUAL REPORT 2021 / 2022
17
MANAGEMENT DISCUSSION AND ANALYSIS (Contd.)
Key Challenges and Opportunities
Risks and challenges go hand-in hand in the business of running
an organization irrespective of whether the risk may be from
environmental problems, social discontent, political and social
unrest or even natural disasters. These can be costly, have negative
publicity, threaten operating frameworks and also prompt unforeseen
expenditure. Reputational damage too can far exceed the immediate
cost impacts.
While we seek to proactively reduce and manage these risks,
challenges have never been a deterrent for us; rather, they have
been a means of directing us towards opportunity and improving
business performance over time. These opportunities have driven
us to enhance business growth, while ensuring that we remain
within compliance benchmarks and at the same time ensuring that
our stakeholders are empowered and remain inclusive to our end
goal. Over the year, the challenges we faced eventually shown us
emerging opportunities such as restriction on importation of vehicles
encouraged us to react by investing in assembling of commercial
vehicles, which, is a strategic way forward to the Company.
Looking Forward
We are hopeful that Sri Lanka will be able to manage the
unprecedented and complex challenges in the coming years with a
collective understanding of the size and scope of the challenge and
delivering of a clear road map to achieve economic stability with the
help of domestic and international professional agencies.
The probable case is that import restrictions will continue until
the foreign exchange crisis is resolved, however it is possible that
restrictions could be relaxed as a precondition of IMF. Nevertheless,
we will rely on our sizable inventory position to meet demand over
the next year while remain confident in the performance of the other
business verticals such as hiring, aer sale services and spare part
sales.
Profit Aer Tax
Earnings Per Share
Net Asset Per Share
Dividend Per Share
2019/20
2019/20
2019/20
31.03.2020
2020/21
2020/21
2020/21
31.03.2021
2021/22
2021/22
2021/22
31.03.2022
0
0
200
50
850
0
5
10
15
900
950
1,000
1,050
400
100
Value
Created to
Share
Holders
Rs.
Rs.
Rs. Mn
Rs.
ANNUAL REPORT 2021 / 2022
18
ANNUAL REPORT OF THE BOARD OF
DIRECTORS ON THE AFFAIRS OF THE COMPANY
The Board of Directors is pleased to present the Thirty Ninth
Annual Report of your Company together with the audited Financial
Statements and the Auditor's Report for the financial year ended
31
st
March 2022 confirming to all relevant statutory and compliance
requirements.
The details set out herein provide the related information required by
the Companies Act, No. 07 of 2007, Colombo Stock Exchange Listing
Rules and are guided by recommended best practices.
The table of disclosures in pages 27 to 30 given under Corporate
Governance, list out the disclosures required by the Companies Act,
No. 07 of 2007 and the Listing Rules of the Colombo Stock Exchange.
PRINCIPAL ACTIVITIES AND STATE OF AFFAIRS OF THE COMPANY
The principal activities of the Company include import and assemble
of Semi-Knocked-Down (SKD) chassis and fabricate bodies, import
and marketing of Ashok Leyland range of vehicles, spare parts, power
generators and let vehicles on hire. The Company also carries out
repairs and restoration of commercial vehicles.
There was no significant change in the nature of principal activities of
the Company during the year under review that may have significant
impact on the state of aairs of the Company.
VISION, MISSION AND VALUE STATEMENT
The Company's vision and mission statements are available on page
01. The strategic directions are developed in line with the vision and
the employees are guided according to the mission and values of the
Company. The operations of the Company are conducted with the
highest level of ethical standards and integrity at all times.
REVIEW OF PERFORMANCE AND FUTURE DEVELOPMENTS
A review of performance of the year under review and the future
prospects including goals and strategies of the Company is contained
in the Chief Executive Oicer's Review and in the Management
Discussion and Analysis of the Company.
DIRECTORS' RESPONSIBILITY FOR FINANCIAL REPORTING
The Directors are responsible for the preparation and presentation
of the Financial Statements of the Company to giving a true and fair
view of the state of its aairs.
The Statement of Directors' Responsibility for Financial Reporting is
given on page 41 which forms an integral part of the Annual Report of
the Board of Directors.
DISCLOSURES
The Annual Report of the Company fulfils the disclosure requirements
of the Sri Lanka Accounting Standards (SLFRs / LKASs), Companies
Act, No. 07 of 2007 and the Listing Rules of the Colombo Stock
Exchange.
FINANCIAL STATEMENTS
The Financial Statements have been prepared in conformity with
the requirements of the Sri Lanka Accounting Standards (SLFRSs /
LKASs), Companies Act, No. 07 of 2007, and the Listing Rules of the
Colombo Stock Exchange.
The Statements of Profit or Loss and Other Comprehensive Income,
Financial Position, Cash Flows, Accounting Policies and Notes to the
Financial Statements are given on pages 46 to 97.
The aforementioned Financial Statements for the year ended 31
st
March 2022 signed on behalf of the Board by the Chairman, a Director,
Chief Executive Oicer and Chief Financial Oicer are given on page
47.
AUDITOR'S REPORT ON THE FINANCIAL STATEMENTS
M/s KPMG performed the statutory audit of the Financial Statements
and the Auditor's Report is given on pages 43 to 45.
SIGNIFICANT ACCOUNTING POLICIES
Preparation of the Financial Statements of the Company has been
consistent with the previous financial year. The significant accounting
policies adopted in the Financial Statements are given on pages 50 to
62 of this Annual Report.
2021/22
Rs.
2020/21
Rs.
Profit
Profit aer taxation
342,975,015
4,505,303
Other Comprehensive Income
3,256,308
809,845
Total Comprehensive Income
for the year
346,231,323
5,315,148
Profit brought forward from
previous year
2,419,620,055
2,431,362,944
Profit available for
appropriation
2,765,851,378
2,436,678,092
Appropriations
2,436,678,092
2,465,107,111
Appropriations
Unclaimed dividend Reversed 1,312,344 1,046,178
Dividend Paid for previous
year
(7,241,686)
(18,104,215)
Un-appropriated profit
carried forward
2,759,922,036
2,419,620,055
ANNUAL REPORT 2021 / 2022
19
ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF
THE COMPANY (Contd.)
DIVIDENDS
The Board of Directors have recommended payment of a first and
final dividend of Rs. 10.00 (100%) per share (2020/21- Rs. 2.00 per
share i.e. 20% on the paid-up value) for the year ended 31
st
March
2022.
The Directors confirmed that the Company satisfies the solvency test
requirement under Section 56 of the Companies Act, No. 07 of 2007
for the final dividend proposed. The Solvency certificates have been
obtained from the Auditors in respect of the final dividend proposed.
PUBLIC HOLDING AND THE MARKET VALUE OF SHARES
The last transaction prior to close of business on 31
st
March 2022, on
the trading floor of the Colombo Stock Exchange was at a price of Rs.
847 per share. (Corresponding price on 31
st
March 2021 was Rs. 879
per share)
The number of ordinary shares held by the public as at 31
st
March
2022 was 1,100,011 (31
st
March 2021 - 1,100,011) which represent
30.38% (31
st
March 2021 - 30.38%) of the issued Share Capital of the
Company.
RATIOS AND MARKET PRICE INFORMATION
Ratios relating to equity and debt and the market price information
are given on page 7 and 101 to 102 of this annual report.
STATED CAPITAL AND RESERVES
The Stated Capital of the Company as at 31
st
March 2022 amounted
to Rs. 49,375,150 (31
st
March 2021 - Rs. 49,375,150), details of Stated
Capital and Reserves are available in note 25 & 26 to the Financial
Statements.
There has been no change in the Stated Capital during the year.
Movements of the Reserves are shown in the Statement of Changes
in Equity in the Financial Statements.
SHARE INFORMATION
Information relating to distribution of shareholdings, market value,
public shareholding and top twenty shareholders are available on
pages 99 to 100.
PROPERTY, PLANT & EQUIPMENT, RIGHT-OF-USE ASSET AND
INTANGIBLE ASSETS
The net book value of Property, Plant & Equipment, Right-of-use
Asset and the Intangible Assets amounts to Rs. 693.59 Mn.
An analysis of the Company's Property, Plant & Equipment, Right-of-
use Asset and Intangible Assets are given in Note 15, 16 and 17 to the
Financial Statements.
MARKET VALUES OF THE PROPERTIES
The freehold land and buildings of the Company have been revalued
by independent qualified valuers. The most recent valuation was
conducted in 2021 and the values are disclosed under Note 15.1 to
the Financial Statements in page 68.
CAPITAL EXPENDITURE
The total Capital Expenditure incurred on the acquisition of Fixed
Assets and Intangible Assets during the year is given in Note 15, 16 &
17 to the Financial Statements.
BOARD OF DIRECTORS
The Board of Directors consisted of 7 members during the year. The
names of the Directors who held oice during the financial year are
given below. The profiles of directors appear on pages 11 to 13 and
their memberships on the Board committees of the Company are
given in page 24 of this annual report.
■ Mr. A K S A Jayasena - Chairman (Non-Executive)
■ Mr. D P Kumarage - Independent Director
(Non-Executive)
■ Mr. N Sundararajan - Independent Director
(Non-Executive)
■ Mr. Gopal Mahadevan - Director (Non-Executive)
■ Mr. D A Abeyawardene - Independent Director
(Non-Executive)
■ Mr. W H C P S Wijesekara - Director (Non-Executive)
■ Mr. Amandeep Singh Arora - Director (Non-Executive
Appointed w.e.f
24
th
December 2021)
■ Mr. Nitin Seth - Director (Non-Executive
Resigned w.e.f
10
th
November 2021)
NEW APPOINTMENTS AND RESIGNATION OF DIRECTORS DURING
THE YEAR
During the year Mr. Nitin Seth was resigned from the Board and Mr.
Amandeep Singh Arora was appointed to the Board.
RETIREMENT AND RE-ELECTION OF DIRECTORS
In terms of the Article 84 of the Article of Association of the Company,
Mr. Gopal Mahadevan retires by rotation and being eligible oers
himself for re-election.
The agenda for the Annual General Meeting includes two separate
ordinary resolutions to be taken up to re-elect Mr. D P Kumarage and
Mr. N Sundararajan as Directors, who are over the age of 70 years,
as Directors by passing a resolution; that the age limit stipulated in
Section 210 of the Companies Act, No. 07 of 2007 shall not apply to
Mr. D P Kumarage and Mr. N Sundararajan who are over the age of 70
years and that they be re-elected as Directors of the Company.
ANNUAL REPORT 2021 / 2022
20
ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF
THE COMPANY (Contd.)
DIRECTORS' INDEPENDENCE
The Board carried out its annual evaluation of the Independence
of Directors and accordingly Mr. D P Kumarage, Mr. N Sundararajan
and Mr. D A Abeyawardene were confirmed to be Independent as per
the provisions of the Listing Rules of the Colombo Stock Exchange.
Each of the Independent Directors complied with the independence
requirements under the Rules and has submitted signed declarations
to this eect.
The periods of service of Mr. D P Kumarage and Mr. N Sundararajan
as Board Members exceed nine years, the Board is of the view that
the periods of service of the aforesaid Independent Directors do
not compromise their independence and objectivity in discharging
their functions as Directors and, therefore, has determined that Mr.
D P Kumarage and Mr. N Sundararajan are 'Independent' as per the
Listing Rules.
Details of the Directors considered as Non-Independent Directors of
the Company are given in page 25 to the Annual Report.
DIRECTORS' MEETINGS
The Directors' meetings comprise Board meetings, Audit Committee
meetings, Remuneration Committee meetings, Nomination
Committee meetings and Related Party Transactions Review
Committee meetings. Details of number of Board and other
Committee meetings held during the year and the attendance of
Directors at these meetings are given on pages 24 to 26 of the Annual
Report.
DIRECTORS' AND CHIEF EXECUTIVE OFFICER'S SHAREHOLDING
None of the Directors or Chief Executive Oicer held Shares of the
Company during the year under review or during the last financial
year.
INTEREST REGISTER
The Company maintains an interest register in compliance with the
Companies Act, No. 07 of 2007. All Directors have made necessary
declarations in conformity with Section 192 (2) of the Companies Act.
The interest register is available for inspection by the shareholders.
PERTICULARS OF DIRECTORS INTERESTS IN CONTRACTS
The particulars of Directors interests in contracts and other related
party transactions are given in Note 34 to the Financial Statements.
The Directors have no other direct or indirect interest in contract/s or
a proposed contracts with the Company other than those disclosed
under Related Party Transactions.
DIRECTORS' REMUNERATION AND FEES
Details of Directors' emoluments are given in Note 10 to the Financial
Statements. All fees and remuneration have been duly approved by
the Board of Directors of the Company. The Directors have not taken
any loans from the Company during the year under review.
RELATED PARTY TRANSACTIONS
Related Party Transactions of the Company are reviewed by the
Related Party Transactions Review Committee and the Company is
compliant with the requirements of the listing rules of the Colombo
Stock Exchange on Related Party Transactions. During the year there
were no non-recurrent Related Party Transaction which exceeded
in value, the lower of 10% of equity or 5% of the total assets of the
Company and there was an instance that the aggregate value of
the recurrent Related Party Transactions exceeded 10% of the gross
Revenue of the Company. Accordingly, the Company has disclosed
the transactions that could be classified as Related Party Transactions
in terms of Sri Lanka Accounting Standard - LKAS 24, in Note 34 on
pages 84 to 89 to the Financial Statements.
BOARD COMMITTEES
The Board of Directors of the Company while assuming the overall
responsibility and accountability for the management of the
Company has formed the following Committees to ensure oversight
and control over the aairs of the Company conforming to corporate
governance code and best practices.
■ AUDIT COMMITTEE
Mr. D P Kumarage - Chairman
Mr. A K S A Jayasena
Mr. N Sundararajan
Mr. Gopal Mahadevan
Mr. D A Abeyawardene
■ REMUNERATION COMMITTEE
Mr. N Sundararajan - Chairman
Mr. D P Kumarage
Mr. D A Abeyawardene
Mr. W H C P S Wijesekara
Mr. Amandeep Singh Arora (Appointed w.e.f 30
th
May 2022)
Mr. Nitin Seth (Resigned w.e.f 10
th
November 2021)
■ NOMINATION COMMITTEE
Mr. N Sundararajan - Chairman
Mr. D P Kumarage
Mr. D A Abeyawardene
Mr. W H C P S Wijesekara
Mr. Amandeep Singh Arora (Appointed w.e.f 30
th
May 2022)
Mr. Nitin Seth (Resigned w.e.f 10
th
November 2021)
■ RELATED PARTY TRANSACTIONS REVIEW COMMITTEE
Mr. N Sundararajan - Chairman
Mr. A K S A Jayasena
Mr. D P Kumarage
Mr. Gopal Mahadevan
Mr. D A Abeyawardene
ANNUAL REPORT 2021 / 2022
21
RISK MANAGEMENT
The Board has established an adequate risk management and
internal control system. The risk exposure of the Company and a
detailed overview is given in the Risk Management Report on pages
37 to 40 of this annual report.
STATUTORY PAYMENTS
The Directors, to the best of their knowledge, are satisfied that
all statutory payments due to the Government, other regulatory
institutions and in relation to employees have been made up to date.
DONATIONS
There were no donations granted during the year under review
(2020/21 - Nil).
DECLARATION
The Directors declare that
■ Compliance with laws and regulations
To the best of their knowledge and belief the Board of Directors
confirms that the Company has complied with all applicable
laws, rules and regulations in the conduct of its operations and
has not engaged in any activity, which contravenes laws and
regulations of the country.
■ Directors' interests in contracts
The directors have declared all material interests in contracts
involving the Company and refrained from voting on matters in
which they were materially interested.
■ Equitable Treatment
The Company has made all endeavors to ensure that all
shareholders are treated equitably.
■ Going Concern
In determining the basis of preparing the Financial Statements for
the year ended 31
st
March 2022, based on available information,
the Company evaluated the resilience of its businesses
considering a wide range of factors relating to expected revenue
streams, cost management, profitability, ability to defer non-
essential capital expenditure, debt repayment schedules, cash
reserves and potential sources of financing facilities, and the
ability to continue providing goods and services to ensure that
the businesses continue as least impacted as possible.
Aer due consideration of the range and likelihood of outcomes,
the Directors are satisfied that the Company has adequate
resources to continue in operational existence for the foreseeable
future and continue to adopt the going concern basis in preparing
and presenting these Financial Statements.
The Directors also hereby confirm (as required in Section 57 (1)
(a) of Companies Act, No. 07 of 2007) that the Company is in a
position to pay its debts, as they become due in the normal
course of business.
■ Eectiveness of Internal Controls
The Board of Directors has conducted a review of the internal
controls covering financial, operational and compliance controls
and risk management, and have obtained reasonable assurance
of their eectiveness and proper adherence.
■ Corporate governance
The Board of Directors is committed to maintain an eective
corporate governance culture within the Company in compliance
with the Code of Best Practice on Corporate Governance issued
jointly by the Institute of Chartered Accountants of Sri Lanka and
the Securities and Exchange Commission of Sri Lanka. A detailed
report on corporate governance is provided on pages 23 to 30 of
this annual report.
EMPLOYMENT AND INDUSTRIAL RELATIONS
The Company continues to invest in human resource development
and eective HR practices to ensure achieving corporate goals. The
number of permanent employees as at 31
st
March 2022 was 239. (31
st
March 2021 - 177).
There were no material issues pertaining to employees or industrial
relations during the year.
ENVIRONMENTAL PROTECTION
The Company has made its best endeavors to comply with the
relevant environmental laws and regulations. The Company has
not engaged in any activity that is harmful or hazardous to the
environment and has taken steps that are necessary to safeguard the
environment from any pollution that could arise during the course of
the business of the Company.
CONTINGENT LIABILITIES AND OUTSTANDING LITIGATION
Details of contingent liabilities, litigations and claims are listed in
Notes 36 and 37 to the Financial Statements. These will not have any
material adverse impact on the financial results of the Company or
its future operations.
EVENTS OCCURRING AFTER THE REPORTING PERIOD
There were no material events that occurred aer the reporting
date that require adjustments to or disclosures in the Financial
Statements, except disclosure given in Note 38 to the Financial
Statements.
ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF
THE COMPANY (Contd.)
ANNUAL REPORT 2021 / 2022
22
INDEPENDENT AUDITORS' APPOINTMENT AND REMUNERATION
The Company's Independent External Auditors, M/s. KPMG, who
were re-appointed by a resolution passed at the last Annual General
Meeting audited the Financial Statements of the year under review,
oer themselves for reappointment.
A sum of Rs. 2,000,000/- (2020/21 - Rs. 1,700,000/-) in addition to
reimbursement of out of pocket expenses were payable at the year-
end as audit fees for the year under review. In addition, they were
paid Rs. 60,000/- (2020/21 - Rs. 60,000/-) and Rs. 275,000/- (2020/21 -
Rs. 200,000/-) by the Company for Audit Related work and non-audit
related work respectively.
As far as the Directors are aware, the Auditors do not have any
relationships (other than that of an auditor) with the Company
other than those disclosed above. The Auditors also do not have any
interest in the Company.
In accordance with the Companies Act, No. 07 of 2007, a resolution
related to the appointment of external auditors and to determine
their remuneration is being proposed at the forthcoming Annual
General Meeting to be held on 10
th
August 2022.
ANNUAL GENERAL MEETING
The thirty ninth Annual General Meeting will be held on 10
th
August
2022. The notice of Annual General Meeting is given on page 106 of
this annual report.
ACKNOWLEDGEMENT
The Directors wish to express their gratitude and appreciation
to the Government of Sri Lanka, bankers, financial institutions,
shareholders, valued customers, M/s Lanka Leyland Limited, and
M/s Ashok Leyland Limited - India, for their co-operation, valuable
guidance, assistance and the continued support.
The Directors also wish to thank all the employees for their
contribution, support and co-operation throughout the year.
By order of the Board
A K S A Jayasena D P Kumarage
Chairman Director
D A Abeyawardene
Director / Secretary
Colombo
30
th
May 2022
ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF
THE COMPANY (Contd.)
ANNUAL REPORT 2021 / 2022
23
CORPORATE GOVERNANCE
Lanka Ashok Leyland PLC is committed to maintain the highest
standards of corporate governance and this statement describes the
principles and practices followed by the Company in this regard.
This statement also describes how Lanka Ashok Leyland PLC has
applied the principles set out in the Corporate Governance Best
Practice Guidelines jointly issued by the Institute of Chartered
Accountants of Sri Lanka, and the Securities and Exchange
Commission of Sri Lanka (SEC), and the Listing rules (Section 7.6,
7.10 and Section 9) issued by Colombo Stock Exchange (CSE).
BOARD OF DIRECTORS
Board of Directors of Lanka Ashok Leyland PLC is collectively
responsible for the long term success of the Company. Its role
is essentially threefold - to provide leadership and set strategic
direction, to oversee management and ensure highest level of
ethical and legal standards and to ensure that the Company provides
its stakeholders with a balanced and understandable assessment of
the Company's current position and prospects.
The Board has delegated responsibilities to the Chief Executive
Oicer and to the team of Management of the Company. The main
areas where decisions remain with the Board include approval of the
annual strategy statement, the Financial Statements, annual budgets
(including capital expenditure), acquisitions and dividends. The
Board is also responsible for setting and monitoring the Company's
risk management policy.
On a broader level the Board has delegated some of its
responsibilities to its Committees. The composition and activities of
these Committees are detailed in their individual reports on pages
31 to 35. The Board reviews periodic updates presented by the
Chairmans of each of these Committees at the Board meetings.
The Board currently consists of seven Directors including the
Chairman. All the Directors are Non-Executive Directors and three of
them are Independent Directors. The composition of the Board and
brief profile of the Directors highlighting the range of expertise they
bring to the Board are set out on pages 24 and 11 to 13.
CORPORATE GOVERNANCE FRAMEWORK
ANNUAL REPORT 2021 / 2022
24
CORPORATE GOVERNANCE (Contd.)
The current members of the Board and their membership on the Board Committees of the Company are as follows;
Number of Board meetings held during the year and the attendance of Directors are furnished below;
Name of the Director
Category Board Committees as Chairman or Member
Executive Non -
Executive
Independent Non -
Independent
Audit
Committee
Remuneration
Committee
Nomination
Committee
Related- Party
Transactions
Review Committee
Mr. A K S A Jayasena
(Chairman)
-
-
Member - - Member
Mr. D P Kumarage -
-
Chairman
Member Member Member
Mr. N Sundararajan -
- Member Chairman Chairman Chairman
Mr. Gopal Mahadevan -
-
Member - - Member
Mr. D A Abeyawardene -
- Member Member Member Member
Mr. W H C P S Wijesekara -
-
- Member Member -
Mr. Amandeep Singh
Arora
-
-
- Member Member -
Name of the Director
Board Meetings
No. held No. attended
Mr. A K S A Jayasena - Chairman 4 4
Mr. D P Kumarage 4 4
Mr. N Sundararajan 4 4
Mr. Gopal Mahadevan 4 3
Mr. D A Abeyawardene 4 4
Mr. W H C P S Wijesekara 4 2
Mr. Amandeep Singh Arora (Appointed w.e.f 24
th
December 2021) 1 -
Mr. Nitin Seth (Resigned w.e.f. 10
th
November 2021) 3 2
NEW APPOINTMENTS AND RESIGNATION OF DIRECTORS
During the year Mr. Nitin Seth resigned from the Board and Mr. Amandeep Singh Arora was appointed to the Board.
Directors’ Age Diversity Directorship Tenure Diversity
40 - 50 50 - 60 >72 - 70 - 2>60
3
1
1
3
3
3
ANNUAL REPORT 2021 / 2022
25
CORPORATE GOVERNANCE (Contd.)
DIRECTORS' INDEPENDENCE REVIEW
The Board carried out its annual evaluation of the independence of
Directors and accordingly Mr. D P Kumarage, Mr. N Sundararajan and
Mr. D A Abeyawardene were confirmed to be independent as per the
provisions of the Listing Rules of the Colombo Stock Exchange. Each
of the Independent Directors complied with the independence re
-
quirements under the Rules and has submitted signed declarations
in this regard.
Following Directors are considered as Non-Independent Directors of
the Company;
AUDIT COMMITTEE
The Audit Committee is comprised of five Non-Executive Directors, of
whom three are Independent Directors.
The Chairman of the Audit Committee Mr. D P Kumarage, has vast
experience in Banking and Finance sector. The other members
of the Audit Committee have a blend of experience in business
management, accounting, and auditing and risk management.
The Board is of the view that the members of the Audit Committee
have the necessary and relevant accounting and related financial
management expertise and also adequate experience to discharge
the Committee's functions.
A separate report by the Chairman of the Audit Committee is given on
page 31 of the Annual Report.
Name Reason for Non-Independence
Mr. A K S A Jayasena Chairman of Lanka Leyland Limited, which
holds 41.77% of the total share capital of
Lanka Ashok Leyland PLC.
Mr. Gopal
Mahadevan
Whole time Director and also Chief
Financial Oicer of Ashok Leyland Limited,
India which holds 27.85% of the total share
capital of the Company and is also the
main supplier to Lanka Ashok Leyland PLC.
Mr. W H C P S
Wijesekara
Director of Lanka Leyland Limited, which
holds 41.77% of the total share capital of
Lanka Ashok Leyland PLC.
Mr. Amandeep
Singh Arora
Head of International Operations of Ashok
Leyland Limited, India which holds 27.85%
of the total share capital of the Company
and is also the main supplier to Lanka
Ashok Leyland PLC.
Table below gives the Committee composition and the attendance
of members at the meetings.
REMUNERATION COMMITTEE
The Remuneration Committee is comprised of five Non-Executive
Directors, three of whom are Independent Directors.
Remuneration Committee is responsible for developing policies
for executive remuneration, ensuring a formal and transparent
procedure for performance evaluation, and for fixing the
remuneration packages of Key Management Personnel.
Payments made to Directors and Key Management Personnel of the
Company are disclosed in Note 34.5 to the Financial Statements.
A separate Report by the Chairman of the Remuneration Committee
is given on page 32 of the Annual Report.
Below table gives the composition and attendance of the Committee
members at the meetings.
Name of the Director
Audit Committee Meetings
No. held No. attended
Mr. D P Kumarage (Chairman) 4 4
Mr. A K S A Jayasena 4 4
Mr. N Sundararajan 4 4
Mr. Gopal Mahadevan 4 3
Mr. D A Abeyawardene
4 4
Name of the Director
Remuneration Committee
Meetings
No. held No. attended
Mr. N Sundararajan (Chairman) 3 3
Mr. D P Kumarage 3 3
Mr. Gopal Mahadevan 2 2
Mr. D A Abeyawardene 3 3
Mr. W H C P S Wijesekara
3 2
Mr. Amandeep Singh Arora
(Appointed w.e.f 30
th
May 2022)
- -
Mr. Nitin Seth (Resigned w.e.f.10
th
November 2021)
2 1
ANNUAL REPORT 2021 / 2022
26
CORPORATE GOVERNANCE (Contd.)
NOMINATION COMMITTEE
The Nomination Committee is comprised of five Non-Executive
Directors, three of whom are Independent Directors.
The Nomination Committee is responsible for reviewing the structure
and composition of the Board and to make recommendations to the
Board on new Board appointments as per the Articles of Association
of the Company and also to ensure that the Board possesses the
correct mix of expertise for its eective functioning. Accordingly, the
Committee assesses the Board composition to ascertain whether
the combined knowledge, skills mix and experience of the Board
matches the strategic demands facing the Company.
A separate report by the Chairman of the Nomination Committee is
given on page 33 of the Annual Report.
Below table gives the composition and attendance of the Committee
members at the meetings.
INTERNAL AUDIT
The Internal Audit provides an independent risk based oversight
to the Audit Committee on the processes and controls within the
Company. M/s. Ernst & Young Consulting Services (Pvt) Limited,
Chartered Accountants, have been functioning as the internal
auditors to monitor and report on the adequacy of the Financial
and Operational Controls, and identifying areas for improvement.
They present their findings to the Management and the responses
and actions are noted. Thereaer, the highlights are presented to
the Audit Committee. Actions are decided based on the Committee's
advice and regular follow-up is done to close/resolve the identified
issues.
EXTERNAL AUDIT
M/s. KPMG, Chartered Accountants have been appointed by the
shareholders, as the external auditors, to review and express their
opinion on the true and fairness of the Annual Financial Statements
of the Company. They submit their report to the shareholders, for
consideration at the Annual General Meeting. Further they issue an
annual Management Letter to the Board, highlighting priority areas
for attention and improvement, and other significant observations,
if any. This Management Letter is also reviewed by the Audit
Committee and the actions are decided and implemented based on
the Committee's advice.
DISCLOSURES
The tables given below provide the details and disclosures on the
level of compliance with the requirements of the Companies Act,
No. 07 of 2007, Listing Rules of the Colombo Stock Exchange and
the code of best practices issued jointly by Institute of Chartered
Accountants of Sri Lanka and the Securities & Exchange Commission
of Sri Lanka.
RELATED PARTY TRANSACTIONS REVIEW COMMITTEE
The Related Party Transactions Review Committee is comprised
of five Non-Executive Directors, three of whom are Independent
Directors.
Related Party Transactions Review Committee is responsible for
reviewing the ongoing and proposed transactions with related
parties and assists the Board of Directors in laying down, reviewing
and overseeing policies and procedures relating to related party
transactions of the Company, the disclosures and filings to be made
by the Company periodically, and their implementation by the
Management, and also to identify and avoid conflicts of interests, if
any.
Name of the Director
Nomination Committee
Meetings
No. held No. attended
Mr. N Sundararajan (Chairman) 3 3
Mr. D P Kumarage 3 3
Mr. Gopal Mahadevan 2 2
Mr. D A Abeyawardene 3 3
Mr. W H C P S Wijesekara
3 2
Mr. Amandeep Singh Arora (Appointed
w.e.f 30t
h
May 2022)
- -
Mr. Nitin Seth (Resigned w.e.f.10
th
November 2021)
2 1
Name of the Director
Related Party Transactions
Review Committee Meetings
No. held No. attended
Mr. N Sundararajan (Chairman) 3 3
Mr. A K S A Jayasena 3 3
Mr. D P Kumarage 3 3
Mr. Gopal Mahadevan 3 3
Mr. D A Abeyawardene
3 3
A separate report by the Chairman of the Related Party Transactions
Review Committee is given on pages 34 to 35 of the Annual Report.
Below table gives the composition of the Committee and the
attendance at the meetings.
ANNUAL REPORT 2021 / 2022
27
CORPORATE GOVERNANCE (Contd.)
DISCLOSURE REQUIREMENTS UNDER THE COMPANIES ACT, NO. 07 OF 2007
Level of compliance with Section 168 of Companies Act, No. 07 of 2007, pertaining to Corporate Governance.
DISCLOSURES SPECIFIED BY SECTION 7.6 OF THE LISTING RULES OF THE COLOMBO STOCK EXCHANGE
Level of compliance with Section 7.6 of Listing Rules of the Colombo Stock Exchange;
Rule No. Disclosure Requirement
Reference to the
Annual Report
Section 168 (1) a Changes during the accounting period in the nature of the business of the Company. 18 / 50
Section 168 (1) b Financial Statements for the accounting period completed and signed in accordance with section
151.
46 - 97
Section 168 (1) c Auditor's report on the Financial Statements 43 - 45
Section 168 (1) d Change in accounting policies made during the accounting period. Not Applicable
Section 168 (1) e Particulars of entries in the interests register made during the accounting period. 20
Section 168 (1) f Remuneration and other benefits of directors during the accounting period 64
Section 168 (1) g Amount of donations made by the Company during the accounting period. 21
Section 168 (1) h Names of the persons holding oice as Directors of the Company as at the end of the accounting
period and the names of any persons who ceased to hold oice as Directors of the Company
during the accounting period.
19
Section 168 (1) i Amounts payable by the Company to the auditor of the Company as audit fees and as a separate
item, fees payable by the Company for other services provided by that firm.
22
Section 168 (1) j Particulars of any relationship (other than that of auditor) which the auditor has with or any
interests which the auditor has in, the Company.
22
Section 168 (1) k Sign the Annual Report on behalf of the Board by two Directors of the Company and the Secretary
of the Company.
18 - 22
Rule No. Disclosure Requirement
Reference to the
Annual Report
Rule 7.6 (i)
Names of persons who during the financial year were Directors of the Entity.
19
Rule 7.6 (ii)
Principal activities of the Entity during the year and any changes therein.
18 / 50
Rule 7.6 (iii) The names and the number of shares held by the 20 largest holders of shares and the percentage of such
shares held.
99
Rule 7.6 (iv) The float adjusted market capitalisation, public holding percentage (%), number of public shareholders
and under which option the Listed Entity complies with the Minimum Public Holding requirement.
100
Rule 7.6 (v) Directors' and Chief Executive Oicer's holding in shares of the Entity at the beginning and end of financial
year.
20
Rule 7.6 (vi) Information pertaining to material foreseeable risk factors of the Entity. 37 - 40
Rule 7.6 (vii) Details of material issues pertaining to employees and industrial relations of the Entity. 21
Rule 7.6 (viii) Extent, locations, valuations of land and buildings and investment properties. 68
Rule 7.6 (ix) Number of shares presenting the Entity's stated capital. 78
Rule 7.6 (x) Distribution schedule of the number of holders in each class of security, and the percentage of their holding
as per given categories
99
Rule 7.6 (xi) Ratios and market price information 7 / 100 / 102
Rule 7.6 (xii) Significant changes in the Entity's fixed assets and the market value of land if diers substantially from the
book value.
68 - 70
Rule 7.6 (xv) Disclosures pertaining to Corporate Governance practices in terms of Rules 7.10.3, 7.10.5 c and 7.10.6. c 28 - 29
Rule 7.6 (xvi) Details of Related party transactions as per the specified criteria. 84 - 89
ANNUAL REPORT 2021 / 2022
28
CORPORATE GOVERNANCE (Contd.)
DISCLOSURE REQUIREMENTS UNDER SECTION 7.10 OF THE LISTING RULES OF COLOMBO STOCK EXCHANGE (CSE) ON CORPORATE GOVERNANCE
Level of compliance with Section 7.10 of Listing Rules of the Colombo Stock Exchange, pertaining to Corporate Governance.
Rule No. Subject Applicable Requirement Details
Compliance
Status
7.10.1(a)
Non-Executive
Directors
At least two or one third of the Directors,
whichever is higher, should be Non-
Executive Directors.
All the Directors are Non- Executive Directors as
at 31
st
March 2022.
Complied
7.10.2(a)
Independent
Directors
Two or one-third of Non-Executive
Directors, whichever is higher, should be
independent.
Three out of Seven Non-Executive Directors are
independent as at 31
st
March 2022.
Complied
7.10.2(b) Independence
Declaration of
Directors
Each Non-Executive Director should
submit a declaration of Independence/
Non-Independence.
All Non-Executive Directors have submitted their
confirmation of independence as per the criteria
set by the CSE listing rules.
Complied
7.10.3(a) Disclosures
relating to
Directors
The names of Independent Directors
should be disclosed in the Annual report.
Refer page 24 to the Annual Report. Complied
7.10.3(b) Independence of
Directors
The Board shall make a determination
annually as to the Independence or Non-
Independence of each Non-Executive
Director.
The Board has determined that three (3) Non-
Executive Directors satisfy the criteria for
"Independence" set in the Listing Rules.
Complied
7.10.3(c) Disclosures
relating to
Directors
A brief resume of each Director should be
included in the Annual Report including
the Director's areas of expertise.
Board of Directors' resume is given in pages 11 to
13 to the Annual Report.
Complied
7.10.3(d) Appointment of
new Directors
A brief resume of new Directors appointed
to the Board to be provided to Colombo
Stock Exchange.
The Company has submitted the brief resume
of newly appointed director to Colombo Stock
Exchange.
Complied
7.10.5 Remuneration
Committee
A listed company shall have a
Remuneration Committee.
The Company has a Remuneration Committee.
Refer page 32 to the Annual Report.
Complied
7.10.5(a) Composition of
Remuneration
Committee
Shall comprise of Non-Executive
Directors, a majority of whom will be
Independent.
The Remuneration Committee comprised of five
(5) Non-Executive Directors out of which three (3)
are Independent.
Complied
7.10.5(b) Functions of the
Remuneration
Committee
The Remuneration Committee shall
recommend the remuneration of
the Executive Directors and the Chief
Executive Oicer.
The Company does not have Executive Directors;
the Committee recommends the remuneration
payable to Chief Executive Oicer and Senior
Executives.
Complied
7.10.5(c) Disclosure in the
Annual Report
relating to
Remuneration
Committee
The Annual Report should set out the
names of the Directors comprising the
Remuneration Committee, Statement of
Remuneration policy and the aggregate
remuneration paid to Executive and Non-
Executive Directors.
Names of Remuneration Committee members
are given in Corporate Governance on page 20.
The report of the Remuneration Committee is
given on page 32 and the remuneration paid to
Directors is given in the Note 10 to the Financial
Statement on page 64.
Complied
7.10.6 Audit Committee A listed company shall have an Audit
Committee.
The Company has an Audit Committee. Refer
page 31 to the Annual Report.
Complied
ANNUAL REPORT 2021 / 2022
29
CORPORATE GOVERNANCE (Contd.)
Rule No. Subject Applicable Requirement Details
Compliance
Status
7.10.6(a) Composition of
Audit Committee
Shall comprise of Non-Executive Directors,
a majority of whom will be independent.
The Audit Committee comprised of five (5) Non-
Executive Directors out of which three (3) are
Independent.
Complied
Shall appoint Non-Executive Director as a
Chairman to the Committee.
Composition of the Committee is given under
Corporate Governance Report on page 24 to the
Annual Report.
Complied
Chief Executive Oicer and the Chief
Financial Oicer should attend Audit
Committee Meetings.
The Chief Executive Oicer, Chief Financial
Oicer attend Audit Committee meetings by
invitation.
Complied
The Chairman of the Audit Committee or
one member should be a member of a
professional accounting body.
One member of the Audit Committee is a member
of The Institute of Chartered Accountants of Sri
Lanka and another is a member of The Institute
of Chartered Accountants of India.
Complied
7.10.6(b) Functions of Audit
Committee
Functions outlined in the Section 7.10.6
(b) of the Listing Rules.
Audit Committee functions are stated in the
Audit Committee Report on page 31.
Complied
7.10.6(c) Disclosure in the
Annual Report
relating to the
Audit Committee
The Annual Report should set out the
names of the Directors comprising
the Audit Committee, shall make a
determination of the independence of the
Auditors and disclose the basis for such
determination and Annual Report shall
contain a Report of the Audit Committee.
Refer the Audit Committee report on page 31 to
the Annual Report.
Complied
Level of compliance with the Code of Best practices on Related Party Transactions issued by the Securities & Exchange Commission of Sri Lanka
and the Section 9 of the Listing Rules of the Colombo Stock Exchange.
Rule No. Subject Applicable Requirement Details
Compliance
Status
9.2.1
Related Party Transactions
Review Committee (RPTRC)
Related Party Transactions should be
reviewed by the RPTRC.
Refer RPTRC Report on pages 34 to 35
to the Annual Report.
Complied
9.2.2
Composition of RPTRC Shall comprise a combination of Non-
Executive Directors and Independent
Non-Executive Directors. Chairman of the
committee should be Independent Non-
Executive Director.
The RPTRC comprised of five (5) Non-
Executive Directors out of which three
(3) are independent including the
Chairman of the Committee.
Complied
9.2.3 Involvement of Parent
Company's RPTRC
Parent Company's RPTRC may be
permitted to function as Parent
Company's RPTRC of the subsidiary.
Not Applicable. Not
Applicable
9.3.1 Immediate Disclosures
- Non Recurrent Related
Party Transactions
As outlined in the Section 9.3.1 of the
Listing Rules.
Company has not had any non-
recurrent Related Party Transactions
during the year under review, which
requires immediate announcement to
the Exchange. Refer RPTRC report on
Pages 34 to 35 to the Annual Report.
Not
Applicable
ANNUAL REPORT 2021 / 2022
30
CORPORATE GOVERNANCE (Contd.)
Rule No. Subject Applicable Requirement Details
Compliance
Status
9.3.2(a) Disclosure -Non recurrent
Related Party Transactions
Disclosure of Non recurrent Related Party
Transactions, if aggregate value of the
Non-recurrent Related Party Transactions
exceeds 10% of the equity or 5% of the
total assets, whichever is lower, of the
listed entity as per the latest Audited
Financial Statements.
Company has not had any non-
recurrent Related Party Transactions
during the year under review with
aggregate value exceeding 10% of
the equity or 5% of the Total assets,
whichever is lower. Hence, no
disclosure is required. Refer RPTRC
report on Pages 34 to 35 to the Annual
Report.
Not
Applicable
9.3.2(b) Disclosure -Recurrent
Related Party Transactions
Disclosure of recurrent Related Party
Transactions, if the aggregate value of
the recurrent Related Party Transactions
exceeds 10% of the Gross Revenue/
Income as per the latest Audited Financial
Statements.
During the year, there was an
instance where aggregate recurrent
Related Party Transactions value
exceeded the threshold of 10% of
Gross Revenue. Accordingly, required
Disclosure has been made in note
34.1 to the Financial Statements.
Complied
9.3.2(c) Report by the RPTRC Committee report shall include; Names
of Committee members, statement that
Committee has reviewed the RPTs and
communicated observations to the
Board, policies and procedures adopted
in reviewing RPTs and number of times
Committee met during the year.
Refer pages 34 to 35 for the Related
Party Transactions Review Committee
report.
Complied
9.3.2(d) A declaration by the Board
of Directors in the Annual
Report.
This should be an airmative statement
of the compliance and full disclosure of
Related Party Transactions or a negative
statement in the event the entity does not
have Related Party Transactions.
Refer page 20 of the Annual Report of
the Board of Directors.
Complied
ETHICAL STANDARDS
The Board is committed to maintain highest ethical standards in conducting its business and to communicate its values to its employees and
dealers, and always strive to ensure their conduct is based on such values.
COMPLIANCE
The Board places significant emphasis on strong internal compliance procedures. The Financial Statements of the Company are prepared in
strict compliance with the guidelines of the Sri Lanka Accounting Standards and other statutory regulations. Interim Financial Statements are
published quarterly in line with the Listing Rules of the Colombo Stock Exchange through which all significant developments are reported to
shareholders. The Board of Directors, to the best of their knowledge and belief, are satisfied that all statutory payments have been made up to
date.
By order of the Board
D A Abeyawardene
Director / Secretary
Colombo
30
th
May 2022
ANNUAL REPORT 2021 / 2022
31
AUDIT COMMITTEE REPORT
The Audit Committee was constituted by the Board of Directors in
accordance with the Best Corporate Governance Practices and the
requirements of the Colombo Stock Exchange. The membership of
the Committee during the financial year 2021/22 comprised of the
following Non-Executive Directors;
■ Mr. D P Kumarage - Chairman Non-Executive
Independent Director
■ Mr. A K S A Jayasena - Member Non-Executive Director
■ Mr. N Sundararajan - Member Non-Executive
Independent Director
■ Mr. Gopal Mahadevan - Member Non-Executive Director
■ Mr. D A Abeyawardene - Member Non-Executive
Independent Director
The members have a well-balanced blend of experience in the
Finance, Legal, Commercial, Corporate Governance and Audit sector.
Chairman of the Audit Committee Mr. D P Kumarage has extensive
experience in Banking and Finance sectors.
Brief profile of each member is provided on pages 11 to 13 of this
annual report.
The Company Secretary acts as the Secretary to the Committee.
ROLE OF THE AUDIT COMMITTEE
The Audit Committee, with its main objective being to assist the
Board of Directors in carrying out their responsibilities, is responsible
for;
■ Ensuring that the internal control system in place is adequate
and properly implemented.
■ Ensuring that a sound financial reporting system is in place in
compliance with Sri Lanka Accounting Standards,
■ Ensuring that the Company complies with the applicable laws
and regulations and
■ Ensuring that the Company's management reporting system
is eicient enough to give accurate, appropriate and timely
information regarding the present and foreseeable financial
governance, risks and compliance requirements.
MEETINGS
The Audit Committee met four times during the year ended 31
st
March 2022 and the attendance details are given in page 25 as part of
the Corporate Governance report.
The meetings were attended by the Chief Executive Oicer and Chief
Financial Oicer of the Company by invitation. The proceedings of
the Audit Committee are regularly reported to the Board.
INTERNAL AUDIT
Internal audit function is outsourced to M/s Ernst & Young Consulting
Services (Pvt) Limited. Audit Committee meets the internal auditors
on a quarterly basis and reviews their findings in order to identify the
eectiveness of the internal controls and risks attached to dierent
areas of operation. Follow-up reports on the previous observations
are also reviewed by the Committee and the internal auditor's
reports are made available to the external auditors as well. The key
risks associated with the business is given in the Risk Management
Report in pages 37 to 40 of this annual report.
STATUTORY AUDIT
M/s KPMG, Chartered Accountants were appointed as the statutory
auditors and the Audit Committee reviewed their independence and
objectivity. Audit Committee also reviewed the observations and
recommendations on the Management Letter issued by the statutory
auditors.
The statutory auditors have given a declaration as required by
section 163 (3) of the Companies Act, No. 07 of 2007, that they do not
have any interest or relationship with the Company, which may have
a bearing on the independence of their role as auditors.
The Committee reviewed the non-audit services and its impact on
the independence of the External Auditors and recommended to the
Board that M/s. KPMG be re-appointed as the Independent External
Auditor and also the re-appointment be included in the agenda
of the Annual General Meeting, for securing the approval of the
shareholders.
FINANCIAL REPORTS
By giving due consideration to audit findings, quarterly and annual
financial reports are reviewed by the Audit Committee prior to their
publication, with the objective of ensuring the accuracy, compliance
with the standards and other regulatory requirements and the ability
to continue as a going concern.
CONCLUSION
The Audit Committee is of the opinion that adequate internal
controls and procedures are in place in the Company to provide
reasonable assurance that its assets are safeguarded, and to ensure
that the financial position and the results disclosed in the Audited
Financial Statements are free from material misstatements.
D P Kumarage
Chairman - Audit Committee
Colombo
30
th
May 2022
ANNUAL REPORT 2021 / 2022
32
REMUNERATION COMMITTEE REPORT
COMPOSITION OF THE COMMITTEE
The Remuneration Committee consists of following Non-executive
Directors of the Board.
■ Mr. N Sundararajan - Chairman Non-Executive
Independent Director
■ Mr. D P Kumarage - Member Non-Executive
Independent Director
■ Mr. D A Abayawardene - Member Non-Executive
Independent Director
■ Mr. W H C P S Wijesekara - Member Non-Executive Director
■ Mr. Amandeep Singh Arora - Member Non-Executive Director
(Appointed w.e.f
30
th
May 2022)
■ Mr. Nitin Seth - Member Non-Executive Director
(Resigned w.e.f
10
th
November 2021)
Brief profile of each member is given on pages 11 to 13 to this annual
report.
The Company Secretary acts as the Secretary to the Committee.
Chief Executive Oicer of the Company assists the Remuneration
Committee by providing market survey data and Key Result Area
reports except on occasions where conflict of interest arises.
SCOPE OF THE REMUNERATION COMMITTEE
The scope of the Committee is to give recommendations to the Board
for deciding compensation of the Chief Executive Oicer and the
Senior Executives of the Company. The Committee also reviews the
policy pertaining to the perquisites of the employees and propose
guidelines and parameters for periodic revisions of compensations
of all other employees.
REMUNERATION POLICY
The Remuneration Policy aims to attract and retain a highly qualified
and experienced workforce, and reward performance accordingly,
taking into account the industry norms. These compensation
packages are commensurate with each employee's level of expertise
and contribution, bearing in mind business performance and
shareholder returns.
The Remuneration package includes basic salary, travelling allowance
or transport facility, fixed monthly allowances, performance based
monthly incentives and healthcare insurance.
The Committee meets from time to time to review and assure
alignment of the Company's compensation structure, human
resource requirements with the strategic decisions taken by the
Board and compensation oered by competitors.
DIRECTORS' EMOLUMENTS
All Independent Directors receive a fixed honorarium per month
plus a fee for attending Board meetings and for serving on Board
Committees. Details of Directors' emoluments are disclosed in Note
10 on pages 64 of this annual report.
MEETINGS
The Committee held three meetings during the year under review
and the attendance details are given on page 25 as part of the
Corporate Governance Report.
N Sundararajan
Chairman - Remuneration Committee
Chennai
30
th
May 2022
ANNUAL REPORT 2021 / 2022
33
NOMINATION COMMITTEE REPORT
COMPOSITION OF THE COMMITTEE
The Nomination Committee consists of the following Non-executive
Directors of the Board;
■ Mr. N Sundararajan - Chairman Non-Executive
Independent Director
■ Mr. D P Kumarage - Member Non-Executive
Independent Director
■ Mr. D A Abayawardene - Member Non-Executive
Independent Director
■ Mr. W H C P S Wijesekara - Member Non-Executive Director
■ Mr. Amandeep Singh Arora - Member Non-Executive Director
(Appointed w.e.f
30
th
May 2022))
■ Mr. Nitin Seth - Member Non-Executive Director
(Resigned w.e.f
10
th
November 2021)
Brief profile of each member is given on pages 11 to 13 of this annual
report.
The Company Secretary acts as the Secretary to the Committee.
PURPOSE OF THE COMMITTEE
The Committee is established to review the structure and composition
of the Board and to make recommendations to the Board on all
new Board appointments to ensure that the Board possesses the
correct mix of expertise for its eective functioning. The Committee
assesses the Board composition to ascertain whether the combined
knowledge, skills mix and experience of the Board matches the
strategic requirements of the Company.
TERMS OF REFERENCE AND KEY ACTIVITIES
The terms of reference of the Nomination Committee include the
following;
■ To review (as and when necessary) the structure, size,
composition and competencies (including the skills, knowledge
and the experience) of the Board and make recommendations to
the Board regarding required changes.
■ To identify and recommend suitable person(s) for appointments
to the Board as Director(s), based on the nominations by the
Promoter shareholders and also the provisions of Articles of
Association of the Company. As per the Promoters' Joint Venture
Agreement, Government of Sri Lanka and Ashok Leyland Limited
have the right to nominate Directors to the Board, and the
Committee accepts such Promoters' choice of Directors.
■ To advise the Board on selection and appointment of Chairman
of the Committees of the Board.
■ To consider and recommend (or not recommend) the re-
appointment of current Directors, taking into account the statutory
requirements and provide advice and recommendations to the
Board on any such appointment.
■ To look into and make recommendations on any other matters
referred to it by the Board of Directors.
CONCLUSION
The Committee is satisfied that the combined knowledge and
experience of the Board matches the requirements and demands
faced by the Company.
MEETINGS
The Committee held three meetings during the year under review
and the attendance details are given on page 26 as part of the
Corporate Governance Report.
N Sundararajan
Chairman - Nomination Committee
Chennai
30
th
May 2022
ANNUAL REPORT 2021 / 2022
34
RELATED PARTY TRANSACTIONS REVIEW
COMMITTEE REPORT
The Committee assists the Board in establishing and reviewing
policies and procedures related to Related Party transactions and
helps to ensure avoidance of conflict of interest. Further, it monitors
whether the management is making appropriate disclosures in
compliance with the Listing Rules of Colombo Stock Exchange and
Code of Best Practices on Related Party Transactions issued by the
Securities and Exchange Commission.
COMPOSITION OF THE COMMITTEE
The Committee consists of five Non-Executive Directors of whom
three are Independent in compliance with the Listing Rule No 9.2.2
of the Colombo Stock Exchange.
The Related Party Transactions Review Committee consists of the
following Non-executive Directors of the Board;
■ Mr. N Sundararajan - Chairman Non-Executive
Independent Director
■ Mr. A K S A Jayasena - Member Non-Executive Director
■ Mr. D P Kumarage - Member Non-Executive
Independent Director
■ Mr. Gopal Mahadevan - Member Non-Executive Director
■ Mr. D A Abeyawardene - Member Non-Executive
Independent Director
Brief profile of each member is provided on pages 11 to13 of this
annual report.
The Company Secretary acts as the Secretary to the Committee.
SCOPE OF THE COMMITTEE
Related Party Transactions Review Committee has been mandated,
to ensure compliance with the Code of Best Practices on Related
Party Transactions issued by the Securities Exchange Commission
of Sri Lanka (the Code), and to facilitate the disclosures as required
under LKAS 24.
■ The Committee reviews the ongoing and proposed Related
Party transactions, (other than those transactions explicitly
exempted in conformity with the Code), which are not of an
ongoing or recurrent nature; and in cases where the Related
Party transactions are of an on-going or recurrent nature, the
Committee establishes guidelines for the senior management to
follow.
■ The Committee normally reviews and updates the Board of
Directors once in every quarter about its review and findings on
the Related Party Transactions.
■ Where applicable, the Committee has laid down guidelines
for the Management to make immediate market disclosure on
applicable Related Party Transactions as required by Section 9 of
the continuing Listing requirements of Colombo Stock Exchange.
The Committee is responsible for making appropriate disclosure on
Related Party Transactions in the Annual Report to the shareholders,
as required by Section 9 of the continuing Listing requirements of
Colombo Stock Exchange.
POLICIES AND PROCEDURES
The Promoters (Lanka Leyland Limited and Ashok Leyland Limited,
India) of the Company and the parties related to Lanka Leyland
Limited and Ashok Leyland Limited, India are directly identified as the
Related Parties of the Company. Information related to the related
parties of the Promoters are periodically obtained and updated in
the database of the Company and are used in identifying, tabulation
and evaluating the transactions between them and the Company.
The members of the Board of Directors of the Company and the
Chief Executive Oicer have been identified as the Key Management
Personnel. Periodic declarations are obtained from the Key
Management Personnel of the Company to identify the parties, if
any, related to them who may have had any transactions relevant
for this purpose.
The Company uses data from the declarations and the data retrieved
from the ERP system to ensure compliance.
MEETINGS OF THE COMMITTEE
The Committee held three meetings during the year under review
and the attendance details of the members is given in page 26 as
part of the Corporate Governance Report.
Findings and recommendations of the Committee were reported to
the Board of Directors, soon aer the meetings of the Committee. The
Board reviewed the findings and has accepted the recommendations
for implementation by the Management and also expressed
satisfaction regarding disclosures.
ANNUAL REPORT 2021 / 2022
35
RELATED PARTY TRANSACTIONS REVIEW
COMMITTEE REPORT (Contd.)
RELATED PARTY TRANSACTIONS DURING THE YEAR 2021/22
Related Party Transactions of the Company are reviewed by the
Related Party Transactions Review Committee and the Company
is in compliance with the requirements of the listing rules of the
Colombo Stock Exchange on Related Party Transactions. During the
year there were no non-recurrent Related Party Transactions which
exceeded in value, the lower of 10% of equity or 5% of the total assets
of the Company and there was an instance where the aggregate
value of the recurrent Related Party Transactions exceeded 10% of
the Gross Revenue of the Company. Accordingly, the Company has
disclosed the transactions that could be classified as Related Party
Transactions in terms of the Sri Lanka Accounting Standard - LKAS
24, in Note 34 on pages 84 to 89 to Financial Statements.
Since most of the purchase and sales transactions of the Company
were with related Parties, the focus was on proper documentation
and disclosure. Government of Sri Lanka, and its associated
organizations have always been the major customers and hence,
extension of credit and accommodating delays in payments were
inevitable, as would happen with any major customer. Therefore, the
significant overdue outstanding from Government of Sri Lanka is to
be understood in the above context, and in the overall context of the
country's economy and the political pandemic situations. However,
the management has expressed their confidence to the Committee
on the recoverability of the dues from Government of Sri Lanka;
meanwhile, the delay and the consequents interest costs are being
reckoned with as part of business operations.
DECLARATION
A declaration by the Board of Directors in the Annual Report as an
airmative statement to the eect that related party transaction
falling within the ambit of the rule 9.3.2 of Listing Rules of the
Colombo Stock Exchange was entered into by the Company during
the year, is given in the Annual Report of the Board of Directors
on page 20. All related party transactions that could be classified
as related party transactions in terms of LKAS 24 -'Related Party
Disclosures', are given in Note 34 to the Financial Statements.
N Sundararajan
Chairman - Related Party Transactions Review Committee
Chennai
30
th
May 2022
ANNUAL REPORT 2021 / 2022
36
DIRECTORS' STATEMENT ON INTERNAL
CONTROLS
Directors' Statement on Internal Controls
Section D.1.5 & D.2.4 of the 'Code of Best Practice on Corporate
Governance 2017' (The Code) issued jointly by the Securities and
Exchange Commission and the Institute of Chartered Accountants
of Sri Lanka recommends that the Board of Directors present a
Statement on Internal Controls in the Annual Report.
Responsibility
The Board of Directors is responsible for formulating and
implementing a sound system of internal controls and for periodically
reviewing its eectiveness and integrity in terms of mitigating any
risks associated and also to ensure sound system of Internal Controls
to safeguard shareholders' investment and Company's assets while
confirming eective system of Internal Controls over financial
reporting.
The Board identifies significant risks on an ongoing basis and takes
necessary steps for implementation of appropriate procedures to
evaluate and manage the identified risks.
Key Internal Control Processes
The Management assists the Board in the implementation of
Board's policies and procedures pertaining to internal controls
over financial reporting by identifying and assessing the risks faced,
and in the design, operation and monitoring suitable internal
controls. In assessing the internal control system, identified oicers
of the Company continued to review and update all procedures
and controls that are connected with significant accounts and
disclosures of the Financial Statements of the Company. The internal
audit function of the Company continued to verify the suitability of
design and eectiveness of these procedures and controls on an
ongoing basis.
The Audit Committee of the Company reviews internal control issues
identified by the outsourced internal audit function, regulatory
authorities and management and evaluates the adequacy and
eectiveness of the internal control systems.
The recommendations made by the external auditors in connection
with the internal control system in previous years were reviewed and
followed up during the year and appropriate steps have been taken
to implement them.
Confirmation
Based on the above processes, the Board confirms that the financial
reporting system of the Company has been designed to provide a
reasonable assurance regarding the reliability of financial reporting
and preparation of Financial Statements for external purposes and
has been done in accordance with Sri Lanka Accounting Standards
(SLFRS / LKAS) and regulatory requirements.
By order of the Board
D P Kumarage
Chairman - Audit Committee
D A Abeyawardene
Director / Secretary
Colombo
30
th
May 2022
ANNUAL REPORT 2021 / 2022
37
MANAGEMENT OF RISK
OVERVIEW
The Company believes that successful and proactive risk
management initiatives can minimize the likelihood and the impact
of risks, though it is not possible to completely avoid risks, as risk is
an integral part of any business and risk and returns goes hand in
hand while doing business. Risk Management is a continuous and
developing process which runs throughout the Company's strategic
initiatives and the implementations, to maintain a balance between
the risks of uncertainty and change necessary to grab opportunities.
A successful approach towards Risk Management results in
compliance, assurance and better-informed decision-making which
will help the Company in improving the eectiveness of strategy and
eiciency of operations.
Lanka Ashok Leyland responded to those new challenges by
redesigning our strategies in line with the risk appetite and risk
tolerance frame work of the Company.
RISK GOVERNANCE AND OVERSIGHT
The Board being primarily responsible for the overall Risk
Management of the Company, approves the strategy and policies
for eective Risk Management which is converted to action in the
manner outlined in the following framework.
The Board has delegated its responsibility to the Audit Committee to
oversee the system of Risk Management, compliance and controls
to mitigate risks. The Company has appointed an independent
professional organization, as internal Auditors who provide in-depth
reports to the Audit Committee. The Audit Committee reviews the
internal audit reports and assesses the eectiveness of laid down
control process, suggested requirements, mitigation plans and gives
directions to the management.
The Senior Management of the Company is responsible for
implementing the Risk Management directives given by the Audit
Committee and for the establishment of appropriate systems to
ensure that enterprise risks are identified, measured, monitored, and
controlled eectively.
RISK MANAGEMENT PROCESS
Control Environment, Risk Assessment, Control Activities,
Communication and Monitoring establish the foundation for the
sound internal control system within the Company. The various risks
faced by the Company are identified and assessed routinely at all
levels and within all functions in the Company. Control activities and
other mechanisms are proactively designed to address and mitigate
the significant risks. Information critical to identifying risks and
meeting business objectives is communicated through established
channels up, down and across the Company. The entire system of
internal control is monitored continuously and possible weaknesses
are addressed timely. Accordingly, the Risk Management Framework
of the Company is presented below.
Risk Management Framework
IMPLEMENTATION
CONTROL
ENVIRONMENT
COMFORT &
ASSURANCE
REVIEW & FEEDBACK
INTERNAL AUDIT
STATUTORY AUDIT
CONTROL ACTIVITIES
RISK ASSESSMENT
RISK APPETITE
RISK
IDENTIFICATION
RISK EVALUATION
RISK RESPONSE STRATEGY
BOARD OF
DIRECTORS
AUDIT
COMMITTEE
MANAGEMENT
COMMITTEE
OPERATIONAL
LEVEL MANAGERS AND
EMPLOYESS
ANNUAL REPORT 2021 / 2022
38
MANAGEMENT OF RISK (Contd.)
Risk Assessment
Risk assessment starts with management discussions, event
analysis, internal audit reports and other internal and external
communications for risk identification and continues to assess the
impact and finally proceeds to risk response. Risk assessment is all
about measuring and prioritizing risks so that risk levels are managed
within defined tolerance thresholds without being over controlled or
foregoing desirable opportunities.
Control Environment
The control environment of Lanka Ashok Leyland PLC is headed by
the Board of Directors, assisted by an Audit Committee with well-
balanced blend of experience, and the management committee.
The Board with the assistance of the Audit committee, sets the
necessary guidelines at the top to ensure an eective control
environment ensuring continuous monitoring and improvements.
The Management Committee implements the control objectives and
gives necessary feedback to both the Audit Committee and to the
operational level managers.
Control Activities
Control activities established through policies and procedures are
performed at all levels of the company at various stages within
business processes, and over the technological environment. They
may be preventive or detective in nature. Segregation of duties
is typically built into the selection and development of control
activities. Where segregation of duties is not practical, management
selects and develops alternative control activities.
Management Committee is responsible for eectively implementing
internal control system in accordance with the policies set by the
Board of Directors based on the recommendations of the Audit
Committee and the Internal and External Auditors.
Communication and Monitoring
Learning through experience, opinions from professionals such as
internal auditors, external auditors and other internal and external
stakeholders are given due importance by the Audit Committee in
monitoring and reviewing the risks. The Audit Committee, which
has the ultimate responsibility of monitoring the process of risk
management, reviews the risks and action plans on a quarterly basis
and makes recommendations to the Board.
The following diagram summarizes the key risks that could be most relevant to the Company's business.
Economical & Political
Environment
Competition &
Customer Demand
Market
Operation
Financial Compliance
Technology and Quality
People
Inventory
Fraud
Health & Safety
Legal and Regulatory
Exchange Rate
Liquidity and C
Interest Rate
Credit
RISKS
ANNUAL REPORT 2021 / 2022
39
MANAGEMENT OF RISK (Contd.)
RISK MANAGEMENT ACTIONS
The table below sets out the categories of risks, along with specific risk elements Lanka Ashok Leyland PLC is exposed to and the potential
implications of the same as well as the risk management initiatives in placed.
Market Risk
Risk Potential Impact Treatment/s
Economical & Political
Environment.
Negative impact on the Company due to
changes in the economic and political
environment.
Economic and political variables / potential fluctuations
are continuously monitored and evaluated as part of the
Company's "strategy and objectives".
Competition and Customer
Demand
Decline in market share, new rivals and
industry over-capacity in a high growth
competitive environment.
The Company maintains long and well established relationships
with major transport operators in the industry as well as with
individual clients.
Launching of new products with latest technology and designs
which attract existing and potential customers while focusing
on continuous improvements.
Financial Risk
Risk Potential Impact
Treatment/s
Exchange Rate Possibility of Exchange rate fluctuations,
and its eects on Company operations
and profitability.
Sri Lankan Rupee witnessed a sharp depreciation against
the US Dollar in March 2022 as a result of ongoing currency
crisis in the Country and on the back of economic turmoil in
global, regional and local markets resulting from the COVID-19
pandemic.
The Company carefully and actively monitored the situation,
since the beginning of the year and took proactive mitigation
measures as well as necessary policy decisions on pricing and
supply chain management etc.
Credit Risk of financial loss to the Company as a
result of customers not settling their dues.
Strict implementation and continuous monitoring of the credit
policy.
Strict follow-up of outstanding on ongoing basis.
Interest Rate Possibility of an adverse impact on cost of
funds and profitability.
Regular monitoring of interest rate fluctuations to enable
necessary back-up plans to mitigate the risk.
Ensuring that the import loans are settled within a shortest
possible period by improving the working capital cycle and
negotiating best possible rates with the banks.
Liquidity and Cash Flow Possibility of risk that the Company
encounters diiculty in meeting the
obligations associated with its Financial
Liabilities that are settled by delivering
Cash or another Financial Asset.
Ensuring that the Company always have suicient liquidity to
meet its liabilities by forecasting the cash flows.
Strong working capital management and periodic reviews to
ensure cash flow alignment.
ANNUAL REPORT 2021 / 2022
40
MANAGEMENT OF RISK (Contd.)
Compliance Risk
Risk Potential Impact
Treatment/s
Legal and Regulatory Regulatory risk arises when the Company
does not comply with regulatory
requirements which are subject to
change from time to time.
The Management reviews changes in regulations and assesses the
business impact of such changes.
A compliance statement is presented to every Board Meeting.
Company oicials closely work with Regulators to ensure that
regulatory requirements are fully understood and complied with.
Seek professional advice from external consultants such as legal, and
tax consultants as and when needed.
Operational Risk
Risk Potential Impact
Treatment/s
Technology and Quality Possibility of products or processes being
outdated or obsolete due to advanced
technology.
Keep pace with current technological developments in the industry.
Upgrade knowledge of technical sta through trainings and seminars.
Ensure strong supplier and customer relationship to understand
customers' changing requirements and suppliers' new developments.
People Impact on business competitiveness due
to diiculties in attracting, developing and
retaining employees with the appropriate
skills, experience and aptitude.
Recruitment of high caliber sta, establishing of eective
communication lines and developing the Company's culture to foster
good employer employee relationships.
Regular training programs are carried out in order to infuse
motivation, commitment and empowerment among the sta.
Inventory Risk of carrying inventory that is not
saleable.
Maintain optimum levels in all possible categories of inventory.
Taking in to consideration of the supply chain barriers faced by Sri
Lankan economy due to ongoing forex restrictions.
Ensure required quality standards are met at all stages of inventory to
maintain quality until the product is delivered.
Fraud The risk that the internal control
weaknesses leading to corruption and
employees abusing entrusted power
for private gain and in turn leading to
misappropriation of assets or fraudulent
financial reports.
Conduct periodic internal audits by an independent firm of Chartered
Accountants.
Formation of an Audit Committee which reviews internal audit
reports and other financial and non-financial reports on a quarterly
basis.
Establishment of stringent procedures and internal control measures
and their continuous improvement.
ANNUAL REPORT 2021 / 2022
41
THE STATEMENT OF DIRECTORS'
RESPONSIBILITIES
Directors' responsibility in relation to the preparation and
presentation of the Financial Statements is set out in the following
statement. Responsibility of the auditors in relation to the Financial
Statements is set out in the report of the auditors.
The Financial Statements comprise of:
■ Statement of Financial Position, which presents a true and fair
view of the state of aairs of the Company as at the end of the
financial year;
■ Statement of Profit or Loss and Other Comprehensive Income of
the Company which presents a true and fair view of the profit or
loss of the Company for the financial year;
■ Statement of Changes in Equity depicting all changes in
shareholders' funds of the Company during the year under review;
■ Statement of Cash Flows providing the information to the users,
on the generation of cash and cash equivalents and the utilization
of those cash flows, during the year under review, and
■ Notes to the Financial Statements comprising accounting policies
and other explanatory information.
The Companies Act, No. 07 of 2007 requires the Directors to prepare
and present Financial Statements for each financial year giving
a true and fair view of the state of aairs of the Company as at the
end of the financial year and the profit or loss of the Company for
the financial year. The Directors are required to confirm that the
Financial Statements have been;
■ prepared using appropriate accounting policies which have
been selected and applied in a consistent manner, and material
departures, if any, have been disclosed and explained; and
■ presented in accordance with the Sri Lanka Accounting Standards;
and
■ prepared with reasonable and prudent judgments and estimates
so that the form and substance of transactions are properly
reflected; and
■ prepared to provide the information required by, and otherwise
comply with, the Companies Act, No. 07 of 2007 and the Listing
Rules of the Colombo Stock Exchange.
The Directors are also required to ensure that the Company has
adequate resources to continue in operation to justify applying the
going concern basis in preparing the Financial Statements.
Further, the Directors have the responsibility to ensure that the
Company maintains suicient accounting records to disclose, with
reasonable accuracy, the financial position of the Company.
The Directors are also responsible for taking reasonable steps
to safeguard the assets of the Company and in this regard to give
proper consideration to the establishment of appropriate internal
control systems with a view to prevent and detect frauds and other
irregularities.
The Directors are required to prepare the Financial Statements and
to provide the auditors with every opportunity to take whatever
steps and undertake whatever inspections that may be considered
appropriate to enable them to give their audit opinion. Further, as
required by Section 56 (2) of the Companies Act, No. 07 of 2007, the
Board of Directors have confirmed that the Company, based on the
information available, satisfies the solvency test immediately aer
the distribution, in accordance with Section 57 of the Companies
Act, No. 07 of 2007, and have obtained a certificate from the auditors,
prior to recommending a dividend of Rs. 10 per share as the first and
final dividend for the financial year ended 31
st
March 2022.
The Directors are of the view that they have discharged their
responsibilities as set out in this Statement.
COMPLIANCE REPORT
The Directors confirm that to the best of their knowledge, all taxes,
duties and levies payable by the Company, all contributions, levies
and taxes payable on behalf of and in respect of the employees of
the Company and all other known statutory dues as were due and
payable by the Company, as at the reporting date had been paid, or
where relevant, provided for.
By order of the Board
D A Abeyawardene
Director / Secretary
Colombo
30
th
May 2022
FINANCIAL CALENDAR 2021/2022
2021/22 2020/21
Annual Report 20
th
July 2022 27
th
August 2021
Annual General Meeting to be held / held 10
th
August 2022 17
th
September 2021
Final Dividend to be Declared / Declared 10
th
August 2022 17
th
September 2021
Final Dividend to be Paid / Paid 01
st
September 2022 11
th
October 2021
SUBMISSION OF INTERIM FINANCIAL STATEMENTS IN TERMS OF THE RULE 7.4 OF THE
COLOMBO STOCK EXCHANGE
2021/22 2020/21
01
st
Quarter Report 29
th
July 2021 14
th
August 2020
02
nd
Quarter Report 09
th
November 2021 13
th
November 2020
03
rd
Quarter Report 08
th
February 2022 15
th
February 2021
04
th
Quarter Report 30
th
May 2022 31
st
May 2021
ANNUAL REPORT 2021 / 2022
42
ANNUAL REPORT 2021 / 2022
43
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Lanka Ashok Leyland PLC
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Lanka Ashok Leyland
PLC ("the Company"), which comprise the statement of financial
position as at 31
st
March 2022, and the statement of profit or loss and
other comprehensive income, statement of changes in equity and
statements of cash flows for the year then ended, and notes to the
financial statements, including a summary of significant accounting
policies set out on pages 46 to 97 of this annual report.
In our opinion, the accompanying financial statements give a true
and fair view of the financial position of the Company as at 31
st
March
2022, and of its financial performance and its cash flows for the year
then ended in accordance with Sri Lanka Accounting Standards.
Basis for Opinion
We conducted our audit in accordance with Sri Lanka Auditing
Standards (SLAuSs). Our responsibilities under those standards are
further described in the Auditor's Responsibilities for the Audit of the
Financial Statements section of our report. We are independent of
the Company in accordance with the Code of Ethics issued by CA
Sri Lanka (Code of Ethics) and we have fulfilled our other ethical
responsibilities in accordance with the Code of Ethics. We believe that
the audit evidence we have obtained is suicient and appropriate to
provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period. These matters were addressed in
the context of our audit of the financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
1. Carrying Value of Inventories
Refer to significant accounting policies in Note 3.9 and explanatory
note in Note 21 of the financial statements. The Company
held inventories which comprised several dierent vehicles,
generators and spare parts with an aggregate carrying value of Rs.
2,952,421,165 as at 31
st
March 2022.
Changes in economic sentiment or consumer preferences,
demands and the introduction of newer models with the latest
design and technologies could result in inventories in hand no
longer being sought aer or being sold at a discount below their
cost. Estimating the future demand and the related selling prices
of vehicles, generators and spare parts are inherently subjective
and uncertain because it involves management estimating the
extent of markdown of selling prices necessary to sell the older
or slow-moving models in the period subsequent to the reporting
date. We identified valuation of inventories as key audit matter
because of the significant judgment exercised by management in
determining appropriate carrying value in inventories.
Our audit procedures included;
■ Evaluating whether the inventory provisions at the end of the
reporting period were determined in a manner consistent with
the Company's inventory provision policy by recalculating
the inventory provisions based on the percentages and other
parameters in the Company's inventory provision policy.
■ Assessing, on a sample basis, whether items in the inventory
ageing report were classified within the appropriate ageing
category by comparing individual items with the underlying
documentation which included purchase invoices and goods
receipt notes.
■ Enquiring of management about any expected changes in
plans for markdowns or disposals of slow moving or obsolete
inventories and comparing their representations with
actual transactions subsequent to the reporting date and
assumptions adopted in determining the inventory provisions;
ANNUAL REPORT 2021 / 2022
44
INDEPENDENT AUDITOR’S REPORT (Contd.)
■ Comparing, on a sample basis, the carrying value of
inventories with sales prices subsequent to the end of the
reporting period.
■ Attending inventory counts as at the year end to ensure the
existence and condition of the inventories as at the reporting
date.
2. Recoverability of Rental and Trade Receivables
Refer to significant accounting policies in Note 3.4.1 and
explanatory notes in Notes 19 & 22 (Rental receivable from trade
debtors & Trade and other receivables) of the financial statements.
The carrying value of Rentals receivable from Trade Debtors
amounted to Rs. 1,379,801,988 and Trade receivables amounted
to Rs 132,575,453 as at 31
st
March 2022.
Assessing the allowance for impairment of Rental and Trade
Receivables remains one of the most significant judgments made
by management particularly in light of the uncertain economic
outlook in Sri Lanka due to the continuing impact of Global
COVID 19 outbreak. We identified assessing the recoverability of
trade debtors as a key audit matter because of the significance
of trade debtors to the financial statements as a whole and the
assessment of the recoverability of trade debtors is inherently
subjective and requires significant management judgment in
accordance with SLFRS 09, which increases the risk of error or
potential management bias.
As described in note 3.4, management provisioning methodology
is based on an Expected Credit Loss (ECL) model as required under
SLFRS 9 "Financial Instruments".
Our audit procedures included;
■ Obtaining an understanding of and assessing the design and
implementation of management's key internal controls relating
to credit control, debt collections and making allowances for
doubtful debtors.
■ Reviewing the appropriateness of the provisioning
methodology used by management in determining the
impairment allowances against the requirements of SLFRS 09.
■ Recomputing management's estimation of the impairment
allowance determined based on the expected credit loss
method.
■ Obtaining an understanding of the key parameters and
assumptions of the expected credit loss model adopted
by the management, including historical default data and
management's estimated loss rates.
■ Assessing the reasonableness of management's loss allowance
estimate by examining the information used by management
to form such judgements, including testing the accuracy of the
historical default data and evaluating whether the historical
loss rates are appropriately adjusted based on current
economic conditions and forward looking information.
■ Challenging management's assumptions for the expected
cashflows and the timing of the expected cashflows in the
scenario-based probability weighted impairment assessment
of individually significant customers.
■ Assessing, on a sample basis, whether items in the debtors
ageing report were classified within the appropriate ageing
category by comparing individual items in the report with the
underlying documentation such as sales invoices.
■ Requesting for confirmations from major debtors and/or
verifying subsequent settlements as an alternative procedure.
Other Information
Management is responsible for the other information. The other
information comprises the information included in the annual
report, but does not include the financial statements and our
auditor's report thereon.
Our opinion on the financial statements does not cover the other
information and we will not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information identified above when
it becomes available and, in doing so, consider whether the other
information is materially inconsistent with the financial statements
or our knowledge obtained in the audit, or otherwise appears to
be materially misstated. If, based on the work we have performed,
we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to
report in this regard.
Responsibilities of Management and Those Charged with
Governance for the Financial Statements
Management is responsible for the preparation of financial
statements that give a true and fair view in accordance with Sri Lanka
Accounting Standards, and for such internal control as management
determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due
to fraud or error.
ANNUAL REPORT 2021 / 2022
45
INDEPENDENT AUDITOR’S REPORT (Contd.)
In preparing the financial statements, management is responsible
for assessing the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless management either
intends to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.
Those charged with governance are responsible for overseeing the
Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor's report
that includes our opinion. Reasonable assurance is a high level
of assurance, but is not a guarantee that an audit conducted in
accordance with SLAuSs will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
As part of an audit in accordance with SLAuSs, we exercise
professional judgment and maintain professional skepticism
throughout the audit. We also:
■ Identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain
audit evidence that is suicient and appropriate to provide a basis
for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
■ Obtain an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the eectiveness of the Company's internal control.
■ Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures
made by management.
■ Conclude on the appropriateness of management's use of the
going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt
on the Company's ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to
draw attention in our auditor's report to the related disclosures
in the financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor's report. However,
future events or conditions may cause the Company to cease to
continue as a going concern.
■ Evaluate the overall presentation, structure and content of the
financial statements, including the disclosures, and whether the
financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement
that we have complied with ethical requirements in accordance with
the Code of Ethics regarding independence, and to communicate
with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with those charge with governance,
we determine those matters that were most significance in the audit
of the financial statements of the current period and therefore
the key audit matters. We describe these matters In our auditor's
report unless law or regulation precludes public disclosure bout the
matter or when, in extremely rare circumstances, we determine that
a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably by expected to
outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
As required by section 163 (2) of the Companies Act No. 07 of 2007,
we have obtained all the information and explanations that were
required for the audit and, as far as appears from our examination,
proper accounting records have been kept by the Company.
CA Sri Lanka membership number of the engagement partner
responsible for signing this independent auditor's report is 1798.
Chartered Accountants
Colombo, Sri Lanka
30
th
May 2022
ANNUAL REPORT 2021 / 2022
46
STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
For the Year Ended 31
st
March
2022 2021
Note Rs. Rs.
Revenue 5 6,860,962,989 2,973,106,405
Cost of Sales (6,046,697,333) (2,731,596,475)
Gross Profit
814,265,656 241,509,930
Other Income 6 367,472,452 435,406,681
Selling and Distribution Expenses 7 (27,844,602) (32,473,676)
Administrative Expenses (467,084,284) (391,395,182)
Impairment (Charge) / Reversal of Trade Receivables 8 (146,571,496) 3,329,318
Other Operating Expenses (88,619,802) (62,668,142)
Profit from Operations
451,617,924 193,708,929
Finance Income 21,059,478 2,962,884
Finance Cost
(24,029,140) (177,596,091)
Net Finance Cost
9 (2,969,662) (174,633,207)
Profit Before Tax
10 448,648,262 19,075,722
Income Tax Expense 11 (105,673,247) (14,570,419)
Profit for the Year
342,975,015 4,505,303
Other Comprehensive Income
Items that will Never be Reclassified to Profit or Loss
Remeasurement of Employee Benefits - Actuarial Gain 27.2 4,121,909 1,065,586
Deferred Tax Charge on Defined Benefit Plan 11.3 (865,601) (255,741)
Total Other Comprehensive Income, net of Tax 3,256,308 809,845
Total Comprehensive Income for the Year 346,231,323 5,315,148
Basic and Diluted Earnings Per Share 12 94.72 1.24
Adjusted Earnings Before Interest, Tax, Depreciation and Amortization (Adjusted EBITDA)
14 565,681,039 330,112,524
The Notes annexed form an integral part of these Financial Statements.
Figures in brackets indicate deductions.
ANNUAL REPORT 2021 / 2022
47
STATEMENT OF FINANCIAL POSITION
As at 31
st
March
2022 2021
Note Rs. Rs.
ASSETS
Non Current Assets
Property, Plant & Equipment 15 647,642,072 508,332,209
Right-of-use Asset 16 42,894,834 56,084,899
Intangible Assets 17 3,054,331 6,392,148
Financial Investments 18 11,550,475 11,558,103
Rental Receivable from Trade Debtors 19.1 864,856,471 1,300,605,035
Deferred Tax Asset 20 213,558,928 184,233,458
Total Non Current Assets 1,783,557,111 2,067,205,852
Current Assets
Inventories 21 2,952,421,165 4,386,035,693
Trade and Other Receivables 22 217,401,901 189,270,423
Rental Receivable from Trade Debtors 19.2 514,945,517 429,188,058
Deposits and Prepayments 23 107,435,055 143,795,703
Cash & Cash Equivalents 24.1 2,067,069,039 17,278,304
Total Current Assets 5,859,272,677 5,165,568,181
Total Assets 7,642,829,788 7,232,774,033
EQUITY & LIABILITIES
Equity
Stated Capital 25 49,375,150 49,375,150
General Reserve 26 887,347,500 887,347,500
Retained Earnings 2,759,922,036 2,419,620,055
Equity attributable to Owners of the Company 3,696,644,686 3,356,342,705
Non Current Liabilities
Employee Benefits 27 96,937,072 96,116,809
Lease Liability 28.1 44,740,501 63,257,392
Total Non Current Liabilities
141,677,573 159,374,201
Current Liabilities
Trade and Other Payables 29 1,143,611,311 936,046,921
Amount due to Related Party 30 2,146,013,053 1,826,684,846
Current Tax Liabilities 31 39,528,436 16,842,337
Provision for Warranty 32 3,479,532 651,835
Short-Term Borrowings 33 378,205,767 863,724,158
Lease Liability 28.1 23,232,000 19,172,790
Bank Overdras 24.2 70,437,430 53,934,240
Total Current Liabilities
3,804,507,529 3,717,057,127
Total Liabilities 3,946,185,102 3,876,431,328
Total Equity & Liabilities
7,642,829,788 7,232,774,033
Net Assets per Share
1,020.93 926.95
The Notes annexed form an integral part of these Financial Statements.
It is certified that the Financial Statements have been prepared and presented in compliance with the requirements of the Companies Act, No 07 of 2007.
A R T Ranasinghe U Gautam
Chief Financial Oicer Chief Executive Oicer
The Board of Directors is responsible for the preparation and presentation of these Financial Statements.
Approved and signed for and on behalf of the Board of Directors of Lanka Ashok Leyland PLC;
A K S A Jayasena D A Abeyawardene
Chairman Director
Colombo, 30
th
May 2022
ANNUAL REPORT 2021 / 2022
48
STATEMENT OF CHANGES IN EQUITY
Stated General Retained Total
Capital Reserves Earnings Equity
Rs. Rs. Rs. Rs.
Balance as at 01
st
April 2020 49,375,150 887,347,500 2,431,362,944 3,368,085,594
Total Comprehensive Income
Profit for the year - - 4,505,303 4,505,303
Other Comprehensive Income for the year - - 809,845 809,845
Total Comprehensive Income - - 5,315,148 5,315,148
Transactions with Owners of the Company
Contribution / Distribution
Unclaimed Dividend Reversed - - 1,046,178 1,046,178
Dividend - - (18,104,215) (18,104,215)
Total Transactions with Owners of the Company - - (17,058,037) (17,058,037)
Balance as at 31
st
March 2021 49,375,150 887,347,500 2,419,620,055 3,356,342,705
Balance as at 01
st
April 2021 49,375,150 887,347,500 2,419,620,055 3,356,342,705
Total Comprehensive Income
Profit for the year - - 342,975,015 342,975,015
Other Comprehensive Income for the year - - 3,256,308 3,256,308
Total Comprehensive Income - - 346,231,323 346,231,323
Transactions with Owners of the Company
Contribution / Distribution
Unclaimed Dividend Reversed - - 1,312,344 1,312,344
Dividend - - (7,241,686) (7,241,686)
Total Transactions with Owners of the Company - - (5,929,342) (5,929,342)
Balance as at 31
st
March 2022 49,375,150 887,347,500 2,759,922,036 3,696,644,686
The Notes annexed form an integral part of these Financial Statements.
Figures in brackets indicate deductions.
ANNUAL REPORT 2021 / 2022
49
STATEMENT OF CASH FLOWS
For the Year Ended 31
st
March 2022 2021
Note Rs. Rs.
Cash flows from Operating Activities
Profit Before Tax 448,648,262 19,075,722
Adjustment For :
Depreciation of Property, Plant and Equipment 10 97,535,233 117,518,042
Depreciation of Right of Use Assets 10 13,190,065 15,547,736
Amortization of Intangible Assets 10 3,337,817 3,337,817
Provision for Employee Benefits 27.1 9,438,039 13,982,157
Impairment Provision / (Reversal) of Trade & Other Receivables 8 146,571,496 (3,329,318)
Charge for Provision for Inventory 10 171,132,955 143,666,639
Finance Costs 24,023,115 177,596,091
Interest Income 9.1 (15,719,713) (1,779,657)
Lease Interest Income 6 (336,923,951) (407,986,130)
Gain on Sale of Property, Plant and Equipment 6 (4,007,019) (5,779,656)
Charge/ (Reversal) of Provision for Free Service 10 4,150,600 (189,838)
Charge / (Reversal) of Warranty Provision 10 2,827,697 (2,008,524)
Fair Value Loss / (Gain) on Equity Investments 9 6,025 (69,441)
Reversal of Provision for Tax Assessment 10 - (39,943,946)
115,562,359 10,561,972
Operating Profit before Working Capital Changes 564,210,621 29,637,694
Working Capital Changes in
Inventories 1,201,011,322 (341,265,162)
Trade and Other Receivables 34,313,696 (10,505,025)
Amounts due from Related Party 177,335,083 436,880,867
Trade and Other Payables 204,726,134 478,677,046
Amounts due to Related Party 319,328,207 1,745,170,053
1,936,714,442 2,308,957,779
Cash Generated from Operations
2,500,925,063 2,338,595,473
Interest Paid (19,308,006) (169,469,366)
Employee Benefits Paid 27 (4,495,867) (8,292,837)
Tax Paid 31 (113,178,219) (14,831,327)
(136,982,092) (192,593,530)
Net Cash Generated from Operating Activities 2,363,942,971 2,146,001,943
Cash flows from Investing Activities
Interest Received 352,645,267 409,767,181
Proceeds from Sale of Property, Plant and Equipment 8,201,712 18,675,185
Acquisition of Property, Plant and Equipment 15.5 (179,569,538) (24,782,287)
Net Cash Flows Generated from Investing Activities 181,277,441 403,660,079
Cash Flows from Financing Activities
Short Term Loans obtained during the year 33.1 2,002,630,837 551,240,493
Short Term Loans repaid during the year 33.1 (2,488,149,228) (3,048,177,191)
Payment for Lease Liability (19,172,790) (23,090,498)
Dividend Paid (7,241,686) (18,104,215)
Net Cash Flows Used in Financing Activities (511,932,867) (2,538,131,411)
Net Decrease in Cash & Cash Equivalents 2,033,287,545 11,530,611
Net Cash & Cash Equivalents at the beginning of the year (36,655,936) (48,186,547)
Net Cash & Cash Equivalents at the end of the year 24 1,996,631,609 (36,655,936)
Analysis of Cash & Cash Equivalents at the end of the year
Cash & Cash Equivalents 24.1 2,067,069,039 17,278,304
Bank Overdras 24.2 (70,437,430) (53,934,240)
1,996,631,609 (36,655,936)
The Notes annexed form an integral part of these Financial Statements.
Figures in brackets indicate deductions.
ANNUAL REPORT 2021 / 2022
50
NOTES TO THE FINANCIAL STATEMENTS
1. REPORTING ENTITY
1.1 Domicile & Legal Form
Lanka Ashok Leyland PLC ("the Company") is a Quoted Public
Limited Liability Company incorporated and domiciled in
Sri Lanka under the provision of Companies Act, No. 17 of
1982 and re-registered under the New Companies Act, No.
07 of 2007. The registered oice of the Company is located at
Panagoda, Homagama.
1.2 Principal Activities and Nature of Operations
The Company is involved in import and assemble of Semi-
Knocked-Down (SKD) chassis and fabricate bodies, import
and marketing of Ashok Leyland buses, trucks, truck chassis,
spare parts, power generators and let vehicles on hire.
The Company also carries out repairs and restoration of
commercial vehicles.
There were no significant changes in the nature of principal
activities of the Company during the financial year under
review.
The number of employees at the end of the year was 239
(2021 - 177).
1.3 Ultimate Holding Company
The Company is a quoted public Company with 41.77% of the
Share Capital held by Lanka Leyland Limited and 27.85% of
the Share Capital held by Ashok Leyland Limited - India.
1.4 Financial Year
The Company's financial year ends on 31
st
March.
2. BASIS OF PREPARATION
2.1 Statement of Compliance
The Financial Statements of the Company have been
prepared in accordance with Sri Lanka Accounting Standards
(referred "SLFRS/LKAS") as laid down by the Institute of
Chartered Accountants of Sri Lanka (CA Sri Lanka) and in
compliance with the requirements of the Companies Act, No.
07 of 2007 and provide appropriate disclosures as required
by the Listing Rules of the Colombo Stock Exchange (CSE).
These Financial Statements, except for information on cash
flows have been prepared following the accrual basis of
accounting.
These SLFRSs and LKASs are available at the website of CA Sri
Lanka - www.casrilanka.com.
These Financial Statements include the following components:
■ Statement of Profit or Loss and Other Comprehensive
Income providing the information on the financial
performance of the Company for the year under review.
■ Statement of Financial Position providing the information
on the financial position of the Company as at the year-
end.
■ Statement of Changes in Equity depicting all changes in
shareholders' funds during the year under review of the
Company.
■ Statement of Cash Flows providing the information to the
users, on the ability of the Company to generate cash and
cash equivalents and utilization of those cash flows.
■ Notes to the Financial Statements comprising Accounting
Policies and other explanatory information.
2.2 Responsibility for Financial Statements
The Board of Directors is responsible for the preparation and
presentation of the Financial Statements of the Company as
per the provisions of the Companies Act, No. 07 of 2007 and
Sri Lanka Accounting Standards (SLFRSs/ LKASs).
The Board of Directors acknowledges this responsibility
as set out in the Report of the Directors under "Directors'
Responsibility for Financial Statements".
2.3 Approval of Financial statements
The Financial Statements of the Company for the year ended
31
st
March 2022 were approved and authorised for issue by
the Board of Directors on 30
th
May 2022.
2.4 Basis of Measurement
The Financial Statements have been prepared on the
historical cost basis and applied consistently with no
adjustments being made for inflationary factors aecting the
Financial Statements, except for the following material items
in the statement of financial position.
Item Basis of Measurement
Retirement
Benefit
Obligation
Measured at its present value, based on an
actuarial valuation as explained in Note 27. The
accounting policy is described in Note 3.11.2.
Equity
Instruments
Measured at its fair value. The accounting
policy is described in Note 3.3.2.
ANNUAL REPORT 2021 / 2022
51
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
2.5 Functional and Presentation Currency
The Company's Financial Statements are presented in Sri
Lankan Rupees, which is the Company's functional and
presentation currency and no level of rounding have been
used in presenting amounts in the Financial Statements,
otherwise indicated.
2.6 Materiality and Aggregation
Each material class of similar items is presented in aggregate
in the Financial Statements. Items of dissimilar nature or
function are presented separately unless they are immaterial.
2.7 Use of Judgments and Estimates
The preparation of the Financial Statements in conformity
with LKAS / SLFRS requires management to make judgments,
estimates and assumptions that aect the application of
accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may dier
from these estimates.
Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimates are revised
and in any future periods aected.
2.7.1 Judgements
Information about judgments made in applying accounting
policies that have the most significant eects on the amounts
recognized in the financial statements is included in the
following notes.
Note 3.16 & 5- revenue recognition: whether revenue from
contracts with customers are recognized over time or at a
point in time.
2.7.2 Assumptions and Estimation Uncertainties
Information about assumptions and estimation uncertainties
as at 31
st
March 2022 that have a significant risk of resulting in
a material adjustment to the carrying amounts of assets and
liabilities in the next financial year is included in the following
notes.
2.7.2.1 Useful Lifetime of Property, Plant and Equipment
Note 3.6 & 15: The Company reviews the residual values,
useful lives and methods of depreciation of Property, Plant
and Equipment at each reporting date. Judgment of the
management is exercised in the estimation of these values,
rates, methods and hence they are subject to uncertainty.
2.7.2.2 Deferred Taxation
Note 3.22.2 & 20: Deferred Tax is provided using the liability
method on temporary dierences between the tax bases of
assets and liabilities and their carrying amounts for financial
reporting purposes at the reporting date. Deferred Tax
Liabilities are recognized for taxable temporary dierences
and for deferred tax assets, availability of future taxable
profits against which deductible temporary dierences can
be utilized is assessed periodically.
2.7.2.3 Defined Benefit Plans
Note 3.11.2 & 27: The cost of the defined benefit obligation
is determined using an actuarial valuation. The actuarial
valuation involves making assumptions about discount
rates, future salary increases, and mortality rates, etc. Due to
the long-term nature of this obligation, such estimates are
subject to significant uncertainty.
2.7.2.4 Provisions for Obsolete and Slow-Moving Items
Note 3.9 & 21: Management's judgment is used in the
estimation of the amount and percentages of slow-moving
items when determining the provisions for obsolete and slow-
moving items. These estimates are based on assumptions
about a number of factors and actual results may dier,
resulting in future changes to the provision made.
2.7.2.5 Impairment Losses on Trade Receivables and Rental
Receivable from Trade Debtors
Note 3.4, 19 & 22: The Company reviews its individually
significant receivables at each reporting date to assess
whether an impairment loss should be recorded in the profit
or loss. In particular, management's judgment is required in
the estimation of the amount and timing of future cash flows
when determining the impairment loss. These estimates are
based on assumptions about a number of factors and actual
results may dier.
If impairment is not required based on the individual
assessment all such individually significant balances are
then assessed collectively, in groups of assets with similar
risk characteristics. The Company measures loss allowances
using the Expected Credit Loss (ECL).
When estimating ECL, Company determines whether the
credit risk of a financial asset has increased significantly
since initial recognition. For this the Company considers
reasonable and supportable information that is relevant and
available without undue cost or eort. This includes both
quantitative and qualitative information and analysis, based
on the Company's historical experience, informed credit
assessment and including forward-looking information.
2.8 Going Concern
The Directors have made an assessment of the Company's
ability to continue as a going concern and is satisfied that it
has the resources to continue in business for a foreseeable
future and do not foresee a need for liquidation or cessation
of trading.
ANNUAL REPORT 2021 / 2022
52
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
The inflation rate of Sri Lanka increased to 21.50% in March
of 2022 and there is a high probability that inflation could
increase further. To respond to the current economic crisis
and inflation, Central Bank of Sri Lanka (CBSL), has tightened
the Monetary Policy while increasing policy rates to 14.50%.
Accordingly, yields on Government securities have also
increased notably to reflect market conditions in view of the
higher financing requirement of the Government.
As the company has a considerable segment of customers
who depends on finance leasing facilities, negative impact
would be experienced by the company as a result of the
increase in interest rates. The Board of Directors continues
to monitor the potential implications of these monitory
factors along with other economic and political factors on
the sustainability of the Company and take proactive action
to meet future obligations and ensure business continuity.
Therefore, given the Company's current financial
performance, and expected future performance based on
internal budgeting and planning, the Financial Statements
continue to be prepared on a going concern basis.
3. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies as set out below have been applied
consistently to all periods presented in these Financial
Statements of the Company unless otherwise indicated.
3.1 Foreign Currency Transactions
Transactions in foreign currencies are translated to the
functional currency applying exchange rates prevailing at the
dates of the transactions.
Monetary assets and liabilities denominated in foreign
currencies are translated at the spot rate of the functional
currency prevailing at the reporting date. Foreign currency
dierences are generally recognised in profit or loss except for
the exchange dierences on trade payables arising from the
purchase of inventory are classified as part of cost of sales.
Statement of Financial Position
3.2 Current Versus non-current Classification
The Company presents Assets and Liabilities in Statement
of Financial Position based on current / non-current
classification.
An asset as current when it is:
■ Expected to be realized or intended to sell or consume in
normal operating cycle
■ Held primarily for the purpose of trading
■ Expected to be realized within twelve months aer the
reporting period, or
■ Cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least twelve
months aer the reporting period
All other assets are classified as non-current.
A liability is current when:
■ It is expected to be settled in normal operating cycle
■ It is held primarily for the purpose of trading
■ It is due to be settled within twelve months aer the
reporting period, or
■ It does not have an unconditional right to defer the
settlement of the liability for at least twelve months aer
the reporting period
The Company classifies all other liabilities as non-current.
Employee Benefit and Lease Liability are classified as non-
current liabilities.
3.3 Financial Instruments
3.3.1 Recognition and Initial Measurement
Trade receivables are initially recognised when they are
originated. All other financial assets and financial liabilities
are initially recognised when the Company becomes a party
to the contractual provisions of the instrument.
A financial asset (unless it is a trade receivable without
a significant financing component) or financial liability
is initially measured at fair value plus, for an item not at
FVTPL, transaction costs that are directly attributable to its
acquisition or issue. A trade receivable without a significant
financing component is initially measured at the transaction
price.
3.3.2 Classification and Subsequent Measurement
On initial recognition, financial assets are classified as
Amortised Cost, FVOCI - Debt Investment, FVOCI - Equity
Investment or FVTPL.
Financial assets are not reclassified subsequent to their initial
recognition unless the Company changes its business model
for managing financial assets, in which case all aected
financial assets are reclassified on the first day of the first
reporting period following the change in the business model.
A financial asset is measured at amortised cost if it meets
both of the following conditions and is not designated as at
FVTPL:
■ it is held within a business model whose objective is to
hold assets to collect contractual cash flows; and
ANNUAL REPORT 2021 / 2022
53
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
■ its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest
on the principal amount outstanding.
Financial asset measured at amortised cost comprises Trade
and Other Receivables, Rental Receivable from Trade Debtors
and Cash and Cash Equivalents.
On initial recognition of an equity investment that is not held
for trading, the Company may irrevocably elect to present
subsequent changes in the investment's fair value in OCI. This
election is made on an investment-by-investment basis.
All financial assets not classified as measured at amortised
cost or FVOCI as described above are measured at FVTPL. This
includes all derivative financial assets. On initial recognition,
the Company may irrevocably designate a financial asset
that otherwise meets the requirements to be measured at
amortised cost or at FVOCI as at FVTPL if doing so eliminates
or significantly reduces an accounting mismatch that would
otherwise arise.
FVTPL comprises investments in equity shares.
Financial Assets - Business Model Assessment
The Company makes an assessment of the objective of the
business model in which a financial asset is held at a portfolio
level because this best reflects the way the business is
managed and information is provided to management. The
information considered includes:
■ the stated policies and objectives for the portfolio and
the operation of those policies in practice. These include
whether management's strategy focuses on earning
contractual interest income, maintaining a particular
interest rate profile, matching the duration of the
financial assets to the duration of any related liabilities
or expected cash outflows or realising cash flows
through the sale of the assets;
■ how the performance of the portfolio is evaluated and
reported to the Company's management; the risks that
aect the performance of the business model (and the
financial assets held within that business model) and
how those risks are managed;
■ 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 Company's 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 for 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 Company 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 Company considers:
■ contingent events that would change the amount or
timing of cash flows;
■ terms that may adjust the contractual coupon rate,
including variable-rate features;
■ prepayment and extension features; and
■ terms that limit the Company's claim to cash flows from
specified assets (e.g. non-recourse features).
A prepayment feature is consistent with the solely payments
of principal and interest criterion if the prepayment amount
substantially represents unpaid amounts of principal and
interest on the principal amount outstanding, which may
include reasonable additional compensation for early
termination of the contract. Additionally, for a financial asset
acquired at a discount or premium to its contractual par
amount, a feature that permits or requires prepayment at
an amount that substantially represents the contractual par
amount plus accrued (but unpaid) contractual interest (which
may also include reasonable additional compensation for
early termination) is treated as consistent with this criterion
if the fair value of the prepayment feature is insignificant at
initial recognition.
ANNUAL REPORT 2021 / 2022
54
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
Financial Assets - Subsequent Measurement and Gains
and Losses
Financial Assets at FVTPL
These assets are subsequently measured at fair value. Net
gains and losses, including any interest or dividend income,
are recognised in profit or loss.
Financial Assets at Amortised Cost
These assets are subsequently measured at amortised cost
using the eective interest method. The amortised cost
is reduced by impairment losses. Interest income, foreign
exchange gains and losses and impairment are recognised in
profit or loss. Any gain or loss on derecognition is recognised
in profit or loss.
3.3.3. Reclassification
Financial assets are not reclassified subsequent to their initial
recognition, except and only in those rare circumstances
when the Company changes its objective of the business
model for managing such financial assets.
Financial Liabilities are not reclassified as such reclassifications
are not permitted by SLFRS 9.
3.3.4 Derecognition
Financial Assets
The Company 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 Company neither transfers nor
retains substantially all of the risks and rewards of ownership
and it does not retain control of the financial asset.
The Company 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 Company derecognises a financial liability when its
contractual obligations are discharged or cancelled, or expire.
The Company also derecognises a financial liability when
its terms are modified and the cash flows of the modified
liability are substantially dierent, in which case a new
financial liability based on the modified terms is recognised
at fair value.
On derecognition of a financial liability, the dierence between
the carrying amount extinguished and the consideration
paid (including any non-cash assets transferred or liabilities
assumed) is recognised in profit or loss.
3.3.5 Osetting
Financial assets and financial liabilities are oset and the
net amount presented in the statement of financial position
when, and only when, the Company currently has a legally
enforceable right to set o the amounts and it intends either
to settle them on a net basis or to realise the asset and settle
the liability simultaneously.
3.4 Impairment
3.4.1 Non-Derivative Financial Assets
Financial Instruments
The Company recognises loss allowances for ECLs on
financial assets measured at amortised cost.
The Company measures loss allowances at an amount equal
to lifetime ECLs. Loss allowances for trade receivables and
contract assets are always measured at an amount equal to
lifetime ECLs.
When determining whether the credit risk of a financial
asset has increased significantly since initial recognition and
when estimating ECLs, the Company considers reasonable
and supportable information that is relevant and available
without undue cost or eort. This includes both quantitative
and qualitative information and analysis, based on the
Company's historical experience and informed credit
assessment and including forward-looking information.
Lifetime ECLs are the ECLs that result from all possible default
events over the expected life of a financial instrument.
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses.
Credit losses are measured as the present value of all cash
shortfalls. ECLs are discounted at the eective interest rate of
the financial asset.
Credit-Impaired Financial Assets
At each reporting date, the Company assesses whether
financial assets carried at amortised cost are credit-impaired.
A financial asset is 'credit-impaired' when one or more events
that have a detrimental impact on the estimated future cash
flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes
the following observable data:
■ significant financial diiculty of the debtor;
■ adverse changes in the payment status of the debtor;
■ it is probable that the debtor will enter bankruptcy or
other financial reorganisation; or
ANNUAL REPORT 2021 / 2022
55
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
Presentation of Allowance for ECL in the Statement of
Financial Position
Loss allowances for financial assets measured at amortised
cost are deducted from the gross carrying amount of the
assets.
Financial Assets Measured at Amortized Cost
The Company considers evidence of impairment for financial
assets measured at amortized cost (loans and receivables) on
specific assets, accordingly all individually significant assets
are assessed for specific impairment.
The Company considers evidence of impairment for these
assets at both an individual asset and a collective level.
All individually significant assets are individually assessed
for impairment. Those found not to be impaired are then
collectively assessed for any impairment that has been
incurred but not yet individually identified. Assets that are
not individually significant are collectively assessed for
impairment.
In assessing collective impairment, the Company uses
historical trends of the probability of default, the timing of
recoveries and the amount of loss incurred, adjusted for
management's judgment as to whether current economic
and credit conditions are such that the actual losses are likely
to be greater or lesser than suggested by historical trends.
An impairment loss is calculated as the dierence between
an asset's carrying amount and the present value of the
estimated future cash flows discounted at the asset's original
eective interest rate. Losses are recognized in profit or loss
and reflected in an allowance account. When the Company
considers that there are no realistic prospects of recovery of
the asset, the relevant amounts are written o. If the amount
of impairment loss subsequently decreases and the decrease
can be related objectively to an event occurring aer the
impairment was recognized, then the previously recognized
impairment loss is reversed through profit or loss.
3.4.2 Non-Financial Assets
The carrying amounts of the Company's non-financial assets,
other than inventories are reviewed at each reporting date
to determine whether there is any indication of impairment.
If any such indication exists, then the asset's recoverable
amount is estimated. An impairment loss is recognized if the
carrying amount of an asset or cash generating unit (CGU)
exceeds its recoverable amount. Impairment losses are
recognized in the statement of profit or loss.
An impairment loss is reversed only to the extent that the
asset's carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or
amortization, if no impairment loss had been recognized.
3.5 Stated Capital
Ordinary Shares
Ordinary shares are classified as equity. Costs attributable to
the issue of ordinary shares are recognized as an expense.
3.6 Property, Plant & Equipment
Property, Plant and Equipment are recognized if it is probable
that future economic benefits associated with the asset will
flow to the company and cost of the asset can be measured
reliably.
a) Cost
All Property, Plant and Equipment are initially recorded
at cost and stated at historical cost less depreciation and
any impairment losses. Cost includes expenditure that
is directly attributable to the acquisition of the asset.
The cost of self-constructed assets includes the cost
of materials and direct labour, any other costs directly
attributable to bringing the asset to a working condition
for its intended use, and the cost of dismantling and
removing the items and restoring the site on which they
are located. Purchased soware that is integral to the
functionality of the related equipment is capitalized as
part of that equipment.
When parts of an item of Property, Plant and Equipment
have dierent useful lives, they are accounted for as
separate items (major components) of Property, Plant
and Equipment.
Expenditure incurred to replace a component of an item
of Property, Plant and Equipment that is accounted
for separately, including major inspection and
overhaul expenditure, is capitalized. Other subsequent
expenditure is capitalized only if it is probable that
the future economic benefits embodied in the item of
Property, Plant and Equipment will flow to the Company
and its cost can be measured reliably. The costs of the
day-to-day servicing of Property, Plant and Equipment
are recognized in the profit or loss as incurred.
b) Depreciation
Depreciation is calculated to write o the cost of items
of property, plant and equipment less their estimated
residual values using the straight-line method over their
estimated useful lives, and is generally recognized in
profit or loss.
The Company provides depreciation from the date the
assets are available for use whereas depreciation of
asset ceases at the earlier of the date that the asset is
classified as held for sale and the date that the asset is
derecognized, at the following rates on a straight line
basis over the periods appropriate to the estimated
useful lives of the dierent types of assets.
ANNUAL REPORT 2021 / 2022
56
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
Factory Building 2.5%
Machinery & Equipment 5%
Factory Equipment 5%
Data processing Equipment 25%
Oice Equipment & City oice equipment 10%
Furniture & Fittings 10%
Motor Vehicles 20%
Plant & Machinery and Equipment - Assyline 20%
Freehold land is not depreciated.
All assets carrying amounts are written down immediately
to its recoverable amount if the asset's carrying amount
is greater than its estimated recoverable amount.
Depreciation methods, useful lives and residual values
are reviewed at each reporting date and adjusted if
appropriate.
c) Derecognition
An item of Property, Plant and Equipment is derecognized
upon disposal or when no future economic benefits are
expected from its use. Gains and losses on disposal of an
item of property, plant and equipment are determined
by comparing the proceeds from disposal with the
carrying amount of property, plant and equipment, and
are recognized net within other income in profit or loss.
d) Capital Work-In-Progress
Capital expenses incurred during the year which are not
completed as at the reporting date are shown as Capital
Work-In-Progress, whilst the capital assets which have
been completed during the year and put to use have
been transferred to Property, Plant & Equipment.
3.7 Intangible Assets
a) Cost
Intangible assets wholly consists of cost of computer
soware acquired by the company and have finite
useful life. Intangible assets are measured at cost less
accumulated amortization and impairment losses.
b) Subsequent Expenditure
Subsequent expenditure on capitalized intangible assets
is capitalized only when it increases the future economic
benefits embodied in the specific asset to which it
relates. All other expenditure is expensed as incurred.
c) Amortization
Intangible assets are amortized on a straight line basis in
the profit or loss from the date when the assets available
for use, over the best estimate of its useful economic life.
The estimated useful life of soware is four years.
3.8 Capital Commitments
Capital commitments of the Company are disclosed in the
Note 35 to the Financial Statements.
3.9 Inventories
Inventories are valued at lower of cost and net realizable
value, aer making due provisions for obsolete and slow-
moving items.
Net realizable value is the price at which inventories can be
sold in the ordinary course of business less the estimated
cost of completion and the estimated cost necessary to make
the sale.
Cost includes expenses incurred in acquiring the inventories
and bringing them to their existing location and condition.
Work-in-progress refers to jobs remaining incomplete in the
workshop and stated at cost. Cost includes all expenditure
related directly to specific projects.
The Cost of each category of inventory is determined on
following basis;
- Spare Parts - At Weighted Average Cost
- Vehicles - At Actual Cost
- Goods In Transit - At Estimated Cost
3.10 Goods-in-Transit
Inventory items shipped, but not received by the Company as
at the reporting date are treated as goods-in transit. In such
situations, estimates are made for unpaid bills in order to
value goods-in-transit.
3.11 Employee Benefits
3.11.1 Short-term Employee Benefits
Short-term employee benefits are expensed as the related
service is provided. A liability is recognized for the amount
expected to be paid if the Company has a present legal or
constructive obligation to pay this amount as a result of past
service provided by the employee and the obligation can be
estimated reliably.
3.11.2 Defined Benefit Plan- Gratuity
A defined benefit plan is a post-employment benefit plan
other than a defined contribution plan.
The Company is liable to pay retirement benefits under the
Payment of Gratuity Act, No. 12 of 1983. Under the said Act,
the liability to an employee arises only on completion of 5
years of continued service.
The liability recognized in the Financial Statements in respect
of defined benefit plans is the present value of the defined
benefit obligation as at the reporting date. The defined
benefit obligation is calculated by a qualified actuary as at
the reporting date using the Projected Unit Credit (PUC)
method as recommended by LKAS 19 - 'Employee Benefits'.
The Company recognizes all actuarial gains and losses
arising from defined benefit plans immediately in other
comprehensive income and all expenses related to defined
benefit plans in employee benefit expense in profit or loss.
ANNUAL REPORT 2021 / 2022
57
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
3.11.3 Defined Contribution Plans- Employees Provided Fund &
Employees Trust Fund
A defined contribution plan is a post-employment benefit
plan under which an entity pays fixed contribution into
a separate entity and will have no legal or constructive
obligation to pay further amounts.
All the employees who are eligible for Employees' Provident
Fund and Employees' Trust Fund are covered by relevant
contribution funds in line with the respective statutes.
Employer's contribution to the defined contribution plans are
recognized as an expense in the profit or loss when incurred.
The company contributes 12% and 3% of the salary of each
employee to the Employees' provident funds and Employees'
trust fund respectively.
3.12 Provisions
A provision is recognized if, as a result of a past event, the
Company has a present legal or constructive obligation that
can be estimated reliably, and it is probable that an outflow
of economic benefits will be required to settle the obligation.
3.13 Warranties
A provision for warranties is recognized when the underlying
products or services are sold. The provision is based on
historical warranty data and a weighting of all possible
outcomes against their associated probabilities.
3.14 Contingent Liabilities
A contingent liability is a possible obligation that arises
from past events whose existence will be confirmed by the
occurrence or non-occurrence of one or more uncertain
future events beyond the control of the Company or a present
obligation that is not recognized because it is not probable
that an outflow of resources will be required to settle the
obligation.
A contingent liability also arises in extremely rare cases where
there is a liability that cannot be recognized because it cannot
be measured reliably. The Company does not recognize a
contingent liability but discloses its existence in the Financial
Statements.
3.15 Leases
At inception of a contract, the Company assesses whether
a contract is, or contains, a lease. A contract is, or contains,
a lease if the contract conveys the right to control the use
of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the
right to control the use of an identified asset, the Company
assesses whether:
- the contract involves the use of an identified asset - this
may be specified explicitly or implicitly, and should be
physically distinct or represent substantially all of the
capacity of a physically distinct asset. If the supplier has
a substantive substitution right, then the asset is not
identified;
- the Company has the right to obtain substantially all of
the economic benefits from use of the asset throughout
the period of use; and
- the Company has the right to direct the use of the asset.
The Company has this right when it has the decision-
making rights that are most relevant to changing how
and for what purpose the asset is used. In rare cases
where the decision about how and for what purpose the
asset is used is predetermined, the Company has the
right to direct the use of the asset if either: the Company
has the right to operate the asset; or
- the Company designed the asset in a way that
predetermines how and for what purpose it will be used.
As a Lessee
At inception or on reassessment of a contract that contains a
lease component, the Company allocates the consideration
in the contract to each lease component on the basis of
their relative stand-alone prices. However, for the leases of
land and buildings in which it is a lessee, the Company has
elected not to separate non-lease components and account
for the lease and non-lease components as a single lease
component.
The Company recognises a right-of-use asset and a lease
liability at the lease commencement date. The right-of-
use asset is initially measured at cost, which comprises the
initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus
any initial direct costs incurred and an estimate of costs to
dismantle and remove the underlying asset or to restore the
underlying asset or the site on which it is located, less any
lease incentives received.
The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the
earlier of the end of the useful life of the right-of-use asset or
the end of the lease term. The estimated useful lives of right-
of-use assets are determined on the same basis as those of
Property, Plant and Equipment. In addition, the right-of-use
asset is periodically reduced by impairment losses, if any, and
adjusted for certain remeasurements of the lease liability.
ANNUAL REPORT 2021 / 2022
58
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
The lease liability is initially measured at the present value of
the lease payments that are not paid at the commencement
date, discounted using the interest rate implicit in the lease
or, if that rate cannot be readily determined, the Company's
incremental borrowing rate. Generally, the Company uses its
incremental borrowing rate as the discount rate.
Lease payments included in the measurement of the lease
liability comprise the following:
- fixed payments, including in-substance fixed payments.
- the exercise price under a purchase option that the
Company is reasonably certain to exercise, lease
payments in an optional renewal period if the Company
is reasonably certain to exercise an extension option,
and penalties for early termination of a lease unless the
Company is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the
eective interest method. It is remeasured when there is a
change in future lease payments arising from a change in the
Company's assessment of whether it will exercise a purchase,
extension or termination option or if there is a revised in-
substance fixed lease payment.
When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount
of the right-of-use asset, or is recorded in profit or loss if the
carrying amount of the right-of-use asset has been reduced
to zero.
The Company presents Right-of-use Assets in 'Right-of-use
Asset' and Lease Liabilities in 'Lease Liability' in the Statement
of Financial Position.
Short-term leases and leases of low-value assets
The Company has elected not to recognise right-of-use assets
and lease liabilities for leases of low-value assets and short-
term leases. The Company recognises the lease payments
associated with these leases as an expense on a straight-line
basis over the lease term.
As a Lessor
When the Company acts as a lessor, it determines at lease
inception whether each lease is a finance lease or an
operating lease.
To classify each lease, the Company makes an overall
assessment of whether the lease transfers substantially
all of the risks and rewards incidental to ownership of the
underlying asset. If this is the case, then the lease is a finance
lease; if not, then it is an operating lease. As part of this
assessment, the Company considers certain indicators such
as whether the lease is for the major part of the economic life
of the asset.
When the Company is an intermediate lessor, it accounts for
its interests in the head lease and the sub-lease separately. It
assesses the lease classification of a sub-lease with reference
to the right-of-use asset arising from the head lease, not with
reference to the underlying asset. If a head lease is a short-
term lease to which the Company applies the exemption
described above, then it classifies the sub-lease as an
operating lease.
If an arrangement contains lease and non-lease components,
then the Company applies SLFRS 15 to allocate the
consideration in the contract.
Finance Leases - as a Lessor
As per SLFRS 16, a lease which transfers substantially all the
risks and rewards incidental to ownership of an underlying
asset is classified as a finance lease. At the commencement
date, the Company recognises assets held under finance
lease in the SOFP and presents them as a "Rental Receivable
from Trade Debtors" at an amount equal to the net
investment in the lease. Net investment in the lease is arrived
by discounting lease payments receivable at the interest rate
implicit in the lease, i.e. the rate which causes present value
of lease payments to equal to the fair value of the underlying
asset and initial direct costs. The Company's net investment
in lease is included in notes to financial statements. The
finance income receivable is recognised in "Other Income"
over the periods of the leases so as to achieve a constant rate
of return on the net investment in the leases and treated as
investing activity in the statement of cash flows.
Statement of Profit or Loss and Other Comprehensive
Income
3.16 Revenue
3.16.1 Revenue Streams
The Company's revenue comprises only the revenue from
contracts with customers. Revenue from contract with
customers generates primarily from New vehicle sales. The
streams of Diesel generator set sales, Repair income, spare
part sales, vehicle hiring income and agency commission
income are the other sources of income included under
revenue from contracts with customers.
3.16.2 Disaggregation of Revenue from Contract with Customers
Revenue from contract with customers is disaggregated by
sales by type of counterparty, major products and service
lines and timing of revenue recognition under Note 05.
3.16.3 P
erformance Obligations and Revenue Recognition Policies
Revenue is measured based on the consideration specified
in a contract with a customer. The Company recognizes
revenue when it transfers control over a good or services to
the customer.
ANNUAL REPORT 2021 / 2022
59
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
The following table provides information about the nature and timing of the satisfaction of performance obligations in contracts with customers,
including significant payment terms, and the related revenue recognition policies.
Type of Product / Service
Nature and Timing of Satisfaction of
Performance Obligations, Including
Significant Payment Terms
Revenue Recognition Policies
Sale of Vehicles with Free Services The Company provides two free services
within two months of the sale, for the
vehicles sold and price of these free services
is in-built in the selling price.
The Company may recognize Revenue from
free services when the service is rendered.
The Company allocates a portion of the
consideration received to free services. This
allocation is based on the relative stand-alone
selling prices. The amount allocated to the
free services is deferred and is recognized as
revenue when the services are rendered.
Spare Parts Sales The Company sells spare parts through their
stalls in several locations. The goods are
realized when the goods are transported
out, and the invoice is raised aerwards.
Revenue from spare parts sales are recognized
at the dispatch point when the Company
transfer the control of spare parts to the
customer.
Body Parts Construction The Company constructs some of the body
parts in resalable nature, where it is less
customized to the particular customer.
The Company also constructs the body
parts fully customized to the specifications
provided by the customer. The Company
has a guaranteed right to payment by the
advance or the full payment charged from
the customer.
The Company transfers the control of
the goods over time. However, the time
consumed for construction and sale of body
part is insignificant. Therefore, the revenue
is recognized at the point of transfer of body
parts.
Local Agency Commission The Company acts as an indent agent
for Ashok Leyland - India. LAL receives a
commission from its indent principal for
arranging the transaction.
The Company act as an agent for Ashok
Leyland - India. Therefore, the commission is
recognized at the date of bill of lading except
for any consideration received on behalf of the
principal.
Diesel Generator Set Sales The Company provides generator sets and
installation services to the customers. The
price for the installation service is in-built in
the price of the generator set.
Revenue from sale of generators are recognized
at the point of delivery.
Revenue from installation service is also
qualified for at a point in time revenue
recognition, since there is no significant time
gap for installation to be taken place.
Hiring income Company provides vehicles on hire basis to
government sectors
Revenue from hiring is recognized over time
due to the fact that the entity identifies the
receipts and simultaneous consumption of
benefits from the services provided to the
customer.
ANNUAL REPORT 2021 / 2022
60
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
3.17 Sale of Goods under Finance Lease
In accordance with paragraph 73 of SLFRS 16 - "Leases", the
selling profit or loss is recognized in the period of sales in
accordance with the policy followed for outright sales. When
low rate of interest are quoted, selling profit is restricted
to that which would apply if a market rate of interest were
charged. Cost incurred in connection with negotiating and
arranging the lease is recognized as an expense when the
selling profit is recognized.
The finance income over and above the selling profit is
recognized over the lease term.
3.18 Gain or Loss on Disposal of Property, Plant and Equipment
Gains and losses on disposal of an item of property, plant
& equipment are determined by comparing the net sales
proceeds with the carrying amounts of property, plant &
equipment and are recognized net within "Other Income" in
Profit or Loss.
3.19 Other Income
All other income is recognized on an accrual basis.
3.20 Expenditure Recognition
Expenses are recognized in the Profit or Loss on the basis
of a direct association between the cost incurred and the
earnings of specific items of income.
All expenditure incurred in running of the business and in
maintaining the Property, Plant and Equipment in a state of
eiciency is charged to profit or loss in arriving at the Profit /
(Loss) for the year.
Expenditure incurred for the purpose of acquiring, extending
or improving assets of permanent nature by means of which
to carry on the business or for the purpose of increasing
earning capacity of the business has been treated as capital
expenditure.
For the purpose of presentation of profit or loss the directors
are of the opinion that "function of expenses method"
presents fairly the elements of the enterprise's performance,
and hence such presentation method is adopted.
3.20.1 Borrowing Costs
Borrowing costs are recognized as an expense in the period in
which they are incurred, except to the extent where borrowing
costs that are directly attributable to the acquisition,
construction, or production of a qualifying asset, which takes
a substantial period of time to get ready for its intended use
or sale, are capitalized as part of the specific asset.
3.21 Finance Income and Finance Costs
Finance income comprises interest income on funds invested
and dividend income. Interest income is recognized as it
accrues in profit or loss, using the eective interest method.
Dividend income is recognized in profit or loss on the date
that the Company's right to receive payment is established,
which in the case of quoted securities is normally the ex-
dividend date.
Finance costs comprise interest expense on borrowings,
and overdra interest expenses. Borrowing costs that are
not directly attributable to the acquisition, construction or
production of a qualifying asset are recognized in profit or
loss using the eective interest method. Foreign currency
gains and losses on financial assets and financial liabilities
are reported on a net basis as either finance income or finance
cost depending on whether foreign currency movements are
in a net gain or net loss position.
3.22 Income Tax Expense
Income Tax expense comprises current and deferred
tax. Current tax and deferred tax is recognized in profit
or loss except to the extent that it relates to a business
combination, or items recognized directly in equity or in
other comprehensive income.
The Company has determined that interest and penalties
related to income taxes, including uncertain tax treatments,
do not meet the definition of income taxes, and therefore
accounted them under LKAS 37 Provisions, contingent
liabilities and contingent assets.
3.22.1 Current Taxation
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, using tax rates enacted
or substantively enacted at the reporting date, and any
adjustment to tax payable in respect of previous years, also
reflecting uncertainty related to income taxes, if any. Current
tax payable also includes any tax liability arising from the
declaration of dividends.
The Company is liable to taxation in accordance with
the Inland Revenue Act, No. 24 of 2017 and subsequent
amendments there to.
3.22.2 Deferred Taxation
Deferred tax is recognized in respect of temporary dierences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for
taxation purposes.
ANNUAL REPORT 2021 / 2022
61
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
The measurement of deferred tax reflects the tax
consequences that would follow the manner in which
the Company expects, at the end of the reporting period,
to recover or settle the carrying amount of its assets and
liabilities.
Deferred tax is measured at the tax rates that are expected to
be applied to temporary dierences when they reverse, using
tax rates enacted or substantively enacted at the reporting
date.
Deferred tax assets and liabilities are oset if there is a legally
enforceable right to oset current tax liabilities and assets,
and they relate to taxes levied by the same tax authority on
the same taxable entity, but they intend to settle current tax
liabilities and assets on a net basis or their tax assets and
liabilities will be realized simultaneously.
A deferred tax asset is recognized for unused tax losses, tax
credits and deductible temporary dierences to the extent
that it is probable that future taxable profits will be available
against which they can be utilized. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefit will be
realized, based on the level of future taxable profit forecasts
and tax planning strategies.
3.23 Fair Value Measurement
'Fair value' is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date in the principal
or, in its absence, the most advantageous market to which
the Company has access at that date. The fair value of a
liability reflects its non-performance risk.
Number of Company's accounting policies and disclosures
require the determination of fair value, for both financial
and nonfinancial assets and liabilities. Fair values have been
determined for measurement and/or disclosure purposes
based on the following methods. Where applicable, further
information about the assumptions made in determining
fair values is disclosed in the notes specific to that asset or
liability.
When measuring the fair value of an asset or a liability, the
Company uses market observable data as far as possible.
Fair values are categorized into dierent levels in a fair
value hierarchy based on the inputs used in the valuation
techniques as follows;
■ Level 1 - Quoted prices (unadjusted) in active markets for
identical assets and liabilities
■ Level 2 - Inputs other than quoted prices included in
Level 1 that are observable from the asset or liability
either directly (as prices) or indirectly (derived prices)
■ Level 3 - Inputs from the asset or liability that are not
based on observable market data (unobservable inputs)
If the inputs used to measure the fair value of an asset
or a liability might be categorized in dierent levels of
the fair value hierarchy, then the fair value measurement
is categorized in its entirety in the same level of the fair
value hierarchy as the lowest level input that is significant
to the entire measurement.
3.24 Events aer the Reporting Period
All material and important events if any which occur aer the
reporting date have been considered and disclosed in Note
38 to the Financial Statements.
3.25 Cash Flow Statement
The Statement of Cash Flows has been prepared by using the
'Indirect Method' of preparing cash flows in accordance with
Sri Lanka Accounting Standard- LKAS 7 on 'Statement of Cash
Flows'.
3.26 Cash and Cash Equivalents
Cash and Cash Equivalents comprise of cash at bank, cash
in hand and short term investments with maturities of six
months or less from the acquisition date and are used by the
Company in the management of its short-term commitments.
Bank overdras that are repayable on demand and forming
an integral part of the Company's cash management are
included as a component of cash and cash equivalents for
the purpose of the Statement of Cash Flows.
3.27 Earnings per Share
The Company presents basic and diluted earnings per share
(EPS) data for its ordinary shares. Basic EPS is calculated
by dividing the profit or loss that is attributable to ordinary
shareholders of the Company by the weighted-average
number of ordinary shares outstanding during the period.
Diluted EPS is determined by adjusting the profit or loss that
is attributable to ordinary shareholders and the weighted-
average number of ordinary shares outstanding for the
eects of all dilutive potential ordinary shares.
3.28 Dividends on Ordinary Shares
Final dividends on ordinary shares are recognized as a
liability and deducted from equity when they are approved
by the Company's shareholders.
ANNUAL REPORT 2021 / 2022
62
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
4. NEW ACCOUNTING STANDARDS ISSUED BUT NOT
EFFECTIVE
The Institute of Chartered Accountants of Sri Lanka has
issued the following new Sri Lanka Accounting Standards
which will become applicable for financial periods beginning
aer the current financial year. Accordingly, the Company
has not applied the following new or amended standards
in preparing these Financial Statements. The following
amended standards and interpretations are not expected
to have a significant impact on the Company's Financial
Statements.
■ Annual Improvements to SLFRS Standards 2018-2020.
The amendments are eective for annual reporting
periods beginning on or aer 01
st
January 2022.
■ Property, Plant and Equipment: Proceeds before
Intended Use (Amendments to LKAS 16). The amendment
applies to annual reporting periods beginning on or aer
01
st
January 2022.
■ Reference to Conceptual Framework (Amendments to
SLFRS 3). The amendment applies to annual reporting
periods beginning on or aer 01
st
January 2022.
■ Classification of Liabilities as Current or Non-current
(Amendments to LKAS 1). The amendment applies
to annual reporting periods beginning on or aer 01
st
January 2023.
■ Disclosure of accounting policies (Amendments to LKAS
1 and SLFRS Practice Statement 2) - eective for annual
periods beginning on or aer 01
st
January 2023.
■ Definition of accounting estimates (Amendments to
LKAS 8) - eective for annual periods beginning on or
aer 01
st
January 2023
■ Deferred Tax related to Assets and Liabilities arising
from a Single Transaction (Amendments to LKAS 12) -
The amendments apply for annual reporting periods
beginning on or aer 01
st
January 2023.
■ Onerous contracts - Cost of Fulfilling a Contract
(Amendments to LKAS 37) - The amendments apply
for annual reporting periods beginning on or aer 01
st
January 2022.
ANNUAL REPORT 2021 / 2022
63
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
For the Year Ended 31
st
March 2022 2021
Rs. Rs.
For the Year Ended 31
st
March 2022 2021
Rs. Rs.
5 REVENUE
5.1 Disaggregation of Revenue from Contract with Customers
5.1.1 Major Products / Service Lines
New Vehicle Sales 6,329,561,251 2,518,517,907
Diesel Generator Set Sales 62,408,676 11,182,963
Repair Income 171,144,000 125,683,556
Spare Parts Sales 211,063,613 238,155,302
Vehicle Hiring Income 67,813,227 71,442,288
Local Agency Commission 18,972,222 8,124,389
6,860,962,989 2,973,106,405
5.1.2 Sales by Type of Counter-party
Government Entities 262,922,901 279,639,780
Corporates and Institutions 3,238,395,797 1,097,901,194
Individuals 3,359,644,291 1,595,565,431
6,860,962,989 2,973,106,405
5.1.3 Timing of Revenue Recognition
Products & Services Transferred at a Point in Time 6,793,149,762 2,901,664,117
Product & Services Transferred Over Time 67,813,227 71,442,288
6,860,962,989 2,973,106,405
5.2 In respect of Commission, Management considers that the following factors indicate the Company acts as an agent;
- The Company neither takes title to nor is exposed to inventory risk related to goods, does not have discretion in establishing prices
and has no significant responsibility in respect of the goods sold.
- The Company receives indent commission for the arrangement of sale of the goods and all the risk related to the transaction is borne
by the supplier of the goods.
6 OTHER INCOME
Profit on Sale of Property, Plant and Equipment 4,007,019 5,779,656
Lease Interest Income (Note 19.7) 336,923,951 407,986,130
Sundry Income 26,541,482 21,640,895
367,472,452 435,406,681
7 SELLING AND DISTRIBUTION EXPENSES
Distribution Expenses Comprise of the Followings;
Sales Promotions 886,275 1,545,487
Discounts 2,048,621 14,093,578
Advertising 226,720 188,685
Other Selling Expenses 24,682,986 16,645,926
27,844,602 32,473,676
ANNUAL REPORT 2021 / 2022
64
For the Year Ended 31
st
March 2022 2021
Rs. Rs.
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
8 IMPAIRMENT (CHARGE) / REVERSAL OF TRADE RECEIVABLES
Impairment Charge of Rental Receivable from Trade Receivables (Note 19.3) (146,050,797) (15,233,858)
Impairment (Charge) / Reversal of Trade Receivables (Note 22.2) (520,699) 18,563,176
(146,571,496) 3,329,318
9 NET FINANCE COST
9.1 Finance Income
Interest Income 15,719,713 1,779,657
Net Foreign Exchange Gain 5,339,765 1,113,786
Financial Assets at FVTPL - Net Change in Fair Value Gain - 69,441
21,059,478 2,962,884
9.2 Finance Cost
Interest Expense on Short Term Borrowings (15,990,461) (165,798,075)
Interest Expense on Bank Overdras (1,370,335) (3,130,628)
Interest Cost on Lease Liability (6,662,319) (8,667,388)
Financial Assets at FVTPL - Net Change in Fair Value Loss (6,025) -
(24,029,140) (177,596,091)
NET FINANCE COST (2,969,662) (174,633,207)
10 PROFIT BEFORE TAX
Profit before tax is stated aer charging all the expenses / (reversal) including followings;
Directors' Emoluments 12,025,833 11,765,000
Auditors' Remuneration - Audit Services 2,000,000 1,700,000
- Audit Related Services 60,000 60,000
- Non Audit Services 275,000 200,000
Sta Cost (Note 10.1) 299,988,834 262,872,575
Depreciation of Property, Plant and Equipment (Note 15) 97,535,233 117,518,042
Depreciation of Right of Use Asset (Note 16) 13,190,065 15,547,736
Amortization of Intangible Assets (Note 17) 3,337,817 3,337,817
Provision for Slow Moving and Obsolete Stocks (Note 21.2) 171,132,955 143,666,639
Charge / (Reversal)of Provision for Free Service (Note 29.1) 4,150,600 (189,838)
Charge / (Reversal) of Warranty Provision (Note 32) 2,827,697 (2,008,524)
Reversal of Provision for Tax Assessment - (39,943,946)
10.1 Sta Cost
Salaries, Wages and Other Benefits 265,607,461 225,916,497
Defined Contribution Plans - EPF 19,954,667 18,379,137
Defined Contribution Plans - ETF 4,988,667 4,594,784
Defined Benefit Plans (Note 27.1) 9,438,039 13,982,157
299,988,834 262,872,575
ANNUAL REPORT 2021 / 2022
65
11.1 Tax Expense
Income Tax on Profits for the year (Note 11.2) 135,989,307 30,270,541
Over Provision of Current Tax in Respect of Previous years (124,989) (1,931,363)
Deferred Tax Reversal (Note 11.3) (30,191,071) (13,768,759)
105,673,247 14,570,419
11.2 Reconciliation of the Accounting Profit and Taxable Profit
Profit Before Tax 448,648,262 19,075,722
Income from Other Sources and Exempt Income (20,089,540) (8,000,893)
Aggregated Expenses Disallowed for Taxation 452,982,948 231,541,977
Aggregated Deductible Expenses for Taxation (289,910,443) (115,782,822)
Assessable Income from Business 591,631,227 126,833,984
Assessable Income from Investment 15,722,813 1,779,657
Taxable Income 607,354,040 128,613,641
Taxation
Income Tax at 14% 402,156 717,464
Income Tax at 18% 28,465,226 252,776
Income Tax at 24% 107,121,925 29,300,301
Income Tax on Profits for the year 135,989,307 30,270,541
11.3 Deferred Tax Reversal Recognized in Comprehensive Income
Statement of Profit or Loss (Note 20) 30,191,071 13,768,759
Other Comprehensive Income (Note 20) (865,601) (255,741)
29,325,470 13,513,018
11.4 Eective Tax Rate
Eective Tax Rate Excluding Deferred Tax (Note 11.5) 30.31% 158.69%
Eective Tax Rate Including Deferred Tax (Note 11.5) 23.58% 86.51%
Eective Tax Rate Including Deferred Tax and Over Provision of Current Tax in Respect of Previous years (Note 11.5) 23.55% 76.38%
11 TAX EXPENSE
The Company is liable to taxation at the rate of 24% on its taxable income, 14% on export income & dividend income and 18% on
manufacturing income in accordance with the Inland Revenue Act, No. 24 of 2017 and subsequent amendments there to. The composition
of income tax expense is as follows ;
For the Year Ended 31
st
March 2022 2021
Rs. Rs.
For the Year Ended 31
st
March 2022 2021
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
ANNUAL REPORT 2021 / 2022
66
For the Year Ended 31
st
March 2022 2021
Rate Rs. Rate Rs.
12 EARNINGS PER SHARE
12.1 Basic Earnings per Share
Basic Earnings Per Share is calculated by dividing the profit for the year attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
The weighted average number of ordinary shares outstanding during the year and the previous year are adjusted for events that have
changed the number of ordinary shares outstanding.
For the Year Ended 31
st
March 2022 2021
Profit Attributable to Ordinary Shareholders (Rs.) 342,975,015 4,505,303
Weighted Average Number of Ordinary Shares 3,620,843 3,620,843
Basic and Diluted Earnings per Share (Rs.) 94.72 1.24
12.2 Diluted Earnings per Share
The calculation of diluted earning per share is based on the profit attributable to ordinary shareholders and the weighted average number
of ordinary shares outstanding aer adjustment for the eect of all diluted ordinary shares.
There were no potentially dilutive ordinary shares outstanding at any time during the year and previous year. Therefore, Diluted Earnings
per Share is same as Basic Earnings per share shown above.
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
11 TAX EXPENSE
(Contd.)
11.5 Reconciliation of Eective Tax Rate
Profit Before Tax 448,648,262 19,075,722
Income Tax Expense at the Average Statutory Income Tax Rate 22.39% 100,454,368 23.54% 4,489,667
Exempted Income (0.22%) (977,730) (7.68%) (1,464,232)
Disallowed Expenses 22.61% 101,424,924 285.68% 54,495,782
Deductible Expenses (14.47%) (64,912,255) (142.86%) (27,250,676)
Eective Tax Rate Excluding Deferred Tax 30.31% 135,989,307 158.69% 30,270,541
Temporary Dierences (6.73%) (30,191,071) (72.18%) (13,768,759)
Eective Tax Rate Including Deferred Tax 23.58% 105,798,236 86.51% 16,501,782
Over Provision of Current Tax in Respect of Previous years (0.03%) (124,989) (10.12%) (1,931,363)
Eective Tax Rate Including Deferred Tax and Over Provision of
Current Tax in Respect of Previous years 23.55% 105,673,247 76.38% 14,570,419
ANNUAL REPORT 2021 / 2022
67
13 DIVIDEND PER SHARE
Aer the reporting date, the following dividend was proposed by the Board of Directors. The Dividend has not been recognized as liability
in the Financial Statements in compliance with LKAS 10 "Events Aer the Reporting Period".
For the Year Ended 31
st
March 2022 2021
For the Year Ended 31
st
March 2022 2021
Note Rs. Rs.
Dividend for the Year (Rs.) 36,208,430 7,241,686
Weighted Average Number of Ordinary Shares 3,620,843 3,620,843
Dividend per Share (Rs.) 10.00 2.00
Profit from Continuing Operations 342,975,015 4,505,303
Income Tax Expense 11 105,673,247 14,570,419
Profit before Tax
448,648,262 19,075,722
Adjustments for:
- Net Finance Costs 9 2,969,662 174,633,207
- Depreciation of Property, Plant & Equipment 10 97,535,233 117,518,042
- Depreciation of Right-of-use Asset 10 13,190,065 15,547,736
- Amortisation of Intangible Assets 10 3,337,817 3,337,817
Adjusted EBITDA
565,681,039 330,112,524
14 ADJUSTED EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTIZATION ( ADJUSTED EBITDA)
The Directors of the Company have presented the performance measure adjusted EBITDA as they monitor this performance measure
at high level and they believe this measure is relevant to an understanding of the Company’s financial performance. Adjusted EBITDA is
calculated by adjusting profit from continuing operations to exclude the impact of Taxation, Net Finance Costs, Depreciation, Amortization,
Impairment Losses / Reversals related Intangible Assets, Property, Plant and Equipment.
Adjusted EBITDA is not a defined performance measure in SLFRS / LKAS. The Company’s definition of adjusted EBITDA may not be
comparable with similarly titled performance measures and disclosures by other entities.
Reconciliation of Adjusted EBITDA to Profit from Operations;
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
ANNUAL REPORT 2021 / 2022
68
Cost Accumulated Depreciation Carrying Value
For the Year Ended 31
st
March 2022 As at 01
st
Additions Disposals / As at 31
st
As at 01
st
Charge for On Disposal As at 31
st
As at 31
st
April 2021 Transfers / March 2022 April 2021 the year March 2022 March 2022
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Freehold Land 10,700,810 - - 10,700,810 - - - - 10,700,810
Freehold Factory & Building 287,392,843 73,427,913 - 360,820,756 53,755,153 7,850,762 - 61,605,915 299,214,841
Data Processing Equipment 34,711,723 12,072,029 - 46,783,752 30,159,119 3,235,205 - 33,394,324 13,389,428
Machinery & Equipment 23,648,566 33,238,294 - 56,886,860 13,122,862 1,290,006 - 14,412,868 42,473,992
Factory Equipment 31,373,243 6,961,255 (1,003,658) 37,330,840 13,189,334 1,550,366 (472,681) 14,267,019 23,063,821
Oice Equipment 7,118,475 4,493,421 - 11,611,896 5,095,185 693,682 - 5,788,867 5,823,029
Furniture & Fittings 22,215,690 4,642,931 - 26,858,621 18,923,192 1,060,911 - 19,984,103 6,874,518
Motor Vehicles 885,636,245 65,470,251 (4,789,600) 946,316,896 682,218,866 75,148,156 (1,125,884) 756,241,138 190,075,758
Plant & Machinery and Equipment - Assy Line 22,013,907 25,774,291 - 47,788,198 260,582 6,706,145 - 6,966,727 40,821,471
1,324,811,502 226,080,385 (5,793,258) 1,545,098,629 816,724,293 97,535,233 (1,598,565) 912,660,961 632,437,668
Capital Work In Progress - Building 245,000 14,959,404 - 15,204,404 - - - - 15,204,404
1,325,056,502 241,039,789 (5,793,258) 1,560,303,033 816,724,293 97,535,233 (1,598,565) 912,660,961 647,642,072
Cost Accumulated Depreciation Carrying Value
For the Year Ended 31
st
March 2021 As at 01
st
Additions Disposals / As at 31
st
As at Charge for On Disposal As at As at
April 2020 Transfers/ March 2021 01
st
April 2020 the year 31
st
March 2021 31
st
March 2021
Adjustments
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Freehold Land 10,700,810 - - 10,700,810 - - - - 10,700,810
Freehold Factory & Building 269,571,448 17,821,395 - 287,392,843 47,014,646 6,740,507 - 53,755,153 233,637,690
Data Processing Equipment 34,282,039 537,184 (107,500) 34,711,723 27,702,208 2,514,342 (57,431) 30,159,119 4,552,604
Machinery & Equipment 22,361,466 1,287,100 - 23,648,566 12,185,067 937,795 - 13,122,862 10,525,704
Factory Equipment 30,470,070 988,746 (85,573) 31,373,243 11,748,515 1,444,448 (3,629) 13,189,334 18,183,909
Oice Equipment 6,786,697 331,778 - 7,118,475 4,536,906 558,279 - 5,095,185 2,023,290
Furniture & Fittings 21,943,090 272,600 - 22,215,690 17,297,894 1,625,298 - 18,923,192 3,292,498
Motor Vehicles 866,900,273 47,171,203 (28,435,231) 885,636,245 594,764,078 103,436,791 (15,982,003) 682,218,866 203,417,379
Plant & Machinery and Equipment - Assy Line - 22,013,907 - 22,013,907 - 260,582 - 260,582 21,753,325
1,263,015,893 90,423,913 (28,628,304) 1,324,811,502 715,249,314 117,518,042 (16,043,063) 816,724,293 508,087,209
Capital Work In Progress - Building 19,025,711 245,000 (19,025,711) 245,000 - - - - 245,000
1,282,041,604 90,668,913 (47,654,015) 1,325,056,502 715,249,314 117,518,042 (16,043,063) 816,724,293 508,332,209
15 PROPERTY, PLANT & EQUIPMENT
15.1 Market Value of the Freehold Land & Building
Property Market Valuation Date of No of Land
Value Surveyor Valuation Buildings Extent
Freehold Land & Building at Rs. 921 Mn Mr. M.A. Ananda 23.01.2021 4 18 acres and
Panagoda, Homagama Sarath 32 perches
15.2 Seylan Bank PLC holds the primary mortgage on Factory Land, Building, Machinery and Other Equipment, amounting to Rs. 200 million.
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
ANNUAL REPORT 2021 / 2022
69
Cost Accumulated Depreciation Carrying Value
For the Year Ended 31
st
March 2022 As at 01
st
Additions Disposals / As at 31
st
As at 01
st
Charge for On Disposal As at 31
st
As at 31
st
April 2021 Transfers / March 2022 April 2021 the year March 2022 March 2022
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Freehold Land 10,700,810 - - 10,700,810 - - - - 10,700,810
Freehold Factory & Building 287,392,843 73,427,913 - 360,820,756 53,755,153 7,850,762 - 61,605,915 299,214,841
Data Processing Equipment 34,711,723 12,072,029 - 46,783,752 30,159,119 3,235,205 - 33,394,324 13,389,428
Machinery & Equipment 23,648,566 33,238,294 - 56,886,860 13,122,862 1,290,006 - 14,412,868 42,473,992
Factory Equipment 31,373,243 6,961,255 (1,003,658) 37,330,840 13,189,334 1,550,366 (472,681) 14,267,019 23,063,821
Oice Equipment 7,118,475 4,493,421 - 11,611,896 5,095,185 693,682 - 5,788,867 5,823,029
Furniture & Fittings 22,215,690 4,642,931 - 26,858,621 18,923,192 1,060,911 - 19,984,103 6,874,518
Motor Vehicles 885,636,245 65,470,251 (4,789,600) 946,316,896 682,218,866 75,148,156 (1,125,884) 756,241,138 190,075,758
Plant & Machinery and Equipment - Assy Line 22,013,907 25,774,291 - 47,788,198 260,582 6,706,145 - 6,966,727 40,821,471
1,324,811,502 226,080,385 (5,793,258) 1,545,098,629 816,724,293 97,535,233 (1,598,565) 912,660,961 632,437,668
Capital Work In Progress - Building 245,000 14,959,404 - 15,204,404 - - - - 15,204,404
1,325,056,502 241,039,789 (5,793,258) 1,560,303,033 816,724,293 97,535,233 (1,598,565) 912,660,961 647,642,072
Cost Accumulated Depreciation Carrying Value
For the Year Ended 31
st
March 2021 As at 01
st
Additions Disposals / As at 31
st
As at Charge for On Disposal As at As at
April 2020 Transfers/ March 2021 01
st
April 2020 the year 31
st
March 2021 31
st
March 2021
Adjustments
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Freehold Land 10,700,810 - - 10,700,810 - - - - 10,700,810
Freehold Factory & Building 269,571,448 17,821,395 - 287,392,843 47,014,646 6,740,507 - 53,755,153 233,637,690
Data Processing Equipment 34,282,039 537,184 (107,500) 34,711,723 27,702,208 2,514,342 (57,431) 30,159,119 4,552,604
Machinery & Equipment 22,361,466 1,287,100 - 23,648,566 12,185,067 937,795 - 13,122,862 10,525,704
Factory Equipment 30,470,070 988,746 (85,573) 31,373,243 11,748,515 1,444,448 (3,629) 13,189,334 18,183,909
Oice Equipment 6,786,697 331,778 - 7,118,475 4,536,906 558,279 - 5,095,185 2,023,290
Furniture & Fittings 21,943,090 272,600 - 22,215,690 17,297,894 1,625,298 - 18,923,192 3,292,498
Motor Vehicles 866,900,273 47,171,203 (28,435,231) 885,636,245 594,764,078 103,436,791 (15,982,003) 682,218,866 203,417,379
Plant & Machinery and Equipment - Assy Line - 22,013,907 - 22,013,907 - 260,582 - 260,582 21,753,325
1,263,015,893 90,423,913 (28,628,304) 1,324,811,502 715,249,314 117,518,042 (16,043,063) 816,724,293 508,087,209
Capital Work In Progress - Building 19,025,711 245,000 (19,025,711) 245,000 - - - - 245,000
1,282,041,604 90,668,913 (47,654,015) 1,325,056,502 715,249,314 117,518,042 (16,043,063) 816,724,293 508,332,209
15.3 During the year, Rs. 61,470,257/- (2020/21 - Rs. 47,171,203/-) worth of Motor Vehicles have been capitalized from Motor Vehicle Stock.
15.4 Property, Plant & Equipment included fully depreciated assets that are still in use having a gross amount of Rs. 613,389,908/- (2020/21 -
Rs. 586,031,922/-).
15.5 During the financial year, the Company purchased Property, Plant and Equipment to the aggregate value of Rs. 179,569,538/- (2020/21 -
Rs. 24,782,287/-) for cash.
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
ANNUAL REPORT 2021 / 2022
70
15 PROPERTY, PLANT & EQUIPMENT (Contd.)
16 RIGHT-OF-USE ASSETS
Carrying amounts of Right-of-use Assets.
15.6 There is no permanent fall in the value of Property, Plant and Equipment which require a provision for impairment.
15.7 There were no restrictions existed on the title to the Property, Plant and Equipment of the Company as at the reporting date.
15.8 There were no capitalized borrowing costs related to the acquisition of Property, Plant and Equipment during the year (2020/21
- Nil).
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
As At 31
st
March 2022 2021
Rs. Rs.
Cost
Balance at beginning of the year 90,147,130 97,059,185
Lease Modification - (6,912,055)
Balance at end of the year 90,147,130 90,147,130
Accumulated Depreciation
Balance at beginning of the year 34,062,231 18,514,495
Charge for the year 13,190,065 15,547,736
Balance at end of the year 47,252,296 34,062,231
Carrying Value as at 31
st
March 42,894,834 56,084,899
17 INTANGIBLE ASSETS
As At 31
st
March 2022 2021
Rs. Rs.
Cost
Balance at beginning of the year 27,713,196 27,713,196
Additions - -
Balance at end of the year 27,713,196 27,713,196
Accumulated Amortization
Balance at beginning of the year 21,321,048 17,983,231
Charge for the year 3,337,817 3,337,817
Balance at end of the year 24,658,865 21,321,048
Carrying Value as at 31
st
March 3,054,331 6,392,148
17.1 Intangible asset consist of ERP soware Purchased during 2007 & 2018 and also Microso License Purchased during the year
2014.
17.2 Intangible Assets included fully amortized assets that are still in use having a gross amount of Rs. 14,361,928 as at 31
st
March
2022 (2020/21 - Rs. 14,361,928).
ANNUAL REPORT 2021 / 2022
71
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
18 FINANCIAL INVESTMENTS
As At 31
st
March 2022 2021
Rs. Rs.
As At 31
st
March 2022 2021
Cost Market Value Cost Market Value
Rs. Rs. Rs. Rs.
As At 31
st
March 2022 2021
Year of Carrying Year of Carrying
Maturity Amount Maturity Amount
Rs. Rs. Rs. Rs.
Equity Securities - Fair Value Through Profit or Loss (Note 18.1) 125,416 131,441
Corporate Debt Securities - Amortised Cost (Note 18.2) 11,425,059 11,426,662
11,550,475 11,558,103
18.1 Investment in Quoted Shares
Diesel & Motor Engineering PLC 7,417 125,416 7,417 131,441
(257 Ordinary Shares)
7,417 125,416 7,417 131,441
18.2 Investment in Debentures
Seylan Bank PLC 2024 11,425,059 2024 11,426,662
(100,000 Debentures at Rate of Rs. 100/- each)
11,425,059 11,426,662
Corporate debt securities are classified at amortised cost. Debentures have an interest rate of 15% and will be matured on 2024.
ANNUAL REPORT 2021 / 2022
72
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
19 RENTAL RECEIVABLE FROM TRADE DEBTORS
Assets leased to customers which transfers substantially all risks and rewards incidental to ownership of the asset to the lessee, the
arrangement is classified as a finance lease. Amounts receivable under finance leases, net of initial rentals received, deferred interest
income and provision for impairment loss, are classified as Rental Receivable from Trade Debtors and are presented below;
As At 31
st
March 2022 2021
Rs. Rs.
Balance as at the beginning of the year 2,596,769,007 3,304,811,808
Granted during the year 23,044,000 9,568,000
Total Rental Receivable 2,619,813,007 3,314,379,808
Less : Payment received during the year (573,377,361) (717,610,801)
Total Rental Outstanding (Note 19.4) 2,046,435,646 2,596,769,007
Less : Deferred Interest Income (409,039,908) (744,523,517)
Unearned Rental Income 1,637,395,738 1,852,245,490
Less : Provision for Impairment Loss (Note 19.3) (257,593,750) (122,452,397)
Balance as at the end of the year 1,379,801,988 1,729,793,093
19.1 Receivable aer one year
Total Rental Receivable 1,024,879,345 1,708,647,416
Less : Deferred Interest Income (160,022,874) (408,042,381)
Unearned Rental Income 864,856,471 1,300,605,035
Less : Provision for Impairment Loss - -
Balance as at 31
st
March 864,856,471 1,300,605,035
19.2 Receivable within one year
Total Rental Receivable 1,021,556,301 888,121,591
Less : Deferred Interest Income (249,017,034) (336,481,136)
Unearned Rental Income 772,539,267 551,640,455
Less : Provision for Impairment Loss (257,593,750) (122,452,397)
Balance as at 31
st
March 514,945,517 429,188,058
Total 1,379,801,988 1,729,793,093
ANNUAL REPORT 2021 / 2022
73
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
19 RENTAL RECEIVABLE FROM TRADE DEBTORS (Contd.)
The movement in the allowance for impairment in respect of Rental Receivable from Trade Debtors during the year is as follows;
Individual Collective Total
As at 31
st
March 2022 Impairment Impairment Impairment
Rs. Rs. Rs.
Individual Collective Total
As at 31
st
March 2021 Impairment Impairment Impairment
Rs. Rs. Rs.
19.3 Movement of Impairment Loss
Balance at the beginning of the year 122,419,083 33,314 122,452,397
Impairment Loss / (Reversal) recognized during the year 146,079,384 (28,587) 146,050,797
Amounts Write-Os (10,909,444) - (10,909,444)
Balance at the end of the year 257,589,023 4,727 257,593,750
Balance at the beginning of the year 107,141,537 77,002 107,218,539
Impairment Loss / (Reversal) recognized during the year 15,277,546 (43,688) 15,233,858
Balance at the end of the year 122,419,083 33,314 122,452,397
19.4 Rental Receivable from Trade Debtors by types of Counter Party are as follows;
19.5 Maturity Analysis of Rentals Receivables from Trade Debtors (Net of Deferred Interest Income and Impairment Provision)
As At 31
st
March 2022 2021
Rs. Rs.
Sri Lanka Transport Board (Note 34.1) 2,009,366,240 2,547,175,071
Corporate and Other Institutions 27,756,242 43,922,048
Individuals 9,313,164 5,671,888
2,046,435,646 2,596,769,007
Less than 06 06 - 12 01 - 05
Months Months Years Total
Rs. Rs. Rs. Rs.
Rental Receivables from Trade Debtors As at 31
st
March 2022 279,098,736 235,846,781 864,856,471 1,379,801,988
Rental Receivables from Trade Debtors As at 31
st
March 2021 239,857,773 189,330,285 1,300,605,035 1,729,793,093
ANNUAL REPORT 2021 / 2022
74
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
19.6 Remaining Contractual Maturity Analysis of Rental Receivable from Trade Debtors
As At 31
st
March 2022 2021
Rs. Rs.
As At 31
st
March 2022 2021
Rs. Rs.
Within 1 Year 1,021,556,301 888,121,591
1 - 2 Years 689,548,004 689,250,071
2 - 3 Years 334,669,004 686,264,004
3 - 4 Years 662,337 332,785,004
4 - 5 Years - 348,337
Gross Rental Receivable from Trade Debtors 2,046,435,646 2,596,769,007
Less: Deferred Interest Income (409,039,908) (744,523,517)
1,637,395,738 1,852,245,490
Less: Provision for Impairment Loss (257,593,750) (122,452,397)
Net Rental Receivable from Trade Debtors 1,379,801,988 1,729,793,093
19.7 Amounts Recognised in Profit or Loss
The Profit or Loss include the following amounts in respect of finance lease.
19 RENTAL RECEIVABLE FROM TRADE DEBTORS (Contd.)
20 DEFERRED TAX ASSETS
For the Year Ended 31
st
March 2022 2021
Rs. Rs.
Selling Profit 3,563,393 1,160,965
Lease Interest Income (Note 06) 336,923,951 407,986,130
340,487,344 409,147,095
Balance at the beginning of the year 184,233,458 170,720,440
Recognised in Profit or Loss (Note 20.1) 30,191,071 13,768,759
Recognised in Other Comprehensive Income (Note 20.3) (865,601) (255,741)
Balance at the end of the Year 213,558,928 184,233,458
20.1 Recognised in Profit or Loss (Note 20.3)
Net Deferred Tax Charge Due to Reduction in Tax Rate (23,029,182) (24,388,634)
Origination and Reversal of Temporary Dierences 53,220,253 38,157,393
30,191,071 13,768,759
As per the amendment to the Inland Revenue Act, No. 24 of 2007, the Company is liable to taxation at the rate of 18% on its manufacturing
income and 24% on its other taxable income. Accordingly, deferred tax asset and liability have been computed based on 21% (2020/21
- 24%) , which is average of above two rates and Rs. 23.03 Mn have been charged to Profit or Loss as a result to the remeasurement of
deferred tax asset and liability of the Company.
ANNUAL REPORT 2021 / 2022
75
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
20 DEFERRED TAX ASSETS (Contd.)
20.2 Deferred Tax Assets and Liabilities are attributable to the following;
20.3 Movement in Recognized Deferred Tax Assets and Liabilities
Assets Liabilities Net Asset/( Liability)
As At 31
st
March 2022 2021 2022 2021 2022 2021
Rs. Rs. Rs. Rs. Rs. Rs.
Balance as at Recognised in Recognised in Balance as at
01
st
April 2021 Profit or Loss OCI 31
st
March 2022
Rs. Rs. Rs. Rs.
Balance as at Recognised in Recognised in Balance as at
01
st
April 2020 Profit or Loss OCI 31
st
March 2021
Rs. Rs. Rs. Rs.
Property, Plant and Equipment
-
-
(45,615,194)
(44,935,549)
(45,615,194)
(44,935,549)
Employee Benefits
20,356,785
23,068,034
-
-
20,356,785
23,068,034
Provision for Inventory
172,180,558
155,705,871
-
-
172,180,558
155,705,871
Provision for Trade Debtors
61,370,468
44,072,233
-
-
61,370,468
44,072,233
Right-of-Use Asset / Lease Liability
5,266,311
6,322,869
-
-
5,266,311
6,322,869
Net Deferred Tax Asset / (Liability) 259,174,122 229,169,007 (45,615,194) (44,935,549) 213,558,928 184,233,458
Deferred tax assets and liabilities are calculated on all taxable and deductible temporary dierences arising from dierences between
accounting bases and tax bases of assets and liabilities.
Property, Plant and Equipment (44,935,549) (679,645) - (45,615,194)
Employee Benefits 23,068,034 (1,845,648) (865,601) 20,356,785
Provision for Inventory 155,705,871 16,474,687 - 172,180,558
Provision for Trade Debtors 44,072,233 17,298,235 - 61,370,468
Right-of-Use Asset / Lease Liability 6,322,869 (1,056,558) - 5,266,311
Net Deferred Tax Asset / (Liability) 184,233,458 30,191,071 (865,601) 213,558,928
Property, Plant and Equipment (55,890,796) 10,955,247 - (44,935,549)
Employee Benefits 25,618,061 (2,294,286) (255,741) 23,068,034
Provision for Inventory 141,430,191 14,275,680 - 155,705,871
Provision for Trade Debtors 52,349,815 (8,277,582) - 44,072,233
Right-of-Use Asset / Lease Liability 7,213,169 (890,300) - 6,322,869
Net Deferred Tax Asset / (Liability) 170,720,440 13,768,759 (255,741) 184,233,458
ANNUAL REPORT 2021 / 2022
76
Fully Built Vehicle Stock 2,043,704,478 2,393,485,134
Semi-Knock-Down (SKD) Vehicle Stock 385,827,190 834,946,367
Generators 30,026,596 22,989,400
Cabins / Bodies & Work In Progress 269,740,495 80,596,024
Spare Parts & Consumables 682,992,778 701,196,516
3,412,291,537 4,033,213,441
Goods In Transit 360,037,047 1,001,596,716
3,772,328,584 5,034,810,157
Provision for Slow Moving & Obsolete Stocks (Note 21.1) (819,907,419) (648,774,464)
2,952,421,165 4,386,035,693
21.1 Provision for Slow Moving & Obsolete Stocks
Balance at the beginning of the year 648,774,464 505,107,825
Charge for the year 171,132,955 143,666,639
Balance at the end of the year 819,907,419 648,774,464
21.2 Stocks have been pledged against the trust loan and revolving import loan facilities obtained from Seylan Bank PLC and Commercial
Bank of Ceylon PLC.
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
As At 31
st
March 2022 2021
Rs. Rs.
As At 31
st
March 2022 2021
Rs. Rs.
As At 31
st
March 2022 2021
Rs. Rs.
22 TRADE AND OTHER RECEIVABLES
Trade Receivables 63,187,394 80,817,715
Receivables from Related Parties (Note 22.1) 104,034,633 79,097,649
Less: Provision for Impairment Loss (Note 22.2) (34,646,574) (61,181,909)
132,575,453 98,733,455
Advances to Sta 9,088,170 454,834
VAT Receivable 75,217,714 53,325,748
Other Receivables 520,564 36,756,386
217,401,901 189,270,423
22.1 Receivables from Related Parties
Sri Lanka Transport Board (Note 34.1) 21,069,023 20,120,934
Ashok Leyland Limited - India (Note 34.1) 24,550,467 -
Other Government Related Entities (Note 34.1) 42,395,143 44,851,715
Bank of Ceylon (Note 34.1) 16,020,000 -
Other Government Financial Institutions (Note 34.1) - 14,125,000
104,034,633 79,097,649
21 INVENTORIES
ANNUAL REPORT 2021 / 2022
77
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
As At 31
st
March 2022 2021
Rs. Rs.
23 DEPOSITS AND PREPAYMENTS
Deposits and Advances 100,553,842 139,594,866
Prepayments 6,881,213 4,200,837
107,435,055 143,795,703
24 CASH & CASH EQUIVALENTS
24.1 Favorable Balances
Short Term Investments 2,052,813,699 2,300,000
Cash in Hand 4,394,025 5,664,369
Cash at Banks 9,861,315 9,313,935
2,067,069,039 17,278,304
24.2 Unfavorable Balances
Bank Overdras (70,437,430) (53,934,240)
(70,437,430) (53,934,240)
Cash & Cash Equivalents for the purpose of Cash Flow Statement 1,996,631,609 (36,655,936)
22.2 Movement of Impairment Loss
The movement in the allowance for impairment in respect of Trade Receivables during the year is as follows;
22.3 Information about the Company’s exposure to credit and market risks, and impairment losses for trade and other receivables, is included
in Note 44.
Individual Collective Total
As at 31
st
March 2022 Impairment Impairment Impairment
Rs. Rs. Rs.
Individual Collective Total
As at 31
st
March 2021 Impairment Impairment Impairment
Rs. Rs. Rs.
Balance at the beginning of the year 9,362,956 51,818,953 61,181,909
Impairment Loss / (Reversal) recognized during the year 723,911 (203,212) 520,699
Amounts Write Os - (27,056,034) (27,056,034)
Balance at the end of the year 10,086,867 24,559,707 34,646,574
Balance at the beginning of the year 1,972,065 77,773,020 79,745,085
Impairment Loss / (Reversal) recognized during the year 7,390,891 (25,954,067) (18,563,176)
Balance at the end of the year 9,362,956 51,818,953 61,181,909
22.
TRADE AND OTHER RECEIVABLES
(Contd.)
ANNUAL REPORT 2021 / 2022
78
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
Bank Interest Approved Security
Rate (%) Facility (Rs.)
Seylan Bank PLC AWPLR 100,000,000 Land / Building / Inventory
Commecial Bank of Ceylon PLC AWPLR 50,000,000 Inventory
Bank of Ceylon AWPLR 1,900,000 Fixed Deposit
24.4 Unutilized bank overdra facilities as at 31
st
March 2022 amounted to Rs. 151.9 Mn (2020/21 - Rs. 129.3 Mn).
25.1 The Company is authorized for 6,000,000 Ordinary Shares (par value of a share is Rs. 10/-).
25.2 There were no movements in the issued share capital during the year.
25.3 All Ordinary Shares rank equally with regard to the Company’s residual assets and holders of these shares are entitled to dividends as
declared from time to time and are entitled to one vote per share at general meetings of the Company.
25.4 A premium of Rs. 40/- per share was received for 329,168 ordinary shares issued as rights in 1992. Accordingly, the Stated Capital of the
Company includes a Share Premium of Rs. 13,166,720/-.
26.1 The General Reserve relates to retained earnings set aside by the Company for general application. There were no movements in the
General Reserves during the year.
24.3 Bank Overdra Facility Details
As At 31
st
March No. of 2022 2021
Shares Rs. Rs.
As At 31
st
March 2022 2021
Rs. Rs.
Ordinary Shares 3,620,843 36,208,430 36,208,430
Share Premium 13,166,720 13,166,720
Stated Capital 49,375,150 49,375,150
26 GENERAL RESERVE
General Reserve 887,347,500 887,347,500
887,347,500 887,347,500
24 CASH & CASH EQUIVALENTS
(Contd.)
25 STATED CAPITAL
ANNUAL REPORT 2021 / 2022
79
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
As At 31
st
March 2022 2021
Rs. Rs.
For the Year Ended 31
st
March 2022 2021
Rs. Rs.
As At 31
st
March 2022 2021
Balance at the beginning of the year 96,116,809 91,493,075
Expenses recognised in Profit or Loss (Note 27.1) 9,438,039 13,982,157
Expenses recognised in Other Comprehensive Income (Note 27.2) (4,121,909) (1,065,586)
Payments during the year (4,495,867) (8,292,837)
Balance at the end of the year 96,937,072 96,116,809
The Employee Benefit Liability for the year is based on the actuarial valuation carried out by professionally qualified actuaries, Messrs.
Actuarial & Management Consultants (Pvt) Limited, on 31
st
March 2022.
The liability is not externally funded.
27.1 Expenses Recognised in Profit or Loss
Current Service Cost 4,450,879 4,832,849
Interest Cost 7,833,520 9,149,308
Past Service Cost (Note 27.3.2) (2,846,360) -
9,438,039 13,982,157
27.2 Expenses Recognised in Other Comprehensive Income
Actuarial Gains (4,121,909) (1,065,586)
(4,121,909) (1,065,586)
Discount Rate 16.00% 8.15%
Expected Annual Average Salary Increment 12.50% 7.00%
Sta Turnover Factor 0.6% 2%
Retiring Age 60 Years 58 Years
Mortality Table A 67/70 A 67/70
27.3.1 The actuarial valuation involves making assumptions about discount rates, future salary increases and mortality rates. In the absence of
a deep market in long term corporate bonds in Sri Lanka, the discount rate has been derived, and approximation of a long term interest
rate of a 16% p.a. (2020/21 - 8.15% p.a) has been used to discount future liabilities. All assumptions are reviewed at each reporting date.
27.3.2 During the year 2021/22, the gratuity arrangement for employees were adjusted to reflect new legal requirement as per "Minimum
Retirement Age of Workers Act No. 28 of 2021". As a result of the plan amendment, the Company defined benefit obligation decreased by
Rs. 2.85 Mn and the corresponding past service cost was recognised in the Income Statement during the year 2021/22.
27 EMPLOYEE BENEFITS
The Company measures the Present Value of Defined Benefit Obligation (PVDBO) which is a Defined Benefit Plan with the advice of an
actuary using Project Unit Credit Method. Changes in the present value of the Retirement Benefit Plan as follows;
27.3 Actuarial Assumptions
The principal actuarial assumptions used in determining the cost are given below;
ANNUAL REPORT 2021 / 2022
80
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
27.4 Sensitivity Analysis
Significant actuarial assumptions for the determination of the defined obligation are the discount rate and the expected salary increase.
The sensitivity analysis below has been determined based on reasonably possible changes in the respective assumption that may occur
at the end of the reporting period.
As At / For the Year Ended 31
st
March 2022 2021
PVODBO Benefit / PVODBO Benefit /
(Expense) (Expense)
Rs. Rs. Rs. Rs.
1% Increase in Discount Rate 91,629,279 5,307,793 90,484,758 5,632,051
1% Decrease in Discount Rate 102,899,905 (5,962,833) 102,440,275 (6,323,466)
1% Increase in Salary Increment Rate 103,267,942 (6,330,870) 102,643,124 (6,526,315)
1% Decrease in Salary Increment Rate 91,221,759 5,715,313 90,202,009 5,914,800
As At 31
st
March 2022 2021
Rs. Rs.
Expected Future Working Life
Within the Next Twelve Months 28,043,535 16,493,729
Between One to Five Years 19,649,194 28,750,359
Between Five to Ten Years 31,101,443 34,363,886
More than Ten Years 18,142,900 16,508,835
96,937,072 96,116,809
Weighted Average duration of Defined Benefit Obligation 6.65 Years 6.63 Years
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely
that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using
the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit
obligation liability recognised in the Statement of Financial Position.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from previous year.
27.5 Maturity Profile of the Defined Benefit Obligation
27 EMPLOYEE BENEFITS
(Contd.)
ANNUAL REPORT 2021 / 2022
81
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
As At 31
st
March 2022 2021
Rs. Rs.
For the Year Ended 31
st
March 2022 2021
Rs. Rs.
For the Year Ended 31
st
March 2022 2021
Rs. Rs.
2021/22 2020/21
Rs. Rs.
Balance as at 01
st
April 82,430,182 104,306,010
Lease Modification* - (6,912,055)
Interest Expense Recognised in Profit or Loss 6,662,319 8,667,388
Payment for Lease Liability (21,120,000) (23,631,161)
Balance as at 31
st
March 67,972,501 82,430,182
28.1 Lease Liabilities included in the Statement of Financial Position
Non-current 44,740,501 63,257,392
Current 23,232,000 19,172,790
67,972,501 82,430,182
28 LEASE LIABILITY
The Company's Leasing Activities
The Company occupies lease hold properties to carry out marketing operations and other related administrative activities.
* The lease liability and right-of-use assets were remeasured due to revisions in the future lease payments.
Less than one year 23,232,000 21,120,000
One to five years 53,665,920 76,897,920
More than five years - -
Total Undiscounted Lease Liabilities 76,897,920 98,017,920
28.3 Amounts Recognised in Statement of Cash Flows
Payment for Lease Liabilities 21,120,000 23,631,161
28.4 Maturity Analysis – Contractual Undiscounted Cash Fows
The following table sets out a maturity analysis of lease payments, showing the undiscounted lease payments to be paid aer the
reporting date.
28.2 Amounts recognised in Profit or Loss
Interest on Lease Liabilities 6,662,319 8,667,388
Recognised in Finance Cost 6,662,319 8,667,388
Expenses Relating to Short-term and low-value Assets 34,923,000 30,273,692
Depreciation - Right-of-use Assets 13,190,065 15,547,736
Recognised in Administrative Expenses 48,113,065 45,821,428
Total Amount recognised in Profit or Loss 54,775,384 54,488,816
ANNUAL REPORT 2021 / 2022
82
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
As At 31
st
March 2022 2021
Rs. Rs.
As At 31
st
March 2022 2021
Rs. Rs.
29 TRADE AND OTHER PAYABLES
Trade Payables 357,729,705 236,530,357
Accruals 32,529,490 32,875,334
Import Duties and Related Other Payable 100,055,674 533,483,074
Refundable Deposits 601,432,887 70,699,130
Unclaimed Dividend 3,543,960 4,837,156
Deferred Income (Note 29.1) 5,190,602 1,040,002
EPF Payable 3,038,972 2,584,026
ETF Payable 455,845 387,604
Unclaimed Wages 217,244 253,086
Liability for Tax Assessment (Note 29.2) 24,765,635 49,965,635
Other Liabilities 14,651,297 3,391,517
1,143,611,311 936,046,921
29.1 Movement of Deferred Income
Balance at the beginning of the year 1,040,002 1,229,840
Provision / (Reversal) for the year 4,150,600 (189,838)
Balance at the end of the year 5,190,602 1,040,002
Deferred Income represent the Free Service Provision as per SLFRS 15 - "Revenue Recognition from Customer Contracts.
29.2 Provision for Tax Assessment
During 2009/10 and 2010/11, Company has disallowed 2/3 of NBT arising from service income for the purpose of Income Tax computation
as NBT was Gazetted by the Inland Revenue Department (IRD) under the "Prescribed Levy" definition. However, the Company was issued
assessments by the IRD for those 2 years, claiming that 2/3 of NBT paid at the customs (at the point of importation) also to be disallowed
in arriving the Income Tax Liability.
The appeal on 2009/10 was determined favoring Commissioner General of Inland Revenue by the Tax Appeal Court. Accordingly, the
case on 2010/11 has been withdrawn during 2020/21 year and the Company was issued an assessment amounting to Rs. 93.2 Mn with
penalties and the payable balance as of year end is Rs.24,765,635/-.
30 AMOUNTS DUE TO RELATED PARTY
Payable to Ashok Leyland Limited - India (Note 34.1) 2,146,013,053 1,826,684,846
2,146,013,053 1,826,684,846
ANNUAL REPORT 2021 / 2022
83
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
As At 31
st
March 2022 2021
Rs. Rs.
As At 31
st
March 2022 2021
Rs. Rs.
For the Year Ended 31
st
March 2022
For the Year Ended 31
st
March 2021
33.2 Assets Pledged
Factory Land, Building, Machinery, Other Equipment and Stocks have been pledged against the Import Loans obtained from banks.
31 CURRENT TAX LIABILITIES
Balance at the beginning of the year 16,842,337 3,334,486
Income Tax Liability for the year (Note 11.2) 135,989,307 30,270,541
Over Under Provision of Current Tax in Respect of Previous years (124,989) (1,931,363)
Tax Paid during the year (113,178,219) (14,831,327)
Balance at the end of the year 39,528,436 16,842,337
32 PROVISION FOR WARRANTY
Balance at the beginning of the year 651,835 2,660,359
Provision / (Reversal) for the year 2,827,697 (2,008,524)
Balance at the end of the year 3,479,532 651,835
Provision for warranties relates mainly to vehicles sold during the last six months of 2021 and 2022. The provision is based on estimates
made from historical warranty data associated with similar products and services. The Company expects to settle the majority of the
liability over the next year.
33 SHORT TERM BORROWINGS
Interest Bearing Borrowings (Note 33.1) 378,205,767 863,724,158
378,205,767 863,724,158
33.1 Movement of Short Term Borrowings
Lender Purpose Obtained Repayments
Rate of As at During During As at
Interest % 01
st
April 2021 the Year the Year 31
st
March 2022
Rs. Rs. Rs. Rs.
Lender Purpose Obtained Repayments
Rate of As at During During As at
Interest % 01
st
April 2020 the Year the Year 31
st
March 2021
Rs. Rs. Rs. Rs.
Seylan Bank PLC Import/ Financing AWPLR 200,000,000 379,888,767 (201,683,000) 378,205,767
Commercial Bank Import/ Financing AWPLR 142,824,158 1,622,742,070 (1,765,566,228) -
State Bank of India Import/ Financing AWPLR -1% 520,900,000 - (520,900,000) -
863,724,158 2,002,630,837 (2,488,149,228) 378,205,767
Seylan Bank PLC Import/ Financing AWPLR 1,560,514,800 278,418,000 (1,638,932,800) 200,000,000
Commercial Bank Import/ Financing AWPLR 1,266,246,056 272,822,493 (1,396,244,391) 142,824,158
State Bank of India Import/ Financing AWPLR -1% 533,900,000 - (13,000,000) 520,900,000
3,360,660,856 551,240,493 (3,048,177,191) 863,724,158
ANNUAL REPORT 2021 / 2022
84
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
34 RELATED PARTY DISCLOSURE
34.1 Related Party Transactions
The Company carries out transactions with parties who are defined as related parties by LKAS 24 “Related Party disclosures”, the details of
which are reported below. The transactions were carried out in the ordinary course of the business and arms length in nature.
Name of Related
Party & Relationship
Name of the
Director
Position Nature of Transaction 2022
Rs.
2021
Rs.
a) Transactions with Lanka Leyland Limited
Lanka Leyland
Limited Holds 41.77%
of the Share Capital
of the Company.
Mr. A K S A
Jayasena
Mr. W H C P S
Wijesekara
Chairman of Lanka
Leyland Limited
Director of Lanka
Leyland Limited
Dividend Payment to Lanka Leyland
Limited
3,025,000 7,562,500
b) Transactions and Outstanding Balance with Ashok Leyland - India - Recurring Transactions - Trading Nature
Ashok Leyland
Limited -India
Holds 27.85 % of
share capital of
the Company by
virtue of the joint
venture agreement
with Lanka Leyland
Limited
Mr. Gopal
Mahadevan
Mr. Nitin
Seth
(Resigned
w.e.f 10
th
November
2021)
Mr. Amandeep
Singh Arora
(Appointed
w.e.f 24
th
December
2021)
Whole time Director
and Chief Financial
Oicer of Ashok
Leyland Limited
Former Chief
Operating Oicer
of Ashok Leyland
Limited
Head of
International
Operations of Ashok
Leyland Limited
Payable to Ashok Leyland India
Opening Balance as at 01
st
April
(Including Import Bills Payable on GIT)
1,826,684,846 81,514,793
Purchase of Semi-Knock-Down (SKD)
Chassis kits and Motor Vehicle
2,010,867,200 1,851,428,053
Purchase of Spare Parts / Power
Generators
170,055,870 175,247,535
Usage Charges for ERP System 5,198,342 3,771,856
Set-o against Receivable Balance (2,861,932) -
Settlement of Purchases (1,863,931,273) (285,277,391)
Closing Balance as at 31
st
March
(Including Import Bills Payable on GIT)
2,146,013,053 1,826,684,846
Receivable from Ashok Leyland India
Opening Balance as at 01
st
April - -
Local Agency Commission (LAC) on
Direct Supply of Vehicles
27,412,399 8,124,389
Payment Received - (8,124,389)
Set-o against Payable Balance (2,861,932) -
Closing Balance as at 31
st
March 24,550,467 -
Dividend Payment to Ashok Leyland
Limited - India
2,016,664 5,041,660
Aggregate Value of Related Party Transactions During the Year
2,215,550,475 2,043,613,493
Aggregate Value of Related Party Transactions as a % of Net Revenue 74.52%
30.42%
ANNUAL REPORT 2021 / 2022
85
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
34 RELATED PARTY DISCLOSURE (Contd.)
34.1 Related Party Transactions (Contd.)
c) Transactions and Outstanding balances with Government of Sri Lanka and its related entities
Since the Government of Sri Lanka holds the ownership of Lanka Leyland Limited, the Government of Sri Lanka and all the entities controlled
or significantly influenced by the Government of Sri Lanka are considered as related parties according to LKAS 24, Related Party Disclosures.
The Company enters into transactions, arrangements and agreements with the Government of Sri Lanka and its related entities and
summary of significant transactions are reported below;
Name of Related Party Nature of Transaction Description 2022
Rs.
2021
Rs.
i) Non-Recurring Transaction - Trading Nature
Sri Lanka Transport Board Supply of Vehicles on
Finance Lease Terms
Balance as at 01
st
April 2,547,175,071 3,245,029,572
Payment Received (537,808,831) (697,854,501)
Balance Receivable as at 31
st
March 2,009,366,240 2,547,175,071
Total Future Rentals Receivables as at 31
st
March 2,009,366,240 2,547,175,071
ii) Recurring Transaction - Trading Nature
Sri Lanka Transport Board Sale of Vehicles / Spare
Parts and Repair / Hiring
services provided under
Payment on Delivery Term
Balance as at 01
st
April 20,120,934 22,275,637
Sale of Vehicles, Spares Parts and
Gen Sets and Services Rendered
during the year
33,693,132 43,531,874
Hiring / Other Services rendered
during the year
59,863,190 71,340,158
Payment Received (92,608,233) (117,026,735)
Balance Receivable as at 31
st
March 21,069,023 20,120,934
Aggregate Value of Related Party
Transactions during the Year
- Sri Lanka Transport Board 93,556,322 114,872,032
Aggregate Value of Related Party
Transactions as a % of Net Revenue
- Sri Lanka Transport Board 3.15% 1.71%
ANNUAL REPORT 2021 / 2022
86
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
34 RELATED PARTY DISCLOSURE (Contd.)
34.1 Related Party Transactions (Contd.)
Name of Related
Party
Nature of Transaction Description 2022
Rs.
2021
Rs.
Other Government
Related Entities
Sale of Vehicles / Spare Parts and
Repair services provided under
Payment on Delivery Term
Balance as at 01
st
April 44,851,715 168,126,859
Sale of Vehicles, Spares Parts and Gen Sets
and Services Rendered during the year
181,484,140 144,629,955
Payment Received (183,940,712) (267,905,099)
Balance Receivable as at 31
st
March 42,395,143 44,851,715
Bank of Ceylon Finance Provided to Lanka Ashok
Leyland PLC's Customers
Balance as at 01
st
April - 10,450,000
Finance Provided during the year 410,332,000 168,412,000
Payment Received for the Sale of Vehicles (394,312,000) (178,862,000)
Balance Receivable as at 31
st
March 16,020,000 -
People's Leasing &
Finance PLC
Finance Provided to Lanka Ashok
Leyland PLC's Customers
Balance as at 01
st
April 14,175,000 9,250,000
Finance Provided during the year 306,787,000 136,470,500
Other Services rendered - 500,000
Payment Received for the Sale of Vehicles (320,962,000) (132,045,500)
Balance Receivable as at 31
st
March - 14,175,000
Aggregate Value of Related Party Transactions During
the Year
- Bank of Ceylon 410,332,000 168,412,000
- People's Leasing & Finance PLC 306,787,000 136,470,500
Aggregate Value of Related Party Transactions as a % of
Net Revenue
- Bank of Ceylon 13.80% 2.51%
- People's Leasing & Finance PLC 10.32% 2.03%
Other Government
Financial
Institutions
Finance Provided to Lanka Ashok
Leyland PLC's Customers
Balance as at 01
st
April (50,000) 12,655,000
Finance Provided during the year 48,110,000 75,455,000
Payment Received for the Sale of Vehicles (48,060,000) (88,160,000)
Balance as at 31
st
March - (50,000)
Total Receivable from Government Financial Institutions 16,020,000 14,125,000
Total Related Party Receivable as at 31
st
March 79,484,166 79,097,649
ANNUAL REPORT 2021 / 2022
87
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
34 RELATED PARTY DISCLOSURE (Contd.)
34.1 Related Party Transactions (Contd.)
Name of Related
Party
Nature of Transaction Description 2022
Rs.
2021
Rs.
Sri Lanka Transport
Board
Dividend Payment to Sri Lanka
Transport Board
Payment during the year 62,500 156,250
Customs of
Sri Lanka
Import Duty and Taxes Balance as at 01
st
April - -
Taxes and Duty Charge for the Year 284,249,409 53,382,222
Payment Made (280,529,409) (53,382,222)
Balance Payable as at 31
st
March 3,720,000 -
Aggregate Value of Related Party Transactions
During the Year
- Customs of Sri Lanka
284,249,409 53,382,222
Aggregate Value of Related Party Transactions
as a % of Net Revenue
- Customs of Sri Lanka
9.56% 0.79%
Other Government
Institutions
Statutory Payments and Utility
Payments made to Government
Institutions
Balance as at 01
st
April 69,340,254 60,445,988
Taxes, Other Statutory Expenses and
Utility Expenses
202,296,083 111,340,487
Payment Made / Set-o (223,221,225) (102,446,221)
Balance Payable as at 31
st
March 48,415,112 69,340,254
Movement for Impairment Provision Recognized on Related Parties
For the Year Ended 31
st
March 2022 Balance as at Impairment Balance as at
01
st
April 2021 Charge / (Reversal) 31
st
March 2022
Rs. Rs. Rs.
For the Year Ended 31
st
March 2021 Balance as at Impairment Balance as at
01
st
April 2020 Charge / (Reversal) 31
st
March 2021
Rs. Rs. Rs.
Sri Lanka Transport Board 107,153,791 145,454,157 252,607,948
Other Government Related Entities - Trade Receivables 15,929,566 (4,960,076) 10,969,490
123,083,357 140,494,081 263,577,438
Sri Lanka Transport Board 92,471,156 14,682,635 107,153,791
Other Government Related Entities - Trade Receivables 30,638,275 (14,708,709) 15,929,566
Government Financial Institutions - Trade Receivables 250,213 (250,213) -
123,359,644 (276,287) 123,083,357
Above impairment amounts recorded under impairment of Rental Receivable from Trade Debtors and Impairment of Trade Receivables
in Note 19.3 and 22.2 respectively.
ANNUAL REPORT 2021 / 2022
88
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
34 RELATED PARTY DISCLOSURE (Contd.)
34.1 Related Party Transactions (Contd.)
As At 31
st
March 2022 2021
Rs. Rs.
For the Year Ended 31
st
March 2022 2021
Rs. Rs.
e) Open Advances - by Government of Sri Lanka and its Related Entities
Sri Lanka Transport Board 407,833 399,830
Bank of Ceylon 17,988,000 -
People's Leasing & Finance PLC 12,100,000 -
Other Government related entities 10,113,758 11,265,943
40,609,591 11,665,773
f) Open Advances - with Government of Sri Lanka and its Related Entities
Sri Lanka Customs 31,620,550 36,215,062
Ceylon Electricity Board 2,510,577 -
34,131,127 36,215,062
34.2 Terms and conditions of Related Party Transactions
The terms and conditions of the transactions with related entities were no more favorable than those available, or which might reason
-
ably be expected to be available, on similar transactions to non related entities on an arm's length basis. The supplies on lease terms are
no more favorable than those available for ordinary finance lease transactions.
34.3 Non Recurrent Related Party Transactions
There were no non- recurrent related party transactions that exceeded the thresholds that required the immediate market disclosure or
shareholder approval as required under Section 9 of the Continuing Listing Requirements of the Colombo Stock Exchange.
34.4 Recurrent Related Party Transactions
There were instances where aggregated recurrent related party transactions exceeded the threshold which required the disclosure in
Financial Statements as per Section 9 of the Listing Requirements of the Colombo Stock Exchange. Accordingly, the required disclosure
is given in note 34 to the Financial Statements.
There were no other recurrent related party transactions which exceeded the threshold stipulated in section 9 of the listing require
-
ments, other than individual transaction disclosed in the note 34.1 to the Financial Statements.
34.5 Compensation of Key Management Personnel
According to LKAS 24 “Related Party Disclosures”, Key Management Personnel, are those planning, directing and controlling the activities
of the entity.
Key Management Personnel include members of the Board of Directors and the Chief Executive Oicer of the Company, total amounts
paid as salaries and reimbursement of expenses amounts to Rs. 28,817,209/- (2020/21 - Rs. 26,833,142/-).
There were no compensation paid to Key Management Personnel during the year other than those disclosed below.
Key Management Personnel Payments
a. Short Term Employee Benefits 27,531,266 25,593,680
b. Post-Employment Benefits 1,285,943 1,239,462
c. Termination Benefits - -
d. Share-Based Payments - -
28,817,209 26,833,142
ANNUAL REPORT 2021 / 2022
89
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
As At 31
st
March 2022 2021
34.6 Transactions, Arrangements and Agreements Involving KMP and Their Close Family Members (CFM)
CFM of a KMP are those family members who may be expected to influence, or be influenced by, that individual in their dealings with the
entity. They may include;
(a) the individual’s domestic partner and children;
(b) children of the individual’s domestic partner; and
(c) dependents of the individual or the individual’s domestic partner
CFM are related parties to the entity. There were no transactions with CFM during the year.
34.7 Loans to Directors
No loans have been given to the Directors of the Company.
34.8 Terms and Conditions of the Transactions with KMPs
The terms and conditions of the transactions with Key Management Personnel and their related entities were no more favorable than
those available, or which might reasonably be expected to be available, on similar transactions to non Key Management Personnel
related entities.
35 CAPITAL COMMITMENTS
There were no material capital expenditure approved by the Board of Directors as at 31
st
March 2022 other than following;
The Company has entered into construction and asset procurement contracts with unrelated parties, amounting to Rs. 44,082,673, for
construction of main gate & sarounding area in the factory premises, genarator building and assets procurement for Assy line. As at 31
st
March 2022, Rs. 8,638,557 of such contract commitments had not yet been incurred and the front shed area and the generator building
are still under construction.
36 CONTINGENT LIABILITIES
There were no material Contingent Liabilities, which require adjustments to or disclosures in the Financial Statements as at 31
st
March
2022.
37 LITIGATIONS AND CLAIMS
Based on the available information, the Management is of the view that there are no material litigation or clams that could have material
impact on the financial position on the Company. Accordingly, no provision has been made for legal claims in the Financial Statements.
38 EVENTS AFTER REPORTING PERIOD
There were no other material events occurring aer the reporting period that requires adjustments to or disclosure in the Financial
Statements other than disclosed below;
"Aer satisfying the Solvency Test in accordance with Section 57 of the Companies Act, No. 07 of 2007, the Directors recommend the
payment of first and final dividend of Rs. 10/- per share (100%) amounting to Rs. 36,208,430/- for the year ended 31
st
March 2022 (2020/21-
Rs. 2/- per share (20%) amounting to Rs. 7,241,686/-), which will be declared at the Annual General Meeting to be held on 10
th
August
2022."
In accordance with Sri Lanka Accounting Standard 10 (LKAS 10) “Events aer the reporting period” this proposed first and final dividend
has not been recognized as a liability as at 31
st
March 2022. Subsequent to the reporting period, no circumstance has arisen which would
require adjustments to or disclosure in the Financial Statements, other than the above.
39 ULTIMATE HOLDING COMPANY
The Company is a quoted public limited liability Company with 41.77% of the Share Capital held by Lanka Leyland Limited and 27.85%
of the Share Capital held by Ashok Leyland Limited - India.
40 SEGMENTAL REPORTING
There are no distinguishable components of the business defined as segments and all operations are treated as one segment.
41 NUMBER OF EMPLOYEES
The number of employees as of year end was as follows;
Executives 73 55
Non Executives 166 122
239 177
34 RELATED PARTY DISCLOSURE (Contd.)
ANNUAL REPORT 2021 / 2022
90
42 FINANCIAL INSTRUMENTS - FAIR VALUES
42.1 Accounting Classifications and Fair Values
The following table shows the carrying amounts and fair values of Financial assets and Financial liabilities, including their levels in the
fair value hierarchy. It does not include fair value information for Financial assets and Financial liabilities not measured at fair value if
the carrying amount is a reasonable approximation of fair value.
As at 31
st
March 2022 Carrying Amount Fair Value
Fair Value Financial Other Total Level 1 Level 2 Level 3 Total
Hedging FVTPL FVOCI - FVOCI - Assets at Financial
Instruments Debt Equity Amortised Liabilities
Instruments Instruments Cost
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Financial Assets Measured at Fair Value
Investment in Equity Securities - 125,416 - - - - 125,416 125,416 - - 125,416
- 125,416 - - - - 125,416 125,416 - - 125,416
Financial Assets not Measured at Fair Value
Investment in Debentures - - - - 11,425,059 - 11,425,059 - - - -
Rental Receivable from Trade Debtors - - - - 1,379,801,988 - 1,379,801,988 - - - -
Trade Receivable - - - - 132,575,453 - 132,575,453 - - - -
Cash & Cash Equivalents - - - - 2,067,069,039 - 2,067,069,039 - - - -
- - - - 3,590,871,539 - 3,590,871,539
Financial Liabilities Not Measured at Fair Value
Trade Payable - - - - - 357,729,705 357,729,705 - - - -
Amounts due to Related Parties - - - - - 2,146,013,053 2,146,013,053 - - - -
Short Term Borrowings - Import Loans - - - - - 378,205,767 378,205,767 - - - -
Lease Liabilities - - - - - 67,972,501 67,972,501 - - - -
Bank Overdras - - - - - 70,437,430 70,437,430 - - - -
- - - - - 3,020,358,456 3,020,358,456 - - - -
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
ANNUAL REPORT 2021 / 2022
91
42 FINANCIAL INSTRUMENTS - FAIR VALUES (Contd.)
42.1 Accounting Classifications and Fair Values (Contd.)
As at 31
st
March 2021 Carrying Amount Fair Value
Fair Value Financial Other Total Level 1 Level 2 Level 3 Total
Hedging FVTPL FVOCI - FVOCI - Assets at Financial
Instruments Debt Equity Amortised Liabilities
Instruments Instruments Cost
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Financial Assets measured at Fair Value
Equity Securities - 131,441 - - - - 131,441 131,441 - - 131,441
- 131,441 - - - - 131,441 131,441 - - 131,441
Financial Assets not measured at Fair Value
Investment in Debentures - - - - 11,426,662 - 11,426,662 - - - -
Rental Receivable from Trade Debtors - - - - 1,729,793,093 - 1,729,793,093 - - - -
Trade Receivable - - - - 98,733,455 - 98,733,455 - - - -
Cash & Cash Equivalents - - - - 17,278,304 - 17,278,304 - - - -
- - - - 1,857,231,514 - 1,857,231,514 - - - -
Financial Liabilities not measured at Fair Value
Trade Payable - - - - - 236,530,357 236,530,357 - - - -
Amounts due to Related Parties - - - - - 1,826,684,846 1,826,684,846 - - - -
Short Term Borrowings - Import Loans - - - - - 863,724,158 863,724,158 - - - -
Lease Liabilities - - - - - 82,430,182 82,430,182 - - - -
Bank Overdras - - - - - 53,934,240 53,934,240 - - - -
- - - - - 3,063,303,783 3,063,303,783 - - - -
Transfer between levels
There were no transfers between Level 1, 2 and 3 during the year.
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
ANNUAL REPORT 2021 / 2022
92
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
43 FINANCIAL RISK MANAGEMENT
Overview
The Company has exposure to the following risks arising from financial instruments;
· Credit Risk
· Liquidity Risk
· Market Risk
· Operational Risk
This note presents information about the Company’s exposure to each of the above risks, and the Company’s objectives, policies and
processes of measuring and managing risk.
Risk Management Framework
The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework.
The Company Audit Committee oversees how management monitors compliance with the Company’s risk management policies and
procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Company
Audit Committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and adhoc reviews of risk man
-
agement controls and procedures, the results of which are reported to the Audit Committee.
Credit Risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Company’s receivables from customers.
Exposure to Credit Risk
The net carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk as at the
reporting date was as follows;
Trade and Other Receivables
The Company’s exposure to credit risk is influenced mainly by the individual characteristics of the customers. However, management
also considers the demographics of the Company’s customer base, including the default risk of the industry as these factors may have
an influence on credit risk. During 2021/22, approximately 3.1% (2020/21 : 4%) of the Company’s revenue was attributable to sales
transactions with the largest single customer.
The Company establishes an allowance for impairment that represents its estimate of impaired losses in respect of trade receivables.
The main components of this allowance are determined based on historical data of payment statistics of similar financial assets.
As At 31
st
March 2022 2021
Rs. Rs.
Trade Receivables 132,575,453 98,733,455
Other Receivables 185,380,290 230,131,834
Rental Receivable from Trade Debtors 1,379,801,988 1,729,793,093
Cash at Banks and Short Term Investments in Banks 2,062,675,014 11,613,935
Total 3,760,432,745 2,070,272,317
ANNUAL REPORT 2021 / 2022
93
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
43 FINANCIAL RISK MANAGEMENT
(Contd.)
The maturity analysis of Rental Receivable from Trade Debtors is given in Note 19.5 and 19.6. The aging of Trade receivables as at 31
st
March was as follows;
The maximum exposure to credit risk for Rental Receivable fromTrade Debtors by type of counterparty is given in Note 19.4. The maxi
-
mum exposure to credit risk for trade receivable by type of counterparty was as follows;
As at 31
st
March 2022 0 - 60 61 - 90 91 - 120 121 - 180 More than Total
Days Days Days Days 180 Days
Rs. Rs. Rs. Rs. Rs. Rs.
As at 31
st
March 2021 0 - 60 61 - 90 91 - 120 121 - 180 More than Total
Days Days Days Days 180 Days
Rs. Rs. Rs. Rs. Rs. Rs.
Trade Receivables (Gross)
117,276,441 1,968,495 6,143,573 7,064,907 34,768,611 167,222,027
Impairment (1,950,464) (115,906) (359,161) (695,006) (31,526,037) (34,646,574)
Trade Receivables (Net) 115,325,977 1,852,589 5,784,412 6,369,901 3,242,574 132,575,453
Trade Receivables (Gross) 56,054,661 4,857,974 3,631,358 17,032,100 78,339,271 159,915,364
Impairment (1,402,963) (675,127) (668,017) (2,379,249) (56,056,553) (61,181,909)
Trade Receivables (Net) 54,651,698 4,182,847 2,963,341 14,652,851 22,282,718 98,733,455
The movement in the allowance for impairment in respect of trade and lease rental receivables during the year was as follows;
The movement in the allowance for impairment in respect of trade and lease rental receivables during the year was as follows;
As at 31
st
March 2022 Individual Collective Total
Impairment Impairment Impairment
Rs. Rs. Rs.
As at 31
st
March 2021 Individual Collective Total
Impairment Impairment Impairment
Rs. Rs. Rs.
Balance as at 01
st
April 2021 131,782,039 51,852,267 183,634,306
Provision Charge / (Reversal) for the year 146,803,295 (231,799) 146,571,496
Write-o during the year (10,909,444) (27,056,034) (37,965,478)
Balance as at 31
st
March 2022 267,675,890 24,564,434 292,240,324
Balance as at 01
st
April 2020 109,113,602 77,850,022 186,963,624
Provision Charge / (Reversal) for the year 22,668,437 (25,997,755) (3,329,318)
Balance as at 31
st
March 2021 131,782,039 51,852,267 183,634,306
As At 31
st
March Carrying Amount
2022 2021
Rs. Rs.
Government Entities 58,427,786 55,055,460
Corporates and Other Institutions 68,657,188 34,016,430
End-user Customers 5,490,479 9,661,565
132,575,453 98,733,455
ANNUAL REPORT 2021 / 2022
94
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
43 FINANCIAL RISK MANAGEMENT
(Contd.)
Cash at Banks
The Company held cash at banks of Rs. 2.06 Bn. as at 31
st
March 2022 (2020/21: Rs. 11.6 Mn.), which represents its maximum credit
exposure on these assets.
Respective credit ratings of banks with Company cash balances held are as follows;
Liquidity Risk
Liquidity risk is the risk of facing diiculty in meeting the obligations associated with its financial liabilities that are settled by delivering
cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have
suicient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or
aecting the Company’s reputation.
The Company also monitors the level of expected cash inflows from trade and other receivables together with expected cash outflows on
trade and other payables. In addition, the Company maintains Rs. 200 million overdra facility that is secured. Interest would be payable
at the market rate.
Cash at Bank
As At 31
st
March 2022 2021
Bank Credit Rate Rs. Rs.
Bank of Ceylon AA - (lka) 2,300,000 2,301,975
Cargills Bank AA - (lka) 950,026,789 -
Commercial Bank of Ceylon PLC AA - (lka) 759,675,810 5,670,416
Indian Bank BBB - 300,652,415 51,130
People's Bank AA - (lka) - 898,306
Seylan Bank PLC A (lka) 20,000 20,000
State Bank of India BBB - 50,000,000 2,672,108
2,062,675,014 11,613,935
ANNUAL REPORT 2021 / 2022
95
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
As at 31
st
March 2022
Carrying Contractual Cash Flows
Amount Total 0 - 30 Days 31 - 90 Days More than 90 Days
Rs. Rs. Rs. Rs. Rs.
As at 31
st
March 2021
Carrying Contractual Cash Flows
Amount Total 0 - 30 Days 31 - 90 Days More than 90 Days
Rs. Rs. Rs. Rs. Rs.
Trade Payables
357,729,705 357,729,705 109,085,380 248,644,325 -
Amounts due to Related Party
2,146,013,053 2,146,013,053 261,203,329 6,925,939 1,877,883,785
Short Term Borrowings
378,205,767 378,205,767 378,205,767 - -
Lease Liability
67,972,501 76,897,920 - - 76,897,920
Bank Overdras
70,437,430 70,437,430 70,437,430 - -
Total
3,020,358,456 3,029,283,875 818,931,906 255,570,264 1,954,781,705
Trade Payables 236,530,357 236,530,357 70,926,370 165,603,987 -
Amounts due to Related Party 1,826,684,846 1,826,684,846 62,634,167 45,774,170 1,718,276,509
Short Term Borrowings 863,724,158 863,724,158 - 863,724,158 -
Lease Liability 82,430,182 98,017,920 - - 98,017,920
Bank Overdras 53,934,240 53,934,240 53,934,240 - -
Total 3,063,303,783 3,078,891,521 187,494,777 1,075,102,315 1,816,294,429
Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices that will aect the
Company’s income or the value of its financial instruments. The management conduct periodic reviews on the Company`s pricing &
pricing policy in order to mitigate the market risk. The objective of market risk management is to manage and control market risk expo-
sures within acceptable parameters, while optimizing the return.
Foreign Currency Risk
The Company is exposed to currency risk mainly on payable for purchases that are denominated in US Dollars. The Management closely
monitors the exchange rate movement, for necessary action.
The Financial Instruments denominated in US Dollars as on 31
st
March are;
Sri Lankan Rupee witnessed a sharp depreciation against the US Dollar in March 2022 as a result of ongoing currency crisis in the Country
and on the back of economic turmoil in global, regional and local markets resulting from the COVID-19 pandemic. The Company is
exposed to currency risk on foreign currency denominated liabilities and economic risk identified by currency risk.
Sri Lankan Rupee witnessed a steep depreciation during the end of the year when CBSL allowed free float of the currency. In addition to
the depreciation of the currency, there were significant challenges in the foreign currency market on the back of a marked reduction in
liquidity amidst declining confidence and a depletion of foreign currency reserves in the country. This resulted in a series of measures
such as the continuation of certain import controls and stipulations on foreign currency conversions and remittances. The Company
carefully monitored the implications and took preventive measures to early settle the liabilities when ever possible.
The following are the contractual maturities of financial liabilities at its Carrying Value;
43 FINANCIAL RISK MANAGEMENT
(Contd.)
As at 31
st
March 2022 2021
LKR Exchange Rate USD LKR Exchange Rate USD
Payable to Ashok Leyland Limited - India
2,146,013,053 298.9958 7,177,402
1,826,684,846 201.60 9,060,937
2,146,013,053 7,177,402 1,826,684,846 9,060,937
ANNUAL REPORT 2021 / 2022
96
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
Sensitivity Analysis
A reasonably possible strengthening (weakening) of the Sri Lankan rupees against US dollar at the year end would have aected the
measurement of financial liabilities denominated in a foreign currency and aected profit before tax by the amounts shown below. This
analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact on forecasted purchases.
The following details the Company's sensitivity movement in the foreign currencies. The foreign exchange rate sensitivity is calculated for
each currency by aggregation of the net foreign exchange rate exposure of a currency and a simultaneous parallel foreign exchange rates
shi in the foreign exchange rates of each currency by 5%. 5% represents management's assessment of the reasonably possible change
in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts
their translation at the period end for a 5% change in foreign currency rates.
Profit before Tax
Strengthening Weakening
2021-22
LKR (5% movement) 107,300,653 (107,300,653)
2020-21
LKR (5% movement) 91,334,242 (91,334,242)
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flow of a financial instrument will fluctuate because of changes in market
interest rate. The Company's exposure to the risk of changes in market interest rate relates primarily to the Company's short term debt
obligations with floating rates. The Company manages its interest rate risk by monitoring interest rate fluctuations to enable necessary
back-up plans to be ready in advance to mitigate the risk and by ensuring that the import loans are settled within a shortest possible
period by improving the working capital cycle and negotiating best possible rates with the Banks.
The Central Bank of Sri Lanka tightened the monetary policy during the second half of the financial year, resulting in an upward trend in
interest rates. Elevated pressures on inflation on account of many factors including increases in global commodity prices, food supply
and the sharp depreciation of the currency in March 2022 have resulted in strong actions by the CBSL on monetary policy post end of
the reporting period. Such actions have raised monetary policy rates significantly and helped bridge the gap between policy and market
interest rates. The Company proactively managed the risk of increasing interest rates by matching its borrowings and short term invest
-
ment portfolios.
Exposure to Interest Rate Risk
The interest rate profile of the Company’s interest-bearing financial instruments is given in Note 24.3 and 33.1 to the Financial State
-
ments.
Cash Flow Sensitivity Analysis for Variable-Rate Instruments
The following details demonstrate the sensitivity to a reasonably possible change in the interest rate with all other variables held con
-
stant. 1% increase or decrease is used when reporting interest rate risk and represents management's assessment of the reasonably
possible change in interest rates.
43 FINANCIAL RISK MANAGEMENT
(Contd.)
ANNUAL REPORT 2021 / 2022
97
NOTES TO THE FINANCIAL STATEMENTS (Contd.)
Profit before Tax
Variable-Rate Instruments Favorable Un-Favorable
Rs. Rs.
Import Loans
2021/22
Interest Rate (1% movement) 2,988,128 (2,988,128)
2020/21
Interest Rate (1% movement) 19,802,184 (19,802,184)
The impact on the Company’s Profit before tax due to the change in the interest rate is as follows;
As At 31
st
March 2022 2021
Rs. Rs.
Interest Bearing Borrowings 378,205,767 863,724,158
Total Equity 3,696,644,686 3,356,342,705
Equity and Debts 4,074,850,453 4,220,066,863
Gearing Ratio 9% 20%
43 FINANCIAL RISK MANAGEMENT
(Contd.)
Capital Management
The Company’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. Board of Directors of the Company monitors the return on capital, as well as the level of dividends
to ordinary shareholders.
ANNUAL REPORT 2021 / 2022
98
2021/22 2020/21
To Government as
Taxes
To Employees
To Directors
To Lenders
To Shareholders as
Dividends
Retained for
Reinvestments and
Future Growth
26%
36%
35%
2%
1%
1%
1%
2%
To Government as
Taxes
To Employees
To Directors
To Lenders
To Shareholders as
Dividends
Retained for
Reinvestments and
Future Growth
41%
27%
18%
11%
VALUE ADDED STATEMENT
For the Year Ended 31
st
March
2022
2021
Rs.
Rs.
Revenue 6,860,962,989 2,973,106,405
Operating Expenses (6,076,149,536) (2,426,326,028)
784,813,453 546,780,377
Other Operating Income 367,472,452 435,406,681
Finance Income 21,059,478 2,893,443
Total Value Added by the Company 1,173,345,383 985,080,501
Distributed as Follows
For the Year Ended 31
st
March
2022
2021
Rs. As a %
Rs. As a %
To Government as Duties and Taxes 410,454,517 35% 405,776,137 41%
To Employees 299,988,834 25% 262,872,575 27%
To Directors 12,025,833 1% 11,765,000 1%
To Lenders (Interest on Loan Capital) 24,023,115 2% 177,596,091 18%
To Shareholders as Dividends 7,241,686 1% 18,104,215 2%
Retained for Reinvestments and Future Growth 419,611,398 36% 108,966,483 11%
(Depreciation & Retained Profits)
1,173,345,383 100% 985,080,501 100%
ANNUAL REPORT 2021 / 2022
99
SHARE INFORMATION
CATEGORY
NO. OF SHAREHOLDERS NO. OF SHARES SHAREHOLDING %
31
st
March 2022 31
st
March 2021 31
st
March 2022 31
st
March 2021 31
st
March 2022 31
st
March 2021
1 - 1,000
701
702
44,108
42,679
1.21
1.18
1,001 - 5,000
12
11
27,057
21,804
0.75
0.60
5,001 - 10,000
-
1
-
6,682
-
0.18
10,001 - 50,000
1
1
31,250
31,250
0.86
0.86
50,001 - 100,000
-
-
-
-
-
-
100,001 - 500,000
2
2
429,291
429,291
11.86
11.86
500,001 - 1,000,000
1
1
568,305
568,305
15.70
15.70
OVER 1,000,000
2
2
2,520,832
2,520,832
69.62
69.62
TOTAL
719
720
3,620,843
3,620,843
100.00
100.00
MAJOR SHAREHOLDERS
NO. OF SHARES HELD SHARE HOLDING %
31
st
March 2022 31
st
March 2021 31
st
March 2022 31
st
March 2021
Lanka Leyland Limited 1,512,500 1,512,500 41.77 41.77
Ashok Leyland Limited 1,008,332 1,008,332 27.85 27.85
N Thirimanne 568,305 568,305 15.70 15.70
Perpetual Equities (Pvt) Limited 228,356 228,356 6.31 6.31
Rahul Capital (Pvt) Limited 200,935 200,935 5.55 5.55
Sri Lanka Central Transport Board 31,250 31,250 0.86 0.86
U I Suriyabandara 4,546 4,231 0.13 0.12
R V D Piyathilake / R V D C G Rajapakse 2,785 201 0.08 0.01
R P T Adams 2,700 2,700 0.07 0.07
L N J Perera 2,600 2,600 0.07 0.07
Bansei Securities Capital (Pvt) Ltd. / M A U Gnanathilaka 2,230 2,230 0.06 0.06
D B D D Danthanarayana 2,000 100 0.06 0.003
Assetline Leasing Co. Ltd/ S.M. Dharmakeerthi Samarakoon 1,957 2,649 0.05 0.07
F M Asaf Khan 1,514 1,514 0.04 0.04
B Periyasamy 1,250 1,250 0.03 0.03
L A P Perera 1,200 1,200 0.03 0.03
N Eeswararajah / S Sivarasa 1,107 1,130 0.03 0.031
P L Perera 1,100 1,100 0.03 0.03
N R Fonseka 1,068 79 0.03 0.002
R A Y T Perera 1,000 1,200 0.03 0.03
R R Jayasundara / L J M A Jayasundara 800 800 0.02 0.02
M J V K Jayasuriya 800 800 0.02 0.02
J G De Mel 105 6,682 0.003 0.18
There were 719 registered shareholders as at 31
st
March 2022 distributed as follows;
List of 20 Major Shareholders
ANNUAL REPORT 2021 / 2022
100
SHARE INFORMATION (Contd.)
Public Holding
No. of Shareholders No. of Shares % Holding Float Adjusted Market
Capitalization
Shares held by public as at 31
st
Marh 2022
717 1,100,011 30.38% 781,008,593
Shares held by public as at 31
st
Marh 2021 718 1,100,011 30.38% 923,185,158
Year Ended 31
st
March 2022 Year Ended 31
st
March 2021
Rs. Date Rs. Date
Highest
1,029.50 9-Feb-22 1,000.00 13-Jan-21
Lowest 551.00 9-Mar-22 541.00 15-May-20
Last Traded
847.00 30-Mar-22 879.00 26-Mar-21
Year End 710.00 31-Mar-22 839.25 31-Mar-21
The highest, lowest and year end market value recorded during the year as follows;
Public Holding
Float Adjusted Market Capitalisation
The public holding of the Company as at 31
st
March 2022 was 30.38% comprising of 717 shareholders and the float adjusted market capitalization
in terms of Rule 7.13 1 (a) of Listing Rule of CSE was Rs. 781,008,593/-, accordingly the Company qualifies under option five of the minimum
public holding requirement.
Lanka Leyland Limited
Ashok Leyland Limited - India
Institutional Investors
Individual Investors
41.77%
27.85%
12.80%
17.58%
Overview of Lanka Ashok Leyland PLC Shareholder Structure by Ownership
ANNUAL REPORT 2021 / 2022
101
DECADE AT A GLANCE
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
TRADING RESULTS
Turnover Rs 000' 10,546,651 7,013,558 8,235,660 9,088,008 11,416,595 15,565,077 8,627,775 6,718,237 2,973,106 6,860,963
Net Trading Profit /(Loss) Before Interest
Rs 000' 390,200 390,958 546,130 366,041 445,420 821,267 295,316 (5,641) (238,735) 105,205
Interest Paid Rs 000' (313,781) (332,748) (87,032) (81,505) (124,437) (164,289) (229,819) (267,372) (177,596) (24,029)
Net Trading Profit /(Loss) Aer Interest Rs 000' 76,419 58,210 459,098 269,914 320,982 656,978 65,496 (273,012) (416,331) 81,176
Other Income Rs 000' 376,704 197,907 74,324 29,459 28,380 26,324 51,432 293,632 435,407 367,472
Profit Before Tax Rs 000' 453,123 256,117 533,422 313,995 349,362 683,302 116,929 20,620 19,076 448,648
Taxation Rs 000' (98,300) (91,561) (203,447) (104,457) (111,156) (179,185) (9,468) 82,793 (14,570) (105,673)
Profit Aer Tax Rs 000' 354,823 164,556 329,975 209,538 238,207 504,117 107,461 103,413 4,505 342,975
Other Comprehensive Income Rs 000' (6,376) (2,091) (4,438) 5,180 (1,547) (5,214) 7,259 4,113 810 3,256
Profit Brought Forward Rs 000' 1,330,037 1,361,233 1,487,489 1,794,922 1,865,189 2,011,388 2,401,829 2,376,907 2,431,363 2,419,620
Eect of Transitional Provision Rs 000' - - - - - - (12,913) (19,325) - -
Retained Earnings
Profit Available for Appropriations Rs 000' 1,678,484 1,523,698 1,813,026 2,009,640 2,101,848 2,510,291 2,503,636 2,465,107 2,436,678 2,765,852
Dividend Paid Rs 000' (217,250) (36,208) (18,104) (144,834) (90,521) (108,625) (126,730) (36,208) (18,104) (7,242)
Transfers to Reserves Rs 000' (100,000) - - - - - - - - -
Unclaimed Dividend Reversed Rs 000' - - - 383 61 163 - 2,464 1,046 1,312
Retained Earnings Rs 000' 1,361,233 1,487,489 1,794,922 1,865,189 2,011,388 2,401,829 2,376,907 2,431,363 2,419,620 2,759,922
INVESTORS' FUNDS
Share Capital Rs 000' 36,208 36,208 36,208 36,208 36,208 36,208 36,208 36,208 36,208 36,208
Retained Earnings Rs 000' 1,361,233 1,487,489 1,794,922 1,865,189 2,011,388 2,401,829 2,376,907 2,431,363 2,419,620 2,759,922
Reserves Rs 000' 900,631 900,631 900,664 900,643 900,646 900,622 900,514 900,514 900,514 900,514
Shareholders Fund Rs 000' 2,298,072 2,424,328 2,731,794 2,802,040 2,948,242 3,338,660 3,313,629 3,368,085 3,356,342 3,696,644
ASSETS & LIABILITIES
Property, Plant & Equipment Rs 000' 331,487 407,136 340,686 554,459 549,022 524,690 548,285 566,792 508,332 647,642
Other Non Current Assets Rs 000' 561,712 174,085 62,708 65,926 26,404 39,288 54,619 1,929,759 1,558,874 1,135,915
Current Assets Rs 000' 5,032,168 4,351,212 5,363,668 4,762,133 5,118,300 6,563,827 5,406,205 5,070,161 5,165,568 5,859,273
Short - Term Borrowings Rs 000' (3,249,257) (2,131,483) (2,214,994) (1,948,189) (940,192) (2,320,488) (1,523,125) (3,360,661) (863,724) (378,206)
Other Current Liabilities Rs 000' (338,369) (333,536) (762,671) (550,465) (1,711,833) (1,385,101) (1,087,856) (671,307) (2,853,333) (3,426,302)
Working Capital Rs 000' 1,444,542 1,886,193 2,386,003 2,263,479 2,466,275 2,858,238 2,795,224 1,038,193 1,448,511 2,054,765
Non Current Liabilities Rs 000' (39,670) (43,087) (57,604) (81,824) (93,460) (83,557) (84,498) (166,659) (159,374) (141,678)
Net worth of Company Rs 000' 2,298,072 2,424,328 2,731,794 2,802,040 2,948,242 3,338,660 3,313,629 3,368,086 3,356,343 3,696,645
ANNUAL REPORT 2021 / 2022
102
DECADE AT A GLANCE (Contd.)
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
CASH FLOW ANALYSIS
Investments in Property,
Plant and Equipment Rs 000' 225,991 14,231 34,540 57,654 77,003 29,766 51,553 15,948 24,782 179,570
Depreciation and Amortization Rs 000' 39,069 61,581 80,855 86,989 125,582 121,295 115,993 134,200 136,404 114,063
Net Cash Generated from / (used in)
Operating Activities Rs 000' (333,771) 1,164,145 (54,445) 500,605 326,513 (1,205,776) 852,480 (2,023,320) 2,146,002 2,363,943
Investing Activities Rs 000' (23,760) (47,831) (28,496) (57,482) (69,464) (13,913) (27,653) 234,806 403,660 181,277
Financing Activities Rs 000' 10,622 (1,117,774) 83,511 (411,639) (276,277) 1,271,671 (924,092) 1,772,704 (2,538,131) (511,933)
Net Increase / (Decrease) in Cash and
Cash Equivalents Rs 000' (346,909) (1,460) 570 31,485 (19,227) 51,982 (99,265) (15,810) 11,531 2,033,288
RATIOS & STATISTICS
Issued Share Capital Nos. 3,620,843 3,620,843 3,620,843 3,620,843 3,620,843 3,620,843 3,620,843 3,620,843 3,620,843 3,620,843
Net Assets per Share Rs. 634.68 669.55 754.46 773.86 814.24 922.07 915.15 930.19 926.95 1,020.93
Dividend per Share Rs. 10.00 5.00 40.00 25.00 30.00 35.00 10.00 5.00 2.00 10.00
Market Price per Share Rs. 1,717.80 1,292.00 1,300.00 1,513.40 1,062.00 990.50 628.00 702.00 839.25 710.00
Market Capitalisation Rs 000' 6,219,884 4,678,129 4,707,096 5,479,784 3,845,335 3,586,445 2,273,889 2,541,832 3,038,792 2,570,799
Earnings per Share Rs. 97.99 45.45 91.13 57.87 65.79 139.23 29.68 28.56 1.24 94.72
Dividend Payout % 10.20 11.00 43.89 43.20 45.60 25.14 33.69 17.51 160.74 10.56
Price Earning Ratio No of Times 17.53 28.43 14.27 26.15 16.14 7.11 21.16 24.58 674.49 7.50
Current Ratio No of Times 1.40 1.77 1.80 1.91 1.93 1.77 2.07 1.26 1.39 1.54
Quick Ratio No of Times 0.25 0.67 0.66 0.37 0.44 0.25 0.24 0.21 0.21 0.76
Interest Cover No of Times 2.44 1.77 7.13 4.85 3.81 5.16 1.51 1.08 1.11 19.67
Trading Profit Before Int. / Net Turnover.
% 3.70 5.57 6.63 4.03 3.90 5.28 3.42 (0.08) (8.03) 1.53
Trading Profit Aer Int. / Net Turnover. % 0.72 0.83 5.57 2.97 2.81 4.22 0.76 (4.06) (14.00) 1.18
Return on Net Assets % 15.44 6.79 12.08 7.48 8.08 15.10 3.24 3.07 0.13 9.28
Asset Turnover No of Times 1.78 1.42 1.43 1.69 2.01 2.18 1.44 0.89 0.41 0.90
Gearing (Debt Capital/Debt+Equity Capital)
% 0.59 0.47 0.45 0.41 0.24 0.41 0.31 0.50 0.20 0.09
ANNUAL REPORT 2021 / 2022
103
DISTRIBUTION NETWORK
ANNUAL REPORT 2021 / 2022
104
GLOSSARY
Actuarial Gains and Losses
Dierence between the previous actuarial assumptions and what has
actually occurred and the eects of changes in actuarial assumptions.
Adjusted EBITDA
Adjusted earnings before interest, tax, depreciation and amortisation
is calculated by adjusting profit from continuing operations to
exclude the impact of Taxation, Net Finance Costs, Depreciation,
Amortisation, Impairment Losses / Reversals related Intangible
Assets, Property, Plant and Equipment.
Amortisation
The systematic allocation of the depreciable amount of an intangible
asset over its useful life.
Borrowings
All interest bearing liabilities.
Capital Employed
Total equity, minority interest and interest bearing Borrowings.
Capital Reserves
Reserves identified for specific purposes and considered not
available for distribution.
Cash Equivalents
Liquid investments with original maturity periods of three months or
less.
Contingent Liability
A possible obligation that arises from past events whose existence
will be confirmed only by the occurrence or non-occurrence of one
or more uncertain future events not wholly within the control of the
enterprise.
Current Ratio
Current assets divided by current liabilities, a measure of liquidity.
Current Service Cost
Increase in the present value of the defined benefit obligation
resulting from employee's service in the current period.
Debenture
A long-term debt instrument issued by a corporate.
Deferred Taxation
The tax eect of timing dierences deferred to / from other periods,
which would only qualify for inclusion on a tax return at a future date.
Dividend Cover
Profit attributable to ordinary shareholders divided by dividend.
Measures the number of times dividend is covered by distributable
profit.
Dividend Payout
Dividend per share as a percentage of the earnings per share.
Dividend Yield
Dividend per share as a percentage of the market price a measure of
return on investment.
EBIT
Abbreviation for Earnings Before Interest and Tax.
Eective Tax Rate
Income tax expense divided by profit from ordinary activities before
tax.
Equity
Shareholders' funds.
Equity Accounted Investees
An entity including an unincorporated entity such as a partnership,
over which the investor has significant influence and that is neither a
subsidiary nor an interest in a joint venture.
Expected Credit Losses (ECLs)
ECL approach is the trade debtor impairment method under SLFRS
09 on "Financial Instruments". ECL are the discounted product of the
Probability of Default (PD) and Loss Given Default (LGD).
Fair Value
The amount for which an asset could be exchanged or liability
settled between knowledgeable willing parties in an arm's length
transaction.
Fair Value Through Profit and Loss
A financial asset/liability acquired/incurred principally for the
purpose of selling or repurchasing it in the near term, part of a
portfolio of identified financial instruments that are managed
together and for which there is evidence of a recent actual pattern of
short-term profit taking, or a derivative (except for a derivative that is
a financial guarantee contract)
Financial Asset
Any asset that is cash, an equity instrument of another entity or a
contractual right to receive cash or another financial asset from
another entity.
ANNUAL REPORT 2021 / 2022
105
GLOSSARY (Contd.)
Financial Instrument
Any contract that gives rise to a financial asset of one entity and a
financial liability or equity to another entity.
Gearing
Proportion of total interest bearing borrowings to capital employed.
Gross Profit Ratio
Gross profit divided by revenue.
Interest Cover
Profit before tax plus net finance cost divided by net finance cost, a
measure of an entity's debt service ability.
Key Management Personnel (KMP)
KMP are those persons having authority and responsibility for
planning directing and controlling the activities of the entity, directly
or indirectly, including any Director (whether executive or otherwise)
of that entity.
Lease
A contract, or part of a contract, that conveys the right to use an asset
for a period of time in exchange for consideration.
Loss Given Default (LGD)
LGD is the percentage of an exposure that a lender expects to loss in
the event of obligor default.
Market Capitalisation
Number of shares in issue multiplied by the market value of a share
at the reported date.
Net Assets Per Share
Shareholders' funds divided by the weighted average number of
ordinary shares in issue, a basis of share valuation.
Other Comprehensive Income
Items of income and expenses that are not recognised in profit or loss
as required or permitted by other SLFRS's.
Present Value of a Defined Benefit Obligation
Present value of expected future payments required to settle the
obligation resulting from employee service in the current and prior
periods.
Price Earnings Ratio
Market price of a share divided by earnings per share as reported at
that date.
Probability of Default (PD)
PD is an internal estimate for each borrower grade of the likelihood
that an obligor will default on an obligation.
Related Parties
Parties who could control or significantly influence the financial and
operating policies of the business.
Return on Average Capital Employed
Profit before tax plus net finance cost divided by average capital
employed.
Return on Average Shareholders' Funds
Attributable profits to the shareholders divided by average
shareholders' funds.
Right-of-use Asset
An asset that represents a lessee's right to use an underlying asset for
the lease term.
Semi-Knocked-Down (SKD)
Units those are imported / exported in sets of new parts of a single
model vehicle with type approval certificate from an internationally
recognized institute which certified by the manufacturer that
have been partly assembled and which are further assembled as a
Completely Built Unit using imported and domestically manufactured
components.
Working Capital
Capital required to finance day-to-day operations computed as the
excess of current assets over current liabilities.
ANNUAL REPORT 2021 / 2022
106
NOTICE OF MEETING
Notice is hereby given that the Thirty Ninth Annual General Meeting (AGM) of Lanka Ashok Leyland PLC will be held at Lanka Ashok Leyland
Conference Room, Panagoda, Homagama on 10
th
August 2022 at 03.30 p.m for following purposes.
1. To consider the report of the Directors' and the audited Financial Statements for the year ended 31
st
March 2022.
2. To elect Mr. Amandeep Singh Arora as a Director of the Company in place of Mr. Nitin Seth.
3. To elect a Director in place of Mr. Gopal Mahadevan who retires by rotation in terms of Article 84 of the Articles of Association of the
Company and who being eligible, oers himself for re-appointment.
4. To re-elect Mr. D P Kumarage as a Director who is over the age of 70 years and who retires at the Annual General Meeting in terms of
section 210 of the Companies Act, No. 07 of 2007 by passing the following ordinary resolution.
"It is here by Resolved that the age limit referred to in Section 210 of the Companies Act, No. 07 of 2007 shall not apply to Mr. D P Kumarage
who is over the age of 70 years prior to this Annual General Meeting and that he be re-elected."
5. To re-elect Mr. N Sundararajan as a Director who is over the age of 70 years and who retires at the Annual General Meeting in terms of
section 210 of the Companies Act, No. 07 of 2007 by passing the following ordinary resolution.
"It is here by Resolved that the age limit referred to in Section 210 of the Companies Act, No. 07 of 2007 shall not apply to Mr. N Sundararajan
who is over the age of 70 years prior to this Annual General Meeting and that he be re-elected."
6. To declare a dividend as recommended by the Board of Directors.
7. To re-appoint Auditors and fix their remuneration, M/s KPMG Chartered Accountants who are eligible for re-appointment.
To consider and if thought fit, to pass with or without modification(s), the following as an ordinary resolution.
"Resolved that M/s KPMG Chartered Accountants are hereby appointed as Statutory Auditors of the Company, for the Financial Year
2022/23, on a remuneration of Rs. 2,300,000/= (Rupees Two Million Three Hundred Thousand Only), in addition to reimbursement of out
of pocket expenses."
8. To transact any other business of which due notice has been given.
By order of the Board
D A Abeyawardene
Director / Secretary
Colombo.
30
th
May 2022
A member entitled to attend and to vote at the above mentioned meeting is entitled to appoint a proxy who need not also be a member, to
attend instead of him. A form of proxy accompanies this notice.
ANNUAL REPORT 2021 / 2022
107
CORPORATE INFORMATION
NAME OF COMPANY Lanka Ashok Leyland PLC
COMPANY REGISTRATION NO P Q 168 (Former No N (PBS) 21)
LEGAL FORM A public quoted Company incorporated in Sri Lanka in 1982. Re-registered as a Public Limited
Company under the Companies Act, No. 07 of 2007.
DIRECTORS A K S A Jayasena - Chairman
D P Kumarage
N Sundararajan
Gopal Mahadevan
D A Abeyawardene
W H C P S Wijesekara
Amandeep Singh Arora
COMPANY SECRETARY D A Abeyawardene
80/12, Rubberwatte Road
Gangodavila Nugegoda.
Tel : 0112 801205
CHIEF EXECUTIVE OFFICER Umesh Gautam
REGISTERED OFFICE Panagoda, Homagama
Tel: 011-2752320 / 011-2751321 / 011-2750232-3
Fax: 011-2752400
E-mail: [email protected]
Web: www.lal.lk
MARKETING OFFICE 41, Edward Lane
R. A. De Mel Mawatha
Colombo 03.
Tel: 011-2502532 / 011-2590404 / 011-2592163
Fax: 011- 2502286
BANKERS Bank of Ceylon
Commercial Bank of Ceylon PLC
Indian Bank
People's Bank
Sampath Bank PLC
Seylan Bank PLC
State Bank of India
Cargills Bank
AUDITORS - STATUTORY KPMG
(Chartered Accountants)
32A, Sir Mohamed Macan Marker Mawatha
P.O. Box 186
Colombo 03.
AUDITORS - INTERNAL Ernst & Young Consulting Services (Pvt) Limited
(Chartered Accountants)
201, De Seram Place
Colombo 10.
TAX CONSULTANTS Dinitway Partners
(Chartered Accountants)
No. 7 ½, Devanampiyathissa Mawatha
Colombo 10.
ANNUAL REPORT 2021 / 2022
108
NOTES
ANNUAL REPORT 2021 / 2022
109
FORM OF PROXY
I/We...........................................................................................................................................................................................................................................................
........................................................................................................................................holder of NIC No..........................................................................................of
…................................................................................................................................................................................................................................................................
...............................................................being a *shareholder / shareholders of Lanka Ashok Leyland PLC, do hereby appoint ..........................................
..................................................................................................................................................................holder of NIC No:................................................................of
....................................................................................................................................................................................................................................................................
or failing him/her
Mr. A K S A Jayasena ............…………………………………………………………….. ....................... of Colombo or failing him
Mr. D P Kumarage ............………………………………………………………………. ........................ of Colombo or failing him
Mr. N Sundararajan ............………………………………………………………………. ..................... of Chennai or failing him
Mr. Gopal Mahadevan .......………………………………………………………..……… ..................... of Chennai or failing him
Mr. D A Abeyawardene........…………………………………………………………..….. ...................... of Colombo or failing him
Mr. W H C P S Wijesekara.....…………………………………………………………..…. ...................... of Colombo or failing him
Mr. Amandeep Singh Arora ...…………………………………………………………..…. ................... of Chennai or failing him
as my/ our* proxy to represent me/ us* and on my/ our* behalf at the Annual General Meeting of the Company to be held at Hotel Taj Samudra,
Galle Face Center Road, Colombo 03 on 10
th
August 2022 at 3.30 p.m. and at any adjournment thereof and at every poll which may be taken
consequen
In witness my/ our hand/ hands this..........................................day of......................................Two Thousand and Twenty Two.
..............................................
Signature
* Note :
1. *Please delete the inappropriate words.
2. Instructions as to completion are noted on the reverse hereof.
ANNUAL REPORT 2021 / 2022
110
FORM OF PROXY (Contd.)
Instructions to Complete Proxy
1. Kindly perfect the form of proxy by filling in legibly your full name and address by
deleting one or other of the alternative words indicated by an asterisk in the body
of the form overleaf in order to indicate clearly your voting instructions by signing in
the space provided and filling in the date of signature.
2. If there is any doubt as to which way the proxy should vote by reason of the way in
which instructions under (I) above have been carried out, no vote will be recorded
by the proxy.
3. A proxy need not be a member of the Company.
4. The completed form of proxy should be deposited at the registered oice of the
Company, Panagoda, Homagama, before 3.30 p.m on 08
th
August 2022 being forty-
eight hours before the time appointed for the holding of the meeting.
5. If a form of proxy is signed by an Attorney, the relevant power of Attorney or
a notarially certified copy of such 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.
