DIPPED PRODUCTS PLC / ANNUAL REPORT 2008—2009

DIPPED PRODUCTS PLC / ANNUAL REPORT 2008—2009

contents 

Corporate 

Chairman’s Statement 4 

Managing Director’s Review 8 

Board of Directors 17 

Group Structure 19 

Management Team 21 

Financial Information 

Financial Calendar 2008/2009 26 

Financial Contents 26 

Annual Report of the Board 27 

Corporate Governance 31 

Statement of Directors’ Responsibilities 37 

Audit Committee Report 38 

Independent Auditor’s Report 39 

Income Statements 40 

Balance Sheets 41 

Statements of Changes in Equity 42 

Cash Flow Statements 43 

Accounting Policies 45 

Notes to the Financial Statements 54 

Ten Year Financial Review 70 

Other 

The Share 72 

Glossary 75 

Notice of Meeting 76 

Form of Proxy 77 

D I P P E D P R O D U C T S P L C A N N U A L R E P O R T 2 0 0 8 – 2 0 0 9 

1

For more details: visit : 

www.dpl-firstlight.com 

2 

D I P P E D P R O D U C T S P L C A N N U A L R E P O R T 2 0 0 8 – 2 0 0 9

Firstlight symbolizes the dawn of a new day, inspiring 

optimism and evoking expectations. It is also the time for 

tapping rubber trees. 

Three quarters of DPL’s requirements in natural rubber is 

sourced from over 3,000 small farmers owning less than 

2 hectares, mainly in the hinterlands of Sri Lanka. Our 

relationship with these smallholders goes back over 30 years. 

Through the “Firstlight” initiative, we are seeking to help 

these farmers realize their potential. Our strategy may 

sound simple – to pay the rubber small farmers a fair price 

by removing intermediaries – but it is certainly changing 

thousands of lives for the better. 

We are providing technical assistance these farmers so badly 

need, but rarely receive: educating and empowering them 

to maximize their income through best practices in planting, 

field management and harvesting; providing implements and 

input material to protect and augment crops; and ultimately 

investing in the development of their communities. 

All this for sure contribute to another of our larger goals: 

the sustainable development of land under rubber cultivation. 

And here, “Firstlight” is helping to preserve the quality of 

air, regulate the climate and conserve the soil under these 

verdant man-made forests. 

“Firstlight” is our way of handling the small rubber farmers 

with care - the expression of our empathy towards the 

economically disadvantaged smallholders. 


3

Chairman’s Statement 

“Group turnover for the 

year increased by 7% to 

Rs 11,896 million with 

profit before tax of 

Rs 616 million…” 

“An important 

achievement of the 

year was the complete 

turnaround of DPTL.” 

“The Plantations sector 

recorded a pre-tax profit 

of Rs 294 million, .…” 

Dear Shareholder, 

I take pleasure in presenting the 

Annual Report of your Company 

for the financial year ended 31 

March 2009. 

Directorate 

Mr. R W Soysa retired on 31 March 

2009 after serving the Company 

from its inception of which 21 years 

as an Executive Director. 

Dr. W S E Fernando too will 

retire on 31 May 2009. He joined 

the Company in 1988 and was 

appointed an Executive Director in 

1994. My colleagues on the Board 

and I thank both the gentlemen for 

their exceptional contributions over 

the years and wish them good health 

and contentment in retirement. 

Mr. F Mohideen, former Deputy 

Secretary to the Treasury was 

invited to the Board as an 

Independent Non-Executive 

Director on 10 July 2008. 

Mr. K A L S Fernando, General 

Manager – Quality of DPL was 

appointed an Executive Director 

with effect from 01 April 2009. 

Mr. L G S Gunawardana, 

Director/General Manager of 

Dipped Products (Thailand) Limited 

will be appointed to the Board as an 

Executive Director from 

01 June 2009. 

Results 

Group turnover for the year 

increased by 7% to Rs 11,896 million 

with profit before tax of 

Rs 616 million same as in the 

previous year. The profit attributable 

to the Shareholders of the Company 

reduced to Rs 363 million compared 

to Rs 371 million in the year 

2007/2008. 

The profit from manufacturing operations 

in Sri Lanka improved 14% to 

Rs 302 million from Rs 264 million 

last year. This could have been better, 

if not for the slowdown in orders 

during the last quarter from the industrial 

segment of the market. The 

trade union action at the Venigros 

factory over several months of the 

year reduced output and adversely 

affected both revenue and profit. 

Medical glove operations of Dipped 

Products (Thailand) Limited (DPTL) 

substantially recovered in the second 

half of the year reducing its losses 

from Rs 271 million in the previous 

year to Rs 159 million. A further 

provision of Rs 50 million was 

however thought prudent in Dipped 

Products PLC’s accounts against 

its investment in DPTL due to that 

company’s asset base being eroded 

by the losses incurred to date. 

An important achievement of the 

year was the complete turnaround 

of DPTL. The company incurred 

losses of nearly the same level as 

the previous year up to the first 

half (and in line with the final result) 

but succeeded to run at break even 

levels for the next six months. It is 

heartening that the company has 

now completed the first quarter of 

the current year with a significant 

net profit. I expect this operation to 

contribute greatly to the Group in 

the future. 

Recovery of the Hand Protection 

sector in both Sri Lanka and Thailand 

in the last quarter was largely 

possible because of the many profit 

improvement measures that were 

implemented. 

ICOGUANTI S.p.A. too performed 

to expectations, improving on both 

turnover and profit. 

The Plantations sector recorded 

a pre-tax profit of Rs 294 million, 

down by 36% from Rs 458 million 

in the earlier year. The sharp 

4 


Chairman’s Statement 

reversal of tea and rubber prices 

from October 2008 to a two year 

low significantly eroded the profit 

margins in the last quarter. 

Taxation 

The effective tax rate of the Group 

increased from 16% to 18%. This is 

despite a reduction in the effective 

tax rate of ICOGUANTI from 

45% in the previous year to 39% 

following changes in Italian tax 

regulations favouring companies that 

are sufficiently capitalized. The low 

profits from tax exempt agricultural 

activities of Kelani Valley Plantations 

PLC caused the increase in the 

effective tax rate of the Group. 

Dividend 

Venigros (Pvt) Ltd and DPL 

Plantations (Pvt) Ltd declared an 

interim dividend of Rs 10/- per share 

each, whilst Grossart (Pvt) Ltd and 

Neoprex (Pvt) Ltd paid Rs 30/- 

and Rs 5/- per share respectively. 

Kelani Valley Plantations PLC paid 

a dividend of Rs 3/50 per share. 

ICOGUANTI distributed Euro 

249,508/- for the financial year 2007. 

Your Directors now propose a 

dividend of Rs 3/- per share entirely 

from tax exempt dividends received, 

which will be free of tax in your 

hands. 

Prospects 

Your Company had to contend with 

several challenges, far beyond what 

was anticipated at the start of the 

year in the backdrop of rising costs. 

The manufacturing operations in 

particular were affected in the first 

three quarters of the year. 

and technical capabilities of DPL are 

among the best in the Industry. They 

have repeatedly proved to be robust 

and resilient to withstand adverse 

impacts from the environment. 

With a firm bridgehead established 

into the medical market, DPL 

is now well positioned to be a 

complete hand protection provider 

in all segments, namely consumer, 

industrial and medical. 

The Plantation sector is likely to 

be under pressure in the ensuing 

year until commodity markets 

recover. The investments made 

so far in maintaining both rubber 

and tea fields in optimal condition 

and in upgrading and diversifying 

the manufacturing facilities of KVPL 

should stand in good stead to cope 

with lean periods. 

On the eve of my retirement, I look 

back with great satisfaction the 

many years I have been associated 

with your Company. From a small 

beginning, DPL has today grown to 

be a globally recognized leader in 

the Industry. It has been my privilege 

to have worked with a team of 

committed men and women and 

contributed to its impressive growth. 

The prospect of DPL growing 

to double or triple its size in the 

medium term is very real. 

I wish to thank all employees for 

their determined and unstinted 

efforts and our customers and 

our suppliers for their unfailing 

support in a difficult year. I thank my 

colleagues on the Board for their 

valuable input and guidance. 

“…upturn 

witnessed in the 

last quarter once 

again demonstrates 

the inherent 

strength of the 

Group.” 

“…DPL is now 

well positioned 

to be a complete 

hand protection 

provider…” 

“The prospect of 

DPL growing to 

double or triple its 

size in the medium 

term is very real.” 

Rs. mn 

3,500 

3,000 

2,500 

2,000 

1,500 

1,000 

Shareholders’ Funds 

The significant upturn witnessed 

in the last quarter once again 

demonstrates the inherent strength 

of the Group. The manufacturing 

N G Wickremeratne 

Chairman 

12 May 2009 

500 

0 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 


5

INPUT MATERIALS 

AND IMPLEMENTS TO 

AUGMENT CROP 

6 


COMMUNITY CAPACITY 

BUILDING 


7

Managing Director’s Review 

“The performance 

of the Group can be 

regarded as satisfactory 

in the context of 

the highly uncertain 

environment…” 

“The meteoric rise 

in oil prices and the 

consequent escalation 

in cost of rubber and all 

other inputs… exerted 

an unprecedented 

degree of pressure…” 

“…speed and the extent 

of changes in cost were 

too intense to be dealt 

with promptly.” 

OVERVIEW 

DPL achieved a profit before tax of 

Rs 616 million similar to the previous 

year. The performance of the Group 

can be regarded as satisfactory in 

the context of the highly uncertain 

environment that prevailed 

throughout the year. 

The Hand Protection operations 

in Sri Lanka having faced serious 

erosion of margins in the wake of 

rising costs over the first half of 

the year, recovered remarkably to 

register a profit of Rs 302 million 

representing a 14% increase over 

Rs 264 million recorded in 

2007/2008. Under the Export 

Development Reward Scheme 

announced by the Government, 

the Group will qualify to receive an 

estimated Rs 34 million in respect of 

exports in the fourth quarter. This 

will be accounted on receipt. 

The medical glove facility in Thailand 

reduced its losses significantly by 

over 41% from Rs 271 million in the 

earlier year to Rs 159 million as its 

operations steadied from August 

2008. 

The marketing company in Italy, 

ICOGUANTI S.p.A. improved its 

profits by 23% to Rs 185 million 

compared to Rs 151 million last year. 

Profits of Kelani Valley Plantations 

PLC and its subsidiaries declined by 

31% to Rs 300 million compared to 

the best performance on record of 

Rs 435 million in 2007. 

PERFORMANCE 

Hand Protection 

Turnover of this sector grew by 7% 

to Rs 9, 463 million, up from 

Rs 8,845 million in the previous year. 

The turnover of glove manufacturing 

activities increased by 5% to 

Rs 6,896 million from Rs 6,542 

million in the comparable period 

last year. While the improvement in 

revenue from Sri Lankan operations 

was limited to only 1%, the medical 

glove business in Thailand grew by 

28% to Rs 1, 367 million. The latter 

is directly attributable to increase in 

output and more so to higher sales 

volumes of nearly 13% over the 

previous year. 

Sales of ICOGUANTI climbed 12% 

to Rs 3,036 million from Rs 2,710 

million in rupee terms on the back 

of a 7% expansion in the Euro 

currency. 

The meteoric rise in oil prices and 

the consequent escalation in cost of 

rubber and all other inputs during 

the first half of the year exerted an 

unprecedented degree of pressure 

on the performance of this sector. 

Though the mitigatory measures 

initiated from the previous year as 

the adverse trends began to unfold 

helped somewhat, the speed and the 

extent of changes in cost were too 

intense to be dealt with promptly. 

At the peak of oil and rubber price 

increases in July/August 2008, the 

direct costs alone exceeded 50% 

in some products, while in others 

it surpassed 35%. In spite of the 

unusually large upward price 

adjustments agreed with customers, 

a substantial portion of the extra 

cost had to be still absorbed over 

and above similar cost absorptions in 

the previous year. Naturally, during 

this period retention of margins was 

almost impossible. This approach was 

however necessary to prevent loss 

of market share of DPL and our 

customers. 

8 



High prices of all input materials 

pushed up inventory values and 

consequently the borrowings. The 

finance overhead in Sri Lanka rose 

by 10%. The high interest rates too 

affected the cost of funds. The Sri 

Lankan rupee depreciated by only 

6.8% during the period, out of sync 

with local inflation that reached 

alarming levels by midyear and 

annulled the recoupment of local 

cost increases. 

Continuing on the work outlined in 

last year’s report, much was done to 

save on cost of energy. A 5 million 

k Cal per hour biomass heater 

commissioned at Venigros in August 

2008 entailed a saving of over Rs 78 

million within the year. Dependence 

on LP gas was reduced by over 95% 

and several steps were also taken 

to minimize electricity and water 

consumption. 

The performance of Sri Lankan 

manufacturing improved in the 

last quarter despite reversal of 

prices to customers, further than 

the increases obtained earlier in 

the year. A combination of several 

factors such as reductions in cost of 

rubber, energy and finance helped. 

The depreciation of the rupee by 

nearly 5% since November 2008 and 

closer monitoring of overheads too 

contributed. 

An additional production plant 

owned by Neoprex commenced 

commercial manufacture of latex 

flock lined gloves by end May 2008. 

Meantime, a lower capacity line 

with higher operational cost was 

decommissioned. 

Hanwella, albeit at a high unit cost, 

was converted to produce flock 

free gloves to meet the growing 

demand for such products. This led 

to rationalization of products made 

between Sri Lanka and Thailand. 

Additionally, two production lines 

of Grossart were modified to 

increase outputs and to incorporate 

manufacturing flexibilities to meet 

the swing in monthly demand among 

product categories. 

The turnaround of Dipped Products 

(Thailand) Limited stands out as 

the most noteworthy development 

of the year. Though the company 

ended the period under review 

with a net loss, its performance 

particularly since August 2008 has 

been encouraging. The operations 

reached break even point in the last 

quarter of the year and have now 

completed the first quarter of the 

current year as at end March 2009 

with a significant net profit. 

Total rectification of the problems 

with the heaters, the improvements 

to plant and process capabilities 

and the favourable movements in 

Thai Bhat and latex prices mainly 

caused the reversal of the fortunes 

of this project. Introduction of 

many product variations of latex 

examination gloves helped in 

attracting several new customers 

and contributed to the recovery. 

DPTL has in the meantime initiated 

legal action overseas against the 

supplier of the heaters claiming 

compensation for the losses directly 

attributable to the non-performance 

of the equipment. 

3,000 

2,500 

2,000 

1,500 

1,000 

500 

0 

Export Volume 

Index by Region 

(Base Year - 1995) 

South America 

Asia/Africa 

North America 

Europe 

Australasia 

“The Sri Lankan 

rupee depreciated 

by only 6.8% during 

the period, out 

of sync with local 

inflation…” 

“…much was done 

to save on cost of 

energy.” 

20.6 % 

2005 2006 2007 2008 2009 

Export Volume by Region 

18.5 % 

9.8 % 

3.6 % 

47.5 % 

The last of the production plants in 

Sri Lanka that continued manufacture 

of patient examination gloves at 

Much effort and attention was 

engaged during the year to cope 

with the unparalleled events starting 

Asia/Africa 

Australasia 

Europe 

North America 

South America 


9


“…three of the new 

products are believed to 

entail innovative features 

and attributes or unique 

manufacturing processes 

leading to the Company 

filing patent rights…” 

“The pre-tax profit 

dropped by 31% to 

Rs 300 million following 

the collapse of the 

commodity markets…” 

“Usually, the last quarter 

has been the most 

rewarding in terms of 

both crop and prices… 

It was not to be during 

the year…” 

with high costs and inflationary 

environment, followed by a crippling 

recession and crumbling global 

economic order. 

Despite these distractions, DPL 

developed 14 new products and 

versions to broaden its offer to the 

customers. At least three of the 

new products are believed to entail 

innovative features and attributes 

or unique manufacturing processes 

leading to the Company filing patent 

rights both in Sri Lanka and overseas. 

The launch of the electrician gloves 

was delayed following product 

refinements identified as needed to 

meet the very stringent parameters 

demanded in the discerning target 

markets. The product is now under 

testing by independent laboratories 

in USA and Europe. 

The Group acquired over a dozen 

new customers for products 

both from Sri Lanka and Thailand 

including Eroski, a leading Spanish 

supermarket. DPL’s own brand 

of products made further inroads 

largely in terms of volume. The 

growth was however modest 

following the slowdown in sales to 

industrial sector in the latter half of 

the year. 

Plantations 

The turnover of Kelani Valley 

Plantations PLC and its subsidiaries 

improved by 10% from Rs 2,828 

million to Rs 3,109 million. Revenue 

from tea moved up by 13.6%, while 

the turnover from rubber increased 

by 2.9%. 

The pre-tax profit dropped by 

31% to Rs 300 million following 

the collapse of the commodity 

markets in the last quarter of the 

year. Plantations recorded a profit 

of Rs 310 million by September 

2008 but finished the year with a 

marginal decline thereon. Usually, 

the last quarter has been the most 

rewarding in terms of both crop and 

prices and boosted the performance 

of this sector. It was not to be 

during the year under review. 

The year started well on an upbeat 

note with tea prices at attractive 

levels which declined by 35% 

in the last three months leaving 

large quantities of unsold teas by 

November. 

Tea crops increased by 10% but the 

heavy rainfall in the first half of the 

year interrupted harvesting patterns 

of rubber depressing crops by 6.8%. 

Kelani Valley Green Tea achieved 

a profit of Rs 5 million benefitting 

from the strong demand for the 

product in the first nine months of 

the year. 

Kalupahana Power Company too 

turned in a profit of Rs 4 million 

on operational earnings for the 

first time since its inception. No 

significant contribution to the 

Group’s profit was made by our tea 

marketing associate, Mabroc Teas. 

Their performance was affected 

as the company was compelled to 

purchase teas at higher prices in a 

rising market in the early part of the 

year to meet its long term export 

orders 

The Kelani Valley Instant Tea (Pvt) Ltd 

where KVPL owns a 75% stake setup 

a new facility in the Nuwara Eliya 

estate to produce instant tea. To 

supplement the output of green tea 

from the Oliphant factory, the black 

tea factory at Glassaugh was also 

converted to green tea manufacture. 

10 


products 

The ethically sourced natural rubber latex 

through the “Firstlight” initiative adds yet 

another facet to DPL’s range of products 

renowned for their quality and consistency. 

Against every pair of natural rubber gloves 

sold in packaging with the “Firstlight” logo (as 

in the insert), USD 0.005 is set aside to sustain 

the projects undertaken to help the small 

rubber farmers who form the backbone of 

our supply chain. 


11


“KVPL …received 

accreditation as 

GLOBALG.A.P 

compliant…” 

“KVPL’s 

performance and 

its contribution… 

were recognised 

with the National 

Business Excellence 

Award and the 

Export Gold 

Award…” 

“…recovery of 

DPTL is timely 

and vindicates our 

conviction to stay 

in this business…” 

Capacity & Production Index 

Hand Protection - Sri Lanka 

(Base - 1991 Capacity) 

700 

600 

500 

400 

300 

200 

100 

0 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 

Capacity 

Productions 

The rehabilitation of the Dunedin 

scrap rubber factory was completed 

enhancing its capacity to process the 

skim output from the centrifuging 

operations of the Group. The 

effluent treatment plants of 

Urumiwela skim factory and Lavant 

scrap factory were redesigned and 

upgraded to be in full compliance 

with the Central Environment 

Authority regulations. 

The capital expenditure of the 

Plantation sector during the year 

amounted to Rs 581 million with 

substantial portion spent on replanting 

of rubber and tea. The balance 

outlay was directed at upgrading 

plant and machinery, factories and 

effluent systems as mentioned in the 

foregoing paragraphs. Grants from 

ADB and other funding agencies 

provided Rs 111 million towards this 

investment. 

KVPL completed the audit of 

all nineteen tea plantations 

and received accreditation as 

GLOBALG.A.P compliant by SGS, 

New Zealand and was admitted as 

a member of the GLOBALG.A.P 

producer, supplier partnership. This 

standard assures the consumer that 

the agricultural operations of KVPL 

meet relevant food, product safety 

parameters with minimal impact on 

the environment, whilst ensuring the 

safety and health of the employees. 

KVPL is the first plantation 

company in Sri Lanka to receive this 

accreditation for all its tea estates. 

This membership together with the 

HACCP, ISO 22000:2005 and TASL- 

SGS accreditations of all our black 

tea factories positions the company 

as a sought after tea producer. 

Adding credence to our 

environmental management 

strategy, a team of scientists was 

commissioned to carry out a 

comprehensive assessment which 

mapped and documented the 

waterways, indigenous fauna and 

flora and the bio diversity specifically 

identifying the endangered species 

on all KVPL plantations. 

KVPL’s performance and its 

contribution to the agriculture and 

plantation sector were recognized 

with the National Business 

Excellence Award and the Export 

Gold Award under the Service 

Providers to Exporters – Extra 

Large Category in 2008 by the 

National Chamber of Exporters of 

Sri Lanka. 

STRATEGIC DIRECTION 

Hand Protection 

Many large global businesses long 

regarded as unassailable are today 

seeking state assistance or are near 

bankruptcy. Closure of factories, 

layoff of employees and the shake 

up in the financial systems are yet to 

stop. It will be naive to expect DPL 

to be insulated from the adverse 

impacts of this meltdown. 

In this backdrop, the recovery of 

DPTL is timely and vindicates our 

conviction to stay in this business 

despite the initial setbacks. In 

reviews of recent years, we have 

stated that this project will and must 

turn profitable for DPL to realize 

its long term goals. The medical 

glove business being less prone 

to recession should survive the 

downturn and create avenues for 

growth. As DPTL consolidates its 

operations more into the new year, 

we will look to move to the next 

phase of expansion. 

12 


people 

The compelling cause of “Firstlight” stimulates 

and enthuses many of our people to go 

beyond their normal call of duty. Kamani from 

Administration, Rohan from Procurement, 

Malli and Niroshan from Centrifuging are only 

a few who voluntarily pledge their time. They 

conceptualize, plan and organize our initiatives 

to uplift the quality of life of the small rubber 

farmers. It is their passion and commitment 

that drives “Firstlight”. 


13


“Our commitment 

to provide customers 

close attention and care 

and deliver on their 

expectations is another 

area earmarked for 

greater focus.” 

“…“cause-related 

marketing” campaigns 

authenticate DPL as a 

socially responsive hand 

protection provider.” 

“KVPL has never 

flinched from maintaining 

its agricultural assets…” 

In contrast, the consumer and 

industrial markets catered by the Sri 

Lankan facilities are showing signs of 

softening demand, the latter being 

the most affected and least expected 

to recover in the immediate future. 

To sustain demand, DPL is well 

poised to leverage the newly 

developed products and take 

them actively to the market. We 

have begun work to determine 

and provide users additional 

performance data on the existing 

range of industrial gloves so as to 

convince them of our products’ 

superior features, benefits and quality. 

Our commitment to provide 

customers close attention and care 

and deliver on their expectations is 

another area earmarked for greater 

focus. 

Teams are being trained in Lean 

Production systems at all locations to 

eliminate waste, streamline the work 

flow, incorporate manufacturing 

flexibility and thereby save cost 

and improve performance. The 

enthusiasm shown by employees 

at all levels towards this initiative 

assures worthwhile results. 

Though energy costs have eased, 

they will rise again. While further 

investments are on hold, designs 

are being developed to be in 

preparedness to move away 

from liquid fuel with minimum of 

delay. Use of solar power for low 

temperature applications are under 

study, to seek funding for trial and 

eventual implementation. 

The foremost strategy to deal with 

the prevailing situation is to conserve 

cash. Until definite indications of 

economic resurgence are seen, no 

investment on capacity expansions 

or major capital expenditure is 

proposed in Sri Lanka. Measures 

taken to tightly manage inventory of 

input materials and expenditure have 

begun to yield results. 

This report provides glimpses of our 

“Firstlight” programme which cares 

for the small rubber farmers in the 

remote villages of Sri Lanka. This 

strategic initiative has now gathered 

considerable momentum to 

disburse meaningful benefits to their 

communities. Based on “Firstlight”, 

BM Polyco Limited, UK featured 

on page 16 of this report, one of 

DPL’s larger customers counting an 

association exceeding 30 years, have 

launched the first “Fair Trade Rubber 

Gloves” with accreditation from 

“Traidcraft” UK. Such “cause-related 

marketing” campaigns authenticate 

DPL as a socially responsive hand 

protection provider. 

Plantations 

The commodity prices which fell 

since late 2008 are not expected to 

recover in the near term. Rubber 

prices which have normally moved in 

tandem with oil prices will be slower 

to recover particularly as automobile 

manufacturers continue to curtail 

production. Tea may pick up sooner 

as the economic tsunami recedes. 

KVPL has never flinched from 

maintaining its agricultural assets 

even over lean times in the past. 

This strategy has paid rich dividends 

whenever the commodity cycle 

peaked and we intend to continue 

this practice. 

The large investments of recent 

years on upgrading factory buildings, 

machinery and other infrastructure 

forestalls the need for more infusion 

14 



of capital for such purposes in the 

immediate future. 

The process excellence and product 

purity of KVPL teas are now well 

established as reflected by the 

numerous accreditations received. 

The “Ethical Tea Brand of the World” 

continues to attract the attention of 

major tea buyers and we will persist 

with our endeavor to exploit this 

head start. It is also our intention 

to leverage the recently acquired 

capability to manufacture black tea, 

green tea and instant tea as market 

demands change. 

Strengthening of the upward 

integration with DPL manufacturing 

operations to the required extent 

will provide a steady outlet for 

rubber production. 

Augmenting “A Home for Every 

Plantation Worker” programme, 

though limited for the present by 

the adverse market conditions, will 

continue to be an integral part of 

our agenda. 

endured the test of time. We value 

these relationships beyond short 

term gains. 

We are conscious that DPL is what 

it is today because of the integrity 

and sincerity we have displayed in 

all our dealings. This behaviour is 

the outcome of a long period of 

mentoring that has instilled in our 

people, the conviction that there is 

no other way to success. 

J A G Anandarajah 

Managing Director 

12 May 2009 

“The process 

excellence and 

product purity of 

KVPL teas are now 

well established…” 

“…DPL is what it 

is today because of 

the integrity and 

sincerity we have 

displayed in all our 

dealings.” 

WAY FORWARD 

We are living through times like 

no other. Though solutions to the 

issues of the day are uncertain, 

DPL undoubtedly has the capability, 

ingenuity and the commitment in its 

people to face the challenges. 

Kg ’000 

8,000 

Production 

Tea & Rubber 

We are further reassured of the 

future because our business is 

built on the bedrock of lasting 

relationships with our customers, 

suppliers and employees. These 

associations were nurtured over 

many years based on mutual trust, 

respect and care. They may not 

have been perfect in every respect 

at all times but have unwaveringly 

7,000 

6,000 

5,000 

4,000 

3,000 

2,000 

1,000 

- 

2004 

Tea 

2005 2006 2007 2008 

Rubber 


15

partnerships 

Our partnership with BM Polyco, a major glove 

company in the UK goes back over 30 years, 

as long as our engagement with the rubber 

smallholders. Based on the “Firstlight” initiative, 

they have launched a “Traidcraft” brand of 

“Fair Trade Rubber Gloves”. Mr Mark Holdaway, 

Managing Director, Mr Richard Delahaye, 

Consumer Business Unit Director and Mr Nick 

Finney, Supply Chain Director of BM Polyco are 

seen above, examining the product. 

16 


Board of Directors 


CHAIRMAN (NON-EXECUTIVE) 

Joined Hayleys in 1971. Chief Executive of DPL from its inception and 

Director since 1981. Managing Director since 1983 and Chairman 

from January 2007. Appointed Group Executive Director of Hayleys 

in 1983 and to its Board in 1986. Deputy Chairman of Hayleys since 

2004 and Chairman & Chief Executive from January 2007. BSc graduate, 

University of Ceylon, Peradeniya, Sri Lanka. Chaired the Sri Lanka 

Association of Manufacturers and Exporters of Rubber Products. 

Committee Member of the Ceylon Chamber of Commerce and 

served as its representative on the National Labour Advisory Council. 

Past president of the Sri Lanka – France Business Council. 


MANAGING 

Joined DPL in 1980. Appointed to the Board in 1989 and Managing 

Director since January 2007. Appointed to the Hayleys Group 

Management Committee in 2001 and to the Board of Hayleys 

in January 2007. Chemistry (Honours) graduate, University of 

Peradeniya, Sri Lanka. Member of the Board of Management, 

Industrial Technology Institute, Sri Lanka. 

R W Soysa (To 31/03/2009) 

OPERATIONS 

Serving DPL since its inception in 1976. Appointed to the Board 

in 1988. Licentiate of the Plastics & Rubber Institute. Recipient 

of the Commonwealth and Foreign Office Scholarship awarded 

by the British government in 1985. Recipient of the Merit Award, 

1988, of the Plastics & Rubber Institute of Sri Lanka. 

Dr W S E Fernando (To 31/05/2009) 

TECHNICAL 

Joined DPL in 1988 and appointed to its Board in 1994 Managing 

Director of Dipped Products (Thailand) Ltd since 2004. Chemistry 

(Honours) graduate, University of Peradeniya, Sri Lanka. 

Awarded Msc and PhD in Polymer Technology from the 

University of Aston, Birmingham, UK. Team Member of the 

UNIDO expert panel for the Thermoplastic Natural Rubber 

Research project. Served as a Member of the Rubber Research 

Board, Sri Lanka. Recipient of National Award for Scientific 

Achievements, 1990. 

G K Seneviratne 

PLANTATIONS 

Joined DPL Plantations (Pvt) Ltd in 1992 and appointed to its 

Board in 1995. Chief Executive of Kelani Valley Plantations PLC 

since 1994 and appointed to its Board in 1996. Managing Director 

of Kelani Valley Plantations PLC since 2004. Appointed to the DPL 

Board in 1998 and to the Hayleys Group Management Committee 

in January 2007. Past Chairman of the Planters’ Association 

of Ceylon. Served as a Member of Sri Lanka Tea Board, Rubber 

Research Board, Plantation Trust Board and the Tea Association of 

Sri Lanka. Joined the plantation industry in 1970. Served as 

Consultant, Investment Monitoring Board, JEDB/SLSPC Estates. 

N Y Fernando 

PROJECTS 

Joined DPL in 1985. Appointed to the Board in 2004. Mechanical 

Engineering (Honours) graduate, University of Moratuwa, Sri 

Lanka. Member/Chartered Engineer of the Institution of Engineers, 

Sri Lanka. Member/Chartered Professional Engineer of the 

Institute of Engineers, Australia. Postgraduate Diploma in Industrial 

Engineering, NIBM. 

N B Weerasekera 

NON-EXECUTIVE 

Appointed to the Board in 2005. FCMA, BSc Physics (Honours) 

graduate, University of Peradeniya, Sri Lanka. Awarded MA in Economics 

from the University of Colombo, Sri Lanka. Regional Managing 

Partner for South and Central Asia, Aureos Capital Ltd. Served as 

Chief Executive Officer of People’s Venture Investment Company and 

Managing Director of Nextventures. 

R K Witanachchi 

MANUFACTURING 

Joined DPL in 1993. Appointed to the Board in 2005. Mechanical 

Engineering (Honours) graduate, University of Peradeniya, Sri 

Lanka. Served as General Manager Lanka Walltiles Ltd. 

A M Pandithage 

NON-EXECUTIVE 

Joined Hayleys in 1969. Appointed Group Executive Director 

in 1996 and to its Board in 1998. Deputy Chairman of Hayleys 

since 2007. Appointed to the DPL Board in 2007. Chief Executive 

of Hayleys Advantis Ltd. since its inception. Fellow of the 

Chartered Institute of Logistics & Transport. Director, Sri Lanka 

Port Management & Consultancy Services Ltd. Former Chairman 

of the Ceylon Association of Ships’ Agents. Former Director of 

both the Sri Lanka Ports Authority & Jaya Container Terminals Ltd. 

Member of the Presidential Committee on Maritime Matters. 

R A Ebell 

ALTERNATE 

Joined Hayleys in 1977. Appointed Group Executive Director in 

1986 and to its Board in 1989. Appointed Alternate Director to 

the DPL Board in 2007. FCA, FCMA, Dip. MCIM. Past President, 

CIMA Sri Lanka Division. 

R Seevaratnam 

INDEPENDENT NON-EXECUTIVE 

Appointed to the Board in 2007. BSc General graduate, University 

of London. FCA, England and Wales and FCA, Sri Lanka. 

Former Senior Partner of KPMG Ford, Rhodes, Thornton and 

Company. 

F Mohideen 

INDEPENDENT NON-EXECUTIVE 

Appointed to the Board in July 2008. Holds a degree in BSc 

Mathematics from the University of London and a MSc in Econometrics 

from the London School of Economics. Served as the 

Deputy Secretary to the Treasury and Director General, External 

Resources Department of the Ministry of Finance and Planning. 

K A L S Fernando 

TECHNICAL SERVICES 

Joined DPL in 1985. Appointed to the Board in April 2009. Holds 

a Joint Hons. BSc Degree in Chemistry and Management from 

University of London and a Post Graduate Diploma in TQM. 

L G S Gunawardena (From 01/06/2009) 

MEDICAL GLOVES 

Joined DPL in 1984. Appointed to the Board w.e.f. June 2009. 

Holds a MBA from the Victoria University, Wellington, New 

Zealand. 


17

technology 

18 

The high speed latex centrifuges featured above 

remove water and non-rubber constituents 

from field latex and concentrate the liquid to 

60 percent dry rubber content. DPL has 

in place a stringent system to segregate the 

field latex collected from the farmers under 

the “Firstlight” programme. Such batches 

are separately centrifuged and used in the 

manufacture of products sold either with 

the “Firstlight” logo or as “Fair Trade Rubber 

Gloves”. 


Group Structure 

HOLDING COMPANY 

DIPPED PRODUCTS PLC 

Incorporated in 1976 in Sri Lanka 

Stated Capital Rs. 598,615,120 

Directors: N G Wickremeratne - Chairman, J A G Anandarajah - Managing Director, R W Soysa+, Dr. W S E Fernando, 

G K Seneviratne, N Y Fernando, N B Weerasekera, R K Witanachchi, A M Pandithage (Alternate R A Ebell), R Seevaratnam, 

F Mohideen‡, K A L S Fernando*, L G S Gunawardena** 

Manufacture and marketing of industrial and general purpose rubber gloves, Management of tea and rubber plantations 

+ Retired March 31, 2009 ‡ Appointed July 10, 2008 * Appointed April 1, 2009 ** Appointed w.e.f. June 1, 2009 

HAND PROTECTION 

PALMA LTD 


Stated capital Rs 40,000,000 

Group interest 100% 

Directors: N G Wickremeratne, J A G Anandarajah, 

R W Soysa, Dr. W S E Fernando, L G S Gunawardena 

Manufacture and export of latex thread 

GROSSART (PVT) LTD 




Directors: N G Wickremeratne - Chairman, 

J A G Anandarajah, R W Soysa, Dr. W S E Fernando, 

N Y Fernando 

Manufacture and export of fabric supported and 

unsupported gloves 

VENIGROS (PVT) LTD 





J A G Anandarajah, J Benoit, M Orlando, R W Soysa, 

Dr. W S E Fernando, J P Coudert, M Bottino 

Manufacture and export of fabric supported and 

unsupported gloves 

NEOPREX (PVT) LTD 







Manufacture and export of household and industrial gloves 

TEXNIL (PVT) LTD 





J A G Anandarajah, R W Soysa, Dr. W S E Fernando 

Manufacture and export of fabric supported gloves 

DIPPED PRODUCTS (THAILAND) LTD 

Incorporated in 2002 in Thailand 

Share capital THB 138,500,000 



J A G Anandarajah, Dr. W S E Fernando - Managing 

Director, R W Soysa, L G S Gunawardena, R K Witanachchi, 

R A Ebell 

Manufacture and export of examination gloves 

ICOGUANTI S.p.A. 

Registered in Milan and successors to ICO Srl 

Incorporated in 1968 in Genoa 

Share capital Euro 2,000,000 


Directors: V Rocchetti - President, M Bottino - Joint 

Managing Director, M Orlando, N G Wickremeratne, 

J A G Anandarajah - Joint Managing Director 

Marketing and distribution of household, industrial and 

medical gloves and personal protective wear 

FELTEX (PVT) LTD 






N Y Fernando, K A L S Fernando 

Manufacture of cotton and synthetic flock 

HANWELLA RUBBER PRODUCTS LTD 





J A G Anandarajah, B A Mahipala, R W Soysa, 

Dr. W S E Fernando 

Manufacture and export of household, industrial and 

examination gloves 

PLANTATIONS 

DPL PLANTATIONS (PVT) LTD 





J A G Anandarajah, R W Soysa, G K Seneviratne, 

Dr. W S E Fernando, A Gunasekera, S Siriwardana 

Plantation management 

KELANI VALLEY PLANTATIONS PLC 





J A G Anandarajah, G K Seneviratne - Managing Director, 

R W Soysa, Dr. W S E Fernando, B P W Jayasekera, 

A M Pandithage (Alternate R A Ebell), R Seevaratnam , 

F Mohideen 

Tea and rubber plantations 

Appointed October 30, 2008 


19

environment 

“Firstlight” cares for the environment and 

protects nature. By creating a viable livelihood 

for the farmer communities, it encourages them 

to keep their lands under rubber cultivation 

without divesting them for housing or industries. 

These man made forests improve air quality, 

facilitate rainfall, assist reduction of greenhouse 

gases and prevent soil erosion. They also provide 

a source of renewable energy thus contributing 

to reduction of fossil fuel usage. 

20 


Management Team 


CHAIRMAN 


MANAGING DIRECTOR 

HAND PROTECTION - DISTRIBUTION 

M Bottino 


ICOGUANTI 

PLANTATIONS 

GENERAL MANAGERS 

Dr W S E Fernando 

DIRECTOR (TECHNICAL) 

MANAGING DIRECTOR DPTL 

A Gunasekera 

S Siriwardena 

M R S Ganapathy 

Low Country Region 

Finance 

Up Country Region 


DIRECTOR (PLANTATIONS) 

MANAGING DIRECTOR KVPL 

N Y Fernando 

DIRECTOR (PROJECTS) 


DIRECTOR (MANUFACTURING) 

K A L S Fernando 

DIRECTOR (TECHNICAL SERVICES) 

HAND PROTECTION - MANUFACTURING 

GENERAL MANAGERS 

L G S Gunawardana Medical gloves 

N A R R S Nanayakkara Finance 

Dr L P Nethsinghe Technical 

B K Pathirage 

Factory Operations 

R M T Premaratne Knitted and Coated Gloves 

Ms L A Kumarasiri Systems 

DIVISIONAL MANAGERS 

A Muthukuda 

Factory Manager (DL) 

K Jinadasa 

Factory Manager (GL) 

K N N Dharmaratne Factory Manager (VL) 

S A N Pushpakumara Factory Manager (HRPL) 

D P P Mendis 

Factory Manager (TL) 

Ms. S E Fernando Group Marketing 

C Ratnasiri 

Group Engineering Maintenance 

R Dassanayake 

Group Commercial 

J Abeyratne 

Development Engineering 

K K D P Senanayake Manufacturing (DPTL) 

L P R Mallikarachchi Centrifuging 

P J Mahaliyanage Engineering Maintenance (DL) 

M Bin-Sadoon 

Administration (DPTL) 

V K B Godamunne Human Resources 

B M A S K Jinadasa Quality Systems 

G Sellahewa 

Supply Chain and Logistics 

C N Mallikaratchi Production (VL) 

M Sivapalan 

Production Planning 

S W A Premachandra Project Implementation 

H M A Kumara 

Finance 

G Premanand 

Engineering (DPTL) 

P Sutthirat 

Human Resources (DPTL) 

Ms Jitinun Chokhaw Finance (DPTL) 

G Karunarathne Compounding (HRPL) 

K M C S K Perera Production (HRPL) 

M Weerasinghe Engineering (HRPL) 

K A G G Kularatne Product Technologist 

I P Kulatunga 

Marketing 

A J M K B Jayasundara Finance 

DEPUTY GENERAL MANAGERS 

R G D Fernando Rubber Marketing & 

Administration 

J A Rodrigo 

Marketing 

A B Stembo 

Tea Group – Low Country 

Y U S Prematilake Rubber Group – Low Country 

D Ramakrishna Nuwara Eliya Group 

D I Gallearachchi Nuwara Eliya Estate 

GROUP MANAGERS 

R K Gunasekera Hatton Group 

S D Samaradiwakara Hatton Group 

B C Gunasekera Rubber Group – Low Country 

C S Amarathunga Tea Group – Low Country 

MANAGERS 

K de J Seneviratne Hatton Regional Office 

N Weeraratne 

Finance Corporate 

K A P Dalpathadu Corporate Sustainability 

ESTATE MANAGERS 

Up Country (Nuwara Eliya & Hatton Group) 

A P Senanayake Oliphant 

M P Wanasinghe* Uda Radella 

T P G I Guruge* Tillyrie 

O K Don Sarath Blinkbonnie 

P S Samarakoon Battalgalla 

R M Samarakoon Fordyce 

R Dissanayake* 

Invery 

R J K Hettiarachchi Robgill 

S A D A Subasinghe Edinburgh 

R M P A Ratnayake* Glassaugh 

ESTATE MANAGERS 

Low Country (Tea & Rubber Group) 

K A R Alles* 

Ganepalla 

M V N K Karunaratne* Kitulgala 

D E P K Welikala We-Oya 

R M V Ratnayake* Kalupahana 

S F Fernando 

Dewalakande 

J Ellawala 

Urumiwela 

M W N de Silva Lavant 

D W Vedamuttu Kelani 

* Acting Estate Managers 


21

IT TRAINING CENTRE 

INGESTRE ESTATE 

CO-OPORATIVE BANK 

NUWARA ELIYA ESTATE 

CHILD DEVELOPMENT CENTRE 

DEWALAKANDE ESTATE 

22 


PLANTATION IMAGE WILL GO HERE 

plantations 

“Firstlight” of DPL and “A Home for Every 

Plantation Worker” of KVPL are our initiatives to 

care for the communities that sustain the source of 

raw materials – the rubber small farmers and the 

plantation worker families. Interlinked in several 

ways, the programmes reflect our commitment 

to operate and behave in a socially responsible 

manner. The Dunedin Factory of KVPL featured 

here processes the skim generated from latex 

collected under “Firstlight”. 


23

INPUT MATERIALS 

COMMUNITY CAPACITY 

BUILDING 

ENVIRONMENT 

EDUCATION AND 

EMPOWERMENT 

TAPPING 

END USER 

FAIR PRICE 

GLOVE PRODUCTION 

TRANSPORT 

CENTRIFUGING 

24 


Financial 

review 


25

Financial Calendar 2008/2009 

Interim Reports 

Quarter ended June 30, 2008 

Quarter ended September 30, 2008 

Quarter ended December 31, 2008 

August 6, 2008 

November 5, 2008 

January 31, 2009 

Annual Report – 2008/2009 

Thirty Third Annual General Meeting 

Final Dividend proposed 

Final Dividend payable 

May 30, 2009 

June 26, 2009 

June 26, 2009 

July 3, 2009 

Financial Contents 

Annual Report of the Board 27 

Corporate Governance 31 

Statement of Directors’ Responsibilities 37 

Audit Committee Report 38 

Independent Auditor’s Report 39 

Income Statements 40 

Balance Sheets 41 

Statements of Changes in Equity 42 

Cash Flow Statements 43 

Accounting Policies 45 

Notes to the Financial Statements 54 

26 


Annual Report of the Board 

ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY 

DIPPED PRODUCTS PLC 2009 

The Directors of Dipped Products PLC present their report together with the audited Financial Statements of the Company and 

of the Group for the year ended March 31, 2009. 

The details set out herein provide the pertinent information required by the Companies Act No. 7 of 2007, the Colombo Stock 

Exchange Listing Rules and are guided by recommended best accounting practices. 

Principal activities and business review of the year 

The principal activities of the Group and its management team are shown on pages 19 & 21 in this report. The Chairman’s 

Statement and the Managing Director’s Review describe the Group’s affairs and mention important events of the year. The results 

for the year are set out in the Income Statements on page 40. 

Financial Statements 

The Financial Statements of the Company and the Group are given on pages 40 to 69. 

Independent Auditor’s Report 

Independent Auditor’s Report on the Financial Statements is given on page 39. 

Accounting policies 

The accounting policies adopted by the Company and its subsidiaries in the preparation of the Financial Statements are given on 

pages 45 to 53. There were no changes in the accounting policies adopted except for Accounting Policy 5.1.2 on defined benefit 

plan-Retirement Gratuity, which has been revised to be compliance with Sri Lanka Accounting standard 16 - Employee Benefits. 

Interest Register 

Directors’ Interest in Transactions: Directors of the Company and its subsidiaries have made the general disclosures provided for 

in Section 192(2) of the Companies Act No. 7 of 2007. Note 29 to the Financial Statements dealing with related party disclosures 

includes details of their interests in transactions. 

Directors’ Interest in Shares: There were no changes in the shareholdings of the Directors of the Company other than the 

resignation of Mr H A Pieris on April 30, 2008, who held 935,426 shares in the Company. 

There were no changes in shareholdings in subsidiaries. 

Directors’ Remuneration: The Executive Directors’ remuneration is established within an established framework . The total 

remuneration of Executive Directors of the Company for the year ended March 31, 2009 is Rs. 24,174,100 (2008 - 

Rs. 23,678,343) which includes the value of perquisites granted to them as part of their terms of service. The total remuneration 

of Non-Executive Directors for the year ended March 31, 2009 is Rs. 1,166,666 (2008 - Rs. 1,500,000) determined according to 

scales of payment decided upon by the Board. The Board is satisfied that the payment of this remuneration is fair to the Company. 

Remuneration paid to the Directors of the subsidiary companies for financial year ended March 31, 2009 is Rs. 24,044,250 

(2008 - Rs. 25,178,343) 

Details of Directors’ Shareholdings as defined in Colombo Stock Exchange Rules 

No. of Shares as at March 31 2009 2008 

Company 

Mr N G Wickremeratne 659,120 659,120 

Mr J A G Anandarajah 219,474 219,474 

Mr R W Soysa 278,020 278,020 

Dr W S E Fernando 85,812 85,812 

Mr N Y Fernando 10,288 10,288 

Mr R K Witanachchi 10,926 10,926 

Mr H A Pieris resigned w.e.f. April 30, 2008. Shares held upto that date - 935,426 (March 31, 2008 - 935,426) 


27


Donations 

The donations made by the Company and the Group are disclosed in Note 5 on Page 55. 

No donations were made for political purposes. 

Directorate 

The names of the Directors who served during the year are given on page 17 in this report. 

Mr R W Soysa who served as an Executive Director of the Company retired on March 31, 2009. 

Dr. W S E Fernando, an Executive Director of the Company retires on May 31, 2009. 

Mr F Mohideen and Mr K A L S Fernando were appointed to the Board on July 10, 2008 and April 1, 2009 respectively. 

Mr L G S Gunawardena will be appointed to the Board with effect from June 1, 2009. 

In terms of the Articles of Association of the Company Shareholders will be requested to re-elect them at the Annual General 

Meeting. 

Mr N B Weerasekera and Mr R K Witanachchi retire by rotation and being eligible, offer themselves re-election. 

The Directors of the subsidiaries are given on page 19. 

Auditors 

Messrs KPMG Ford, Rhodes, Thornton & Co., Chartered Accountants are deemed re-appointed in terms of Section 158 of the 

Companies Act No. 7 of 2007, as Auditors of the Company. The Directors are authorised to determine their remuneration. 

The Auditors, Messrs. KPMG Ford, Rhodes, Thornton & Co., were paid Rs 520,000 (2008 - Rs 460,000) and Rs 3,570,000 

(2008 - Rs 3,137,750) as audit fees by the Company and the Group respectively. In addition, they were paid Rs 65,000 

(2008 – Rs 289,597) and Rs 1,006,431 (2008 - Rs 651,334), by the Company and the Group, for non-audit related work, which 

consisted mainly of tax consultancy services. 

The Financial Statements of Hanwella Rubber Products Ltd., for the year have been audited by B R De Silva and Company, and 

was paid Rs 150,000 (2008 - Rs 145,000) as audit fee and Rs 25,400 (2008- Rs 24,050) for non audit related work, which 

consisted mainly of tax consultancy services. 

In addition to the above, Rs 2,760,559 (2008 - Rs 2,240,000), and Rs 208,370 (2008- Rs 209,000) were paid as audit fees by 

ICOGUANTI S.p.A. and Dipped Products (Thailand) Ltd., respectively. 

As far as the Directors are aware, the Auditors of the Company and of the subsidiaries do not have any relationships (other than 

that of an Auditor) with the Company or any of its subsidiaries other than those disclosed above. The Auditors also do not have 

any interests in the Company or any of its Group companies. 

Turnover 

The gross turnover of the Group during the year was Rs 11,895,985,490 (2008 - Rs11,152,894,905). The Group turnover from 

international trade in Hand Protection sector amounted to Rs 9,462,829,218 (2008 - Rs 8,845,502,910). Further information on 

Group turnover is detailed in note 1 to the Financial Statements. 

Reserves 

The total Group reserves as at March 31, 2009 amount to Rs 2,480,534,933 (2008 - Rs 2,211,788,728) comprising capital 

reserves of Rs 174,222,717 (2008 - Rs 172,018,091) and revenue reserves of Rs 2,306,312,216 (2008 - Rs 2,039,770,637) 

28 



Profits 

After making provisions for all known liabilities and depreciation on property, 

plant & equipment the profit earned by the Group before taxation was 

And taxation on Group profits amounting 

to were deducted 

2009 

Rs ‘000 

2008 

Rs ‘000 

616,437 615,969 

(113,709) (100,627) 

The Group was left with a profit of 502,728 515,342 

And the amount attributable to minority interest of (139,858) (144,220) 

And the balance of the previous year net of final dividend and appropriations 

were adjusted 

1,212,942 1,114,953 

The profit before appropriation was 1,575,818 1,486,075 

Appropriations 

Your Directors have made appropriations as follows: 

Interim dividend - Nil (2008 – Rs. 1.50 per share) - 89,792 

Proposed final dividend of Rs. 3.00 per share (2008 – Rs. 1.50 per share) 179,585 89,793 

Total appropriations 179,585 179,585 

Dividend 

The Board of Directors have recommended a payment of a first & final dividend of Rs. 3.00 per share payable on July 3, 2009 to 

the shareholders of the issued ordinary shares of the Company as at close of business on June 26, 2009. 

The total dividend of Rs. 3.00 per share distributed to shareholders comprise tax exempt dividends received by the Company and 

will therefore be free of income tax in the hands of shareholders. 

The Directors have confirmed that the company satisfies the solvency test requirement under Section 56 of the Companies 

Act No. 7 of 2007 for the dividend proposed. A solvency certificate has been sought from the Auditors of the Company. 

Statutory payments 

The Directors are satisfied that all statutory payments in relation to Employees and the Government have been made up to date. 

Taxation 

The Company has entered into an agreement with the Board of Investment of Sri Lanka and has been granted a 10 year tax 

holiday as “Thrust Industries” up to March 31, 2009 on its business activity. Other income of the Company is liable to taxation at 

the rate of tax of 35%. 

Capital expenditure 

Group expenditure on property, plant & equipment during the year amounted to Rs. 799,080,053 (2008 - Rs. 679,286,042). The 

movement in property, plant & equipment during the year is set out in Note 9 to the Financial Statements. 

Market value of properties 

The value of land owned by the Group is stated at cost or valuation. Information on valuation of land are explained in Note 9 to 

the Financial Statements. 

Events after the Balance Sheet date 

No circumstances have arisen since the Balance Sheet date which would require adjustment to or disclosure in, other than those 

disclosed in note 30 to the Financial Statements. 

Going concern 

The Directors, after making necessary inquiries and reviews including review of the Group’s budget for the ensuing year, capital 

expenditure requirements, future prospects and risks, cash flows and borrowing facilities, have a reasonable expectation that the 

Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Therefore the 

going concern basis has been adopted in the preparation of the Financial Statements. 


29


Stock market information 

Information relating to earnings, dividend, net assets per share and share trading are given on pages 70 to 74. 

Major shareholdings 

The twenty major shareholders as at March 31, 2009 are given on page 73 in this report. 

Annual general meeting 

The Annual General Meeting will be held at the Auditorium of the Institute of Chartered Accountants of Sri Lanka No. 30A, 

Malalasekera Mawatha, Colombo 07 on June 26, 2009 at 3.00 p.m. The Notice of the Annual General Meeting appears on page 76. 

For and on behalf of the Board 


Chairman 



Hayleys Group Services (Pvt) Limited 

Secretaries 

400, Deans Road, 

Colombo 10 

May 12, 2009 

30 


Corporate Governance 

Dipped Products PLC (DPL) continues to be committed to conducting the Company’s business ethically and in accordance with 

high standards of good corporate governance. 

The Company is a subsidiary of Hayleys PLC. Principle Business of the Company is shown on the back inner cover page. 

DPL Governance Guidelines provide Directors and management with a road map of their respective responsibilities. These 

guidelines, which will be updated periodically, detail clearly those matters requiring Board and Committee approval, advice or 

review. The DPL Governance Framework is depicted in the following diagram. 

Shareholders 

Appoint 

Audiitors 

Hayleys 

Remuneraion 

Committee 

Recommend 

Sector 

Management 

Elect 

Board of 

Directors 

Sector 

Management 

Appoint 

Appoint 

Audit 

Committee 

Company 

Secretaries 

We set out below the Corporate Governance practices adopted and practiced by DPL against the background of the Code of 

Best Practice on Corporate Governance issued by The Institute of Chartered Accountants of Sri Lanka and the Rules set out in 

Section 6 of the Colombo Stock Exchange’s Listing Rules. 

Board of Directors 

The Board of Directors is responsible for setting up the Governance Framework within the Company. 

Composition and attendance at meetings 

As at the end of the year under review, the Board consisted of eleven Directors; five Non-Executive Directors including the 

Chairman, six Executive Directors and an Alternate Director for a Non-Executive Director. These Directors are named below 

and their profiles are given on page 17 in this Report. Details of Directors share holding in DPL and the directorates they hold in 

other companies are given on pages 19 and 21 respectively. 

The Board meets quarterly as a matter of routine. Ad hoc meetings are held as and when necessary. During the year under 

review, the Board met on five occasions. The attendance at these meetings was: 

Name of Director 

Executive/ Non - Executive/ 

Independent Non-Executive 

Attendance 

N G Wickremeratne - Chairman Non-Executive 5/5 

J A G Anandarajah - Managing Director Executive 4/5 

R W Soysa * Executive 5/5 

Dr W S E Fernando Executive 4/5 

G K Seneviratne Executive 5/5 

N Y Fernando Executive 5/5 

N B Weerasekera Non-Executive 4/5 

R K Witanachchi Executive 5/5 

A M Pandithage Non-Executive 4/5 

R A Ebell - (Alternate Director) 4/5 

R Seevaratnam Independent Non-Executive 5/5 

F Mohideen Independent Non-Executive 4/4 

K A L S Fernando ‡ Executive - 

* Retired March 31, 2009 Appointed July 10, 2008 ‡ Appointed April 01, 2009 


31


Responsibilities 

The Board is responsible to; 

enhance shareholder value. 

formulate and communicate business policy and strategy to assure sustained growth, and monitor its implementation. 

approve any change in the Group’s business portfolio and sanction major investments and disinvestments in accordance 

with parameters set. 

ensure Executive Directors have the skills/ knowledge to implement strategy effectively, with proper succession 

arrangements in focus. 

ensure effective remuneration, reward and recognition policies are in place to help employees give of their best. 

set and communicate values/ standards, with adequate attention being paid to accounting policies/ practices. 

ensure effective information, control, risk management and audit systems are in place. 

ensure compliance with laws and ethical standards established. 

approve annual budgets and monitor performance against these. 

adopt annual and interim results before these are published. 

Inter alia, Directors; 

must bring independent judgment to bear and consider foremost the interests of the company as a whole. 

must stay abreast of developments in management practice, the world and domestic economy and other matters 

relevant to the company. 

may convey concerns to the Chairman. 

may, where necessary and with the concurrence of the Chairman or the DPL Independent Director, consult and consider 

inputs from “experts” in relevant areas. 

should declare their interests in contracts under discussion at a Board meeting, and refrain from participating in such 

discussion. 

possessing “price- sensitive” information concerning the company should not trade in the company’s shares until such 

information has been adequately disseminated in the market. 

Company Secretary 

The services and advice of the Company Secretary are made available to Directors as necessary. The Company Secretary keeps 

the Board informed of new laws, regulations and requirements coming into effect which are relevant to them as individual 

Directors and collectively to the Board. A major focus of attention recently has been the Companies’ Act No 7 of 2007, with its 

wide ranging implications, pursuant to which the Company adopted a new set of Articles of Association. 

Chairman’s role 

The Chairman is responsible for the efficient conduct of Board meetings. The Chairman maintains close contact with all Directors, 

and holds informal meetings with Non-Executive Directors as and when necessary. 

Board balance 

The composition of the Executive and Non- Executive Directors (the latter are over one third of the total number of Directors) 

satisfies the requirements laid down in the Listing Rules of the Colombo Stock Exchange. The Board has determined that two 

Non-Executive Directors satisfy the criteria for “independence” set out in the Listing Rules. 

Non-Executive Directors profiles reflect their caliber and the weight their views carry in Board deliberations. Each is independent 

of management and free from any relationship that can interfere with independent judgment. The balance of Executive, Non- 

Executive and Independent Non-Executive Directors on the Board ensures that no individual Director or small group of 

Directors dominates board discussion and decision making. 

The Chairman of the Company is also the Chairman of Hayleys PLC. Chief Executive Authority is vested in the Managing Director 

of the Company . The distinction between the position of the Chairman and officers wielding executive powers in the Company 

ensures the balance of power and authority. 

Financial acumen 

The Board, including the Alternate Director includes two senior Chartered Accountants, who possess the necessary knowledge 

and competence to offer the Board guidance on matters of finance. One of them serves as Chairman of the Audit Committee. 

Supply of information 

Directors are provided with quarterly reports on performance that such other reports and documents as are necessary. The 

Chairman ensures all Directors are adequately briefed on issues arising at meetings. 

Appointments to the Board 

The Board as a whole decides on the appointment of Directors. 

32 



Re-election of Directors 

The provisions of the Company’s Articles require a Director appointed by the Board to hold office until the next Annual General 

Meeting (AGM), and seek re-appointment by the shareholders at that meeting. 

The Articles call for one third of the Directors in office to retire at each Annual General Meeting. The Directors who retire are 

those who have served for the longest period after their appointment / re-appointment. Retiring Directors are generally eligible 

for re-election. 

The Managing Director does not retire by rotation. 

Remuneration procedure 

The Remuneration Committee of Hayleys PLC who is the ultimate parent of DPL acts as the Remuneration Committee of the 

Company. 

Remuneration Committee of Hayleys PLC consists of; 

L K B Godamunne (Chairman) - Independent Non-Executive 

I D Bandaranayake - Independent Non-Executive 

A M Senaratne - Independent Non-Executive 

T L F Jayasekera - Independent Non-Executive 

K D D Perera - Non-Executive 

The Remuneration Committee recommends the remuneration payable to Managing Director & Executive Directors and sets 

guidelines for the remuneration of the management staff within the Company. The Board makes the final determination after 

consideration of such recommendation and performance of the senior management staff. 

Disclosure of remuneration 

The total of Directors’ remuneration is reported in note 5 to the Financial Statements. 

Directors are able to access programmes arranged by the Hayleys Group Human Resource Development Division when 

appropriate, to provide update on matters relevant to business management and economic affairs. 

Management Structure 

DPL Group comprises Dipped Products PLC and subsidiary companies. The Board has delegated primary authority to the 

Managing Director and the five Executive Directors, to achieve the strategic objectives formulated by them. 

The authority is exercised within the ethical framework and business practices established by the Board which demands 

compliance with existing laws and regulation as well as best practices in dealing with employees, customers, suppliers and the 

community at large. These are further described elsewhere in this report. 

The Group is effectively divided in to two divisions, namely Hand Protection and Plantations, which fall under the purview of the 

Managing Director. The Hand Protection division includes the production operation of Dipped Products PLC and eight subsidiary 

companies and the Italian marketing company ICOGUANTI S.p.A. The division is managed as six functional units supervised by an 

Executive Director. The Plantation division is managed by an Executive Director and two Directors of DPL Plantations (Pvt) Ltd. 

The Group structure and the Management Team are given on page no 19 and 21. 

The Executive Directors, General Managers and key Managers of both divisions meet separately on a monthly basis to review 

progress and discuss strategic issue and other important developments that require consideration. The Managing Director may 

attend these meetings and minutes are kept of decision made and major issues. 

The Managing Director and designated Executive Director attend the monthly meetings of the Group Management Committee 

of Hayleys PLC and report on progress and important issue. 

Relations with shareholders 

The Notice of Meeting is included in the Annual Report. The Notice contains the agenda for the AGM as well as instructions on 

voting for shareholders, including appointment of proxies. A Form of Proxy is enclosed with the Annual Report. The period of 

notice prescribed by the Companies Act No 7 of 2007 has been met. 

Constructive use of the Annual General Meeting 

The active participation of shareholders at the Annual General Meeting is encouraged. The Board believes the AGM is a means of 

continuing effective dialogue with shareholders. 

The Board offers clarifications and responds to concerns shareholders have over the content of the Annual Report as well as 

other matters which are important to them. The AGM is also used to adopt the Financial Statements for the year. 


33


Major transactions 

There have been no transactions during the year under review which fall within the definition of “Major Transactions” in terms of 

the Companies Act. 

Communication with shareholders 

Shareholders are provided with quarterly Financial Statements and the Annual Report, which the company considers as its 

principal communication with them and other stakeholders. These reports are also provided to the Colombo Stock Exchange. 

Shareholders may bring up concerns they have, either with the Managing Director or the Group’s Secretarial Department as 

appropriate. 

Price sensitive information 

Due care is exercised with respect to share price sensitive information. 

Shareholder value and return 

The Board constantly strives to enhance the shareholder value and provide a total return in excess of the market. It has been the 

policy of the Board to distribute a reasonable dividend rate to the shareholders whilst allowing for capital requirements. 

Accountability and Audit 

Financial reporting 

The Board places great emphasis on complete disclosure of financial and non-financial information within the bounds of 

commercial reality, and on the adoption of sound reporting practices. Financial information is disclosed in accordance with the Sri 

Lanka Accounting Standards. Revisions to existing accounting standards and adoption of new standards are carefully monitored. 

The Annual Report includes descriptive, non-financial content through which an attempt is made to provide stakeholders with 

information to assist them make more informed decisions. 

The Statement of Directors’ Responsibilities for the Financial Statements is given on page 37 in this report. 

Management Report 

The Managing Director’s Review (pages 8 to 15) in this report provides an analysis of the Group’s performance during the 

financial year. 

The Board confirms that there is an ongoing process for identifying, evaluating and managing significant risks. This process has been 

in place through the year under review. The potential risks, both internal as well as external, faced by the Company and actions 

instituted for mitigating the same are reported in the Managing Director’s review. 

Going concern 

The Directors, after making necessary inquiries and reviews including reviews of the company budget for the ensuing year, capital 

expenditure requirements, future prospects and risks, cash flows and borrowing facilities, have a reasonable expectation that the 

Company has adequate resources to continue in operational existence for the foreseeable future. Therefore the going concern 

basis has been adopted in the preparation of the Financial Statements. 

Internal control 

The Directors are responsible for the Group’s system of internal financial controls. The system is designed to safeguard assets 

against unauthorised use or disposition and to ensure that accurate records are maintained and reliable financial information is 

generated. However, there are limits to which any system can ensure that errors and irregularities are prevented or detected 

within a reasonable period. 

The important procedures in place to discharge this responsibility are as follows: 

the Directors are responsible for the establishment and monitoring of financial controls appropriate for the operation 

within the overall Group policies. 

the Board reviews the strategies of the divisions and constituent companies. 

annual budgeting and regular forecasting processes are in place and the Directors review performance. 

the Board has established policies in areas of investment and treasury management and does not permit employment of 

complex risk management mechanism. 

the Group is subjected to regular internal audits and system reviews. 

the Audit Committee reviews the plans and activities of the internal audits and the management letters of External Auditors. 

the Group carefully selects and trains employees and provides appropriate channels of communication to foster a control 

conscious environment. 

34 



The Board has reviewed the effectiveness of the system of financial control for the period up to the date of signing the accounts. 

The Directors’ responsibilities for the Financial Statements are described on page 37. 

Audit Committee 

DPL Group constituted its own Audit Committee in 2007. The Committee consists of three Non- Executive Directors of Dipped 

Products PLC. The meetings were attended by the Chairman, Finance Director of Hayleys PLC and the Managing Director by 

invitation when matters relating to the Group were taken up for discussion. The External Auditor attended the meetings when his 

presence was deemed necessary. 

The Audit Committee has written terms of reference and is empowered to examine any matters relating to the financial affairs of 

the Group and its internal and external audits. 

The Committee reviewed the Financial Statements, internal control procedures, accounting policies, compliance with accounting 

standards, emerging accounting issues and other related functions that the Board required. It also reviews the adequacy of systems 

for compliance with the relevant legal, regulatory and ethical requirements. Significant issues discussed by the Committee at the 

reviews were communicated by the Managing Director to the Board of Directors for their consideration and action. 

The Audit Committee helps the Group achieve a balance between conformance and performance. 

Members of the Audit Committee 

R Seevaratnam – Chairman of the Committee 


F Mohideen 

The Audit Committee recommends the appointment and fees of the External Auditors, having considered their independence 

and performance. 

The Audit Committee Report appears on Page 38 in this Report. 

IT governance 

We continue to give attention to bringing the DPL’s IT systems in line with its strategies and objectives. Dedicated staffs are 

deployed to support this. 

The DPL’s investment in IT resources covers resources operated and managed centrally and resources deployed in the various 

factories. This includes an ERP system, internet and e mail services catering to most parts of the business. 

IT value and alignment 

Investments in IT projects and systems are made after consideration is given to their suitability for the related projects. Further 

aspects such as cost savings, timely information and the balance between cost of investment and present and future scale of 

operations are also taken into account when these decisions are taken. 

IT risk management 

Risks associated with Information Technology are assessed in the process of risk management. Use of licensed software (with 

Microsoft Corporation), closer monitoring of internet usage (for compliance with the IT use policy) and mail server operations 

and the use of antivirus and firewall software, are some of the practices in place. 


35


Level of compliance with the Colombo Stock Exchange’s Listing Ruling section 6, Rules on Corporate Governance are given in the 

following table. 

Rule No. Subject Application requirement Compliance 

Status 

Details 

6.1(a) Non-Executive Directors At least one third of the total number of Directors 

should be Non-Executive Directors 

6.2(a) 

6.2(b) 

6.3(a) 

6.3(b) 

6.3(c) 

6.3(d) 

6.5 

6.5(a) 

6.5(b) 

6.5(c) 

Independent Directors 

Independent Directors 

Disclosure relating to Directors 




Remuneration Committee 

Composition of Remuneration 

Committee 

Functions of Remuneration 

Committee 

Disclosure in the Annual Report 

relating to Remuneration 

Committee 

Two or one third of Non-Executive Directors, 

whichever is higher should be Independent 

Each Non-Executive Director should submit a 

declaration of independence/non-independence in 

the prescribed format 

Names of independent Directors should be 

disclosed in the Annual Report 

The basis for Board to determine a Director as 

independent, specified criteria for independence is 

not met. 

A brief resume of each Director should be included 

in the Annual Report including the areas of expertise 

Forthwith provide a brief resume of new Directors 

appointed to the Board with details specified in 

6.3(d) to the CSE 

A listed company shall have a Remuneration 

Committee 

Shall comprise of Non-Executive Directors a 

majority of whom will be independent 

The Remuneration Committee shall recommend 

the remuneration of Chief Executive Officer and 

Executive Directors 

The Annual Report should set out; 

a) Names of Directors comprising the 

Remuneration Committee 

b) Statement of Remuneration Policy 

c) Aggregated remuneration paid to Executive & 

Non-Executive Directors 

Compliant 

Compliant 

Compliant 

Five of eleven Directors are Non- 

Executive Directors 

Two of the five Non-Executive 

Directors are Independent 

Non-Executive Directors have 

submitted the declaration 

Compliant Please refer page 17 

Compliant 

Given on page 32 under the 

heading of Board Balance 

Compliant Please refer page 17 

Compliant 

Compliant 

Compliant 

Compliant 

Compliant 

Compliant 

Compliant 

A brief resume provided to the 

CSE 

Remuneration Committee of the 

ultimate parent (Hayleys PLC) acts 

as a Remuneration Committee of 

the Company 

As above 

As above and stated in this report 

As above 

As above 

As above 

Please refer the page 

6.6 Audit Committee The company shall have a Audit Committee Compliant Names of the members of the 

Audit Committee are stated on 

page 38 

6.6(a) 

Composition of Audit 

Committee 

Shall comprise of Non-Executive Directors a 

majority of whom will be independent 

Compliant 

Audit Committee consists of 

two Independent Non-Executive 

Directors 

One Non-Executive Director shall be appointed as 

the Chairman of the committee 

Compliant 

Chairman of the Audit Committee 

is an Independent Non-Executive 

Director 

Chief Executive Officer and the Chief Financial 

Officer should attend Audit Committee Meetings 

Compliant 

Chief Executive Officer and 

Chief Financial Officer attend by 

invitation 

The Chairman of the Audit Committee or one 

member should be a member of a professional 

accounting body 

Compliant 

Chairman of the Audit Committee 

is a Chartered Accountant. 

6.6(b) 

Audit Committee functions 

Should be as outlined in the Section 6 of the listing 

rules 

Compliant 

The terms of reference of the 

Audit Committee adopted by the 

Board 

6.6(c) 

Disclosure in the Annual Report 

relating to Audit Committee 

a) Names of Directors comprising the Audit 

Committee 

b) The Audit Committee shall make a 

determination of the independence of the 

Auditors and disclose the basis for such 

determination 

c) The Annual Report shall contain a Report of 

the Audit Committee setting out of manner of 

Compliance of the functions 

Compliant 

Compliant 

Compliant 

Please refer page 38 

Please refer Audit Committee 

Report on page 38 

Please refer Audit Committee 

Report on page 38 

36 


Statement of Directors’ Responsibilities 

The Directors are responsible, under section 150 (1), 151 (1), 152 (1),153 (1) & 153 (2) of the Companies Act No. 7 of 2007, 

to ensure compliance with the requirements set out therein to prepare Financial Statements for each financial year giving a true 

and fair view of the state of affairs of the Company and the Group as at end of the financial year and of the profit & loss of the 

Company and the Group for the financial year. The Directors are also responsible, under section 148 for ensuring that proper 

accounting records are kept to disclose, with reasonable accuracy, the financial position and enable preparation of the Financial 

Statements. 

The Board accepts responsibility for the integrity and objectivity of the Financial Statements presented. The Directors confirm 

that in preparing the Financial Statements, appropriate accounting policies have been selected and applied consistently while 

reasonable and prudent judgments have been made so that the form and substance of transactions are properly reflected. 

They also confirm that the Financial Statements have been prepared and presented in accordance with the Sri Lanka Accounting 

standards. The Financial Statements provide the information required by the Companies Act and the listing rules of the Colombo 

Stock Exchange. 

The Directors have taken reasonable measures to safeguard the assets of the Group and, in that context, have instituted 

appropriate systems of internal control with a view to preventing and detecting fraud and other irregularities. 

As required by section 56 (2) of the Companies Act, the Board of Directors has authorized distribution of the dividends now 

proposed, being satisfied based on information available to it that the Company would satisfy the solvency test after such 

distributions in accordance with section 57 of the Companies Act No 7 of 2007, and sought in respect of the dividend now 

proposed, certificates of solvency from its Auditors. 

The external Auditors, Messrs KPMG Ford Rhodes, Thornton & Co., are re- appointed in terms of Section 158 of the Companies 

Act No. 7 of 2007 were provided with every opportunity to undertake the inspections they considered appropriate to 

enable them to form their opinion on the Financial Statements. The report of the Auditors, shown on page 39 sets out their 

responsibilities in relation to the Financial Statements. 

Compliance Report 

The Directors confirm that to the best of their knowledge, all statutory payments relating to employees and the Government 

that were due in respect of the Company and its Subsidiaries as at the Balance Sheet date have been paid or where relevant, 

provided for. 

By Order of the Board 

Hayleys Group Services (Pvt) Limited 

Secretaries 

400, Deans Road, Colombo 10 

May 12, 2009 


37

Audit Committee Report 

Composition and role 

The Audit Committee, appointed by and responsible to the Board of Directors, comprises three Non-Executive Directors. The 

Chairman, Finance Director of Hayleys PLC and the Managing Director attend meetings of the Committee by invitation. The 

Chairman of the Audit Committee is a senior Chartered Accountant. The role of the Committee, which has specific terms of 

reference, is described in the Corporate Governance Report on page 35. 

The names of the members and brief profiles of each member are given on pages 17 and inner back cover in this report. Their 

individual and collective financial knowledge and business acumen and the independence of the Committee, are brought to bear 

on their deliberations and judgments on matters that come within the Committee’s purview. Kelani Valley Plantations PLC the 

other quoted company in the Group, that has independent non- executive directors constituted its own Audit Committee to 

review their activities with effect from this financial year. Their terms of reference will be similar to the terms of the DPL Group 

Audit Committee and reports from these committees will be forwarded to the DPL Group Audit Committee. 

Meetings 

The Audit Committee met 4 times during the year. The attendance of the members at these meetings is as follows: 

Mr R Seevaratnam (Chairman) 4/4 

Mr N B Weerasekera 4/4 

Mr F Mohideen 1/1 

Activities 

The Committee carried out the following activities during the year: 

the Committee reviewed the financial reporting system adopted by the Group in the preparation of its quarterly and 

annual Financial Statements to ensure reliability of the process and consistency of the accounting policies and methods 

adopted and their compliance with the Sri Lanka Accounting Standards. The methodology included obtaining statements 

of compliance from Heads of Finance. The Committee recommended the Financial Statements to the Board for its 

deliberations and issuance. The Committee, in its evaluation of the financial reporting system, also recognised the adequacy 

of the content and quality of routine management information reports forwarded to its members. 

the Committee reviewed the process to assess the effectiveness of the internal financial controls that have been 

designed to provide reasonable assurance to the Directors that assets are safeguarded and that the financial reporting 

system can be relied upon in preparation and presentation of the Financial Statements. The internal audit function of 

local manufacturing companies is carried out by an independent firm of chartered accountants. Procedures relating to 

continuous monitoring and reporting of key control elements in Group companies were brought to the notice of the 

internal auditors and the Hayleys Group Management Audit & Systems Review Department in order to formulate the 

action plans for the ensuing year. 

the Committee obtained and reviewed statements on major Business Risks, mitigatory action taken or contemplated. 

the Committee reviewed reports tabled by Group companies certifying their compliance with relevant revenue 

regulations. 

the Committee held meetings with the External Auditors to review the scope of the audit and the Audit Management 

Letters of Group companies. Actions taken by the management in response to the issues raised, as well as the effectiveness 

of the internal controls in place, were discussed. Remedial action was recommended wherever necessary. 

the Committee reviewed the nature and value of non-audit work the External Auditors had undertaken, to ensure that it 

did not compromise their independence. The Audit Committee has recommended to the Board of Directors that Messrs 

KPMG Ford, Rhodes, Thornton & Co., be continued as Auditors for the financial year ending March 31,2010. 

R Seevaratnam 

Chairman 


May 6, 2009 

38 


Independent Auditors’ Report 

To the Shareholders of Dipped Products PLC 

Report on the Financial Statements 

We have audited the accompanying Financial Statements of Dipped Products PLC, the consolidated Financial Statements of the 

Company and its subsidiaries as at that date which comprise the Balance Sheet as at March 31, 2009, and the Income Statement, 

Statement of Changes in Equity and Cash Flow Statement for the year then ended, and a summary of significant accounting 

policies and other explanatory notes as set out on pages 40 to 69 of the Annual Report. 

Management’s Responsibility for the Financial Statements 

Management is responsible for the preparation and fair presentation of these financial statements in accordance with Sri Lanka 

Accounting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the 

preparation and fair presentation of Financial Statements that are free from material misstatement, whether due to fraud or error; 

selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. 

Scope of Audit and Basis of Opinion 

Our responsibility is to express an opinion on these Financial Statements based on our audit. We conducted our audit in 

accordance with Sri Lanka Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable 

assurance whether the Financial Statements are free from material misstatement. 

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Financial Statements. An audit 

also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the 

overall Financial Statement presentation. 

We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 

purposes of our audit. We therefore believe that our audit provides a reasonable basis for our opinion. 

Opinion 

In our opinion, so far as appears from our examination, the Company maintained proper accounting records for the year ended 

March 31, 2009 and the Financial Statements give a true and fair view of the Company’s state of affairs as at March 31, 2009 and 

its profit and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards. 

In our opinion, the consolidated Financial Statements give a true and fair view of the state of affairs as at March 31, 2009 and 

the profit and cash flows for the year then ended, in accordance with Sri Lanka Accounting Standards, of the Company and its 

subsidiaries dealt with thereby, so far as concerns the members of the Company. 

Report on Other Legal and Regulatory Requirements 

These Financial Statements also comply with the requirements of Section 153(2) to 153(7) of the Companies Act No. 7 of 2007. 

KPMG FORD, RHODES, THORNTON & CO.. 

Chartered Accountants 

Colombo 

May 12, 2009 


39

Income Statements 

For the year ended March 31, 

Notes 

Consolidated 

2009 

Rs’000 

2008 

Rs’000 

Company 

2009 

Rs’000 

2008 

Rs’000 

Turnover 1 11,895,985 11,152,895 1,229,474 1,243,201 

Cost of sales (9,503,142) (8,974,331) (1,037,821) (1,003,816) 

Gross profit 2,392,843 2,178,564 191,653 239,385 

Other income 2 15,119 13,345 2,497 4,570 

Administrative expenses (1,045,407) (986,172) (184,660) (193,529) 

Distribution expenses (408,317) (392,893) (4,218) (29,216) 

Other expenses 3 (4,745) (10,931) (703) (537) 

Provision for diminution in value of investment in subsidiary - - (50,000) (100,000) 

Net finance income / (cost) 4 (332,675) (223,435) 344,125 283,322 

Share of profit/(loss) of associate (net of tax) (381) 37,491 - - 

Profit before tax 5 616,437 615,969 298,694 203,995 

Income tax (expense) / release 6 (113,709) (100,627) 5,561 8,599 

Profit for the year 502,728 515,342 304,255 212,594 

Attributable to : 

Equity holders of the Company 362,870 371,122 304,255 212,594 

Minority interest 139,858 144,220 - - 

Profit for the year 502,728 515,342 304,255 212,594 

Basic earnings per share ( Rs.) 7 6.06 6.20 5.08 3.55 

Diluted earnings per share ( Rs.) 7 6.06 6.20 5.08 3.55 

Dividends per share ( Rs.) 8 3.00 3.00 3.00 3.00 

The figures in brackets indicate deductions 

The Accounting Policies on pages 45 to 53 and notes on pages 54 to 69 form an integral part of these Financial Statements 

40 


Balance Sheets 

As at March 31 

Notes 

Consolidated 

2009 

Rs’000 

2008 

Rs’000 

Company 

2009 

Rs’000 

2008 

Rs’000 

Assets 

Non-Current assets 

Property, plant & equipment 9 4,826,977 4,402,997 299,189 311,140 

Intangible assets 10 15,684 15,684 - - 

Investments in subsidiaries 11 - - 793,688 843,688 

Investments in associate 11 90,297 98,609 - - 

Other long term investments 11 197,010 197,010 194,457 194,457 

Deferred tax asset 12 21,592 11,933 21,592 11,933 

5,151,560 4,726,233 1,308,926 1,361,218 

Current assets 

Inventories 13 1,925,917 1,900,460 307,401 371,663 

Trade and other receivables 14 3,034,902 2,858,358 357,418 344,657 

Amount due from subsidiaries 15 - - 953,725 953,920 

Amount due from associate 6,000 - - - 

Short term deposits 89,600 20,000 - - 

Cash and cash equivalents 218,654 93,172 42,919 33,845 

5,275,073 4,871,990 1,661,463 1,704,085 

Total assets 10,426,633 9,598,223 2,970,389 3,065,303 

Equity and Liabilities 

Equity attributable to equity holders of the company 

Stated capital 16 598,615 598,615 598,615 598,615 

Capital reserves 174,223 172,018 99,882 99,882 

Revenue reserves 2,306,312 2,039,771 1,086,719 872,256 

3,079,150 2,810,404 1,785,216 1,570,753 

Minority interest 785,912 710,504 - - 

Total equity 3,865,062 3,520,908 1,785,216 1,570,753 

Liabilities 

Non current liabilities 

Deferred tax liability 12 140,385 133,120 - - 

Retirement benefit obligations 17 811,366 741,653 162,693 144,054 

Agents’ Indemnity Fund 18 35,379 33,819 - - 

Interest bearing borrowings 19 1,219,073 1,360,252 - - 

Deferred income 20 346,191 246,277 - - 

2,552,394 2,515,121 162,693 144,054 

Current liabilities 

Trade and other payables 21 1,275,366 1,395,444 156,649 135,855 

Interest bearing borrowings due within one year 22 2,716,948 2,153,414 473,189 513,280 

Amount due to subsidiaries 23 - - 387,626 692,723 

Amount due to Hayleys PLC 8,480 11,641 4,990 8,630 

Income tax payable 8,383 1,695 26 8 

4,009,177 3,562,194 1,022,480 1,350,496 

Total liabilities 6,561,571 6,077,315 1,185,173 1,494,550 

Total equity and liabilities 10,426,633 9,598,223 2,970,389 3,065,303 

The Accounting Policies on pages 45 to 53 and Notes on pages 54 to 69 form an integral part of these Financial Statements. 

It is certified that the Financial Statements have been prepared in compliance with the requirements of the Companies Act no.7 of 2007. 

N A R R S Nanayakkara 

General Manager Finance 

The Directors are responsible for the preparation and presentation of these Financial Statements. 

Signed for and on behalf of the Board 


Chairman 

May 12, 2009 




41

Statements of Changes in Equity 

Consolidated 

For the year ended March 31, 2009 Attributable to equity holders of the Company Minority 

Interest 

Stated 

Capital Reserves Revenue Reserves Total 

Capital 

Capital Reserve Reserve on Legal General Retained Exchange 

Redemption on Scrip Revaluation Reserve Reserve Earnings Fluctuation 

Reserve Issue of Assets 

Reserve 

Fund 

Total 

Equity 

Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 

Balance as at April 1, 2007 598,615 180 25,384 139,760 4,797 504,167 1,296,172 76,654 2,645,729 593,048 3,238,777 

Exchange difference on 

translation of overseas entities - - - - - - - 32,999 32,999 19,340 52,339 

Issue of shares - - - - - - - - - 2,940 2,940 

Net gains/(losses) not recognised 

in the income statement - - - - - - - 32,999 32,999 22,280 55,279 

Dividends - - - - - - (239,446) - (239,446) (49,044) (288,490) 

Profit attributable for the year - - - - - - 371,122 - 371,122 144,220 515,342 

Transfer to legal reserve - - - - 1,897 - (1,897) - - - - 

Transfer to general reserve - - - - - 121,006 (121,006) - - - - 

Balance as at March 31, 2008 598,615 180 25,384 139,760 6,694 625,173 1,304,945 109,653 2,810,404 710,504 3,520,908 

Issue of shares - - - - - - - - - 7,500 7,500 

Adjustment of effective holding - - - - - - - - - 1,069 1,069 

Exchange difference on 

translation of overseas entities - - - - - - - (4,332) (4,332) (1,984) (6,316) 

Net gains/(losses) not recognised 

in the income statement - - - - - - - (4,332) (4,332) 6,585 2,253 

Dividends - - - - - - (89,792) - (89,792) (71,035) (160,827) 

Profit attributable for the year - - - - - - 362,870 - 362,870 139,858 502,728 

Transfer to legal reserve - - - - 2,205 - (2,205) - - - - 

Balance as at March 31, 2009 598,615 180 25,384 139,760 8,899 625,173 1,575,818 105,321 3,079,150 785,912 3,865,062 

Company 

Stated Capital Capital Reserves Revenue Reserves Total Equity 

Capital 

Redemption 

Reserve on 

Revaluation of 

Retained 

Earnings 

Reserve Fund 

Assets 

Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 

Balance as at April 1, 2007 598,615 180 99,702 899,108 1,597,605 

Dividends - - - (239,446) (239,446) 

Profit attributable for the year - - - 212,594 212,594 

Balance as at March 31, 2008 598,615 180 99,702 872,256 1,570,753 

Dividends - - - (89,792) (89,792) 

Profit attributable for the year - - - 304,255 304,255 

Balance as at March 31, 2009 598,615 180 99,702 1,086,719 1,785,216 

a. Reserve on Scrip Issue represents reserves capitalised by subsidiaries in lieu of bonus issue of shares. 

b. Reserve on Revaluation of Assets relates to the revaluation of land. 

c. Legal reserve represents ICOGUANTI reserves capitalised as per Italian Accounting Standards (Civil Code no. 2430) 


42 


Cash Flow Statements 

For the year ended March 31 2009 

Rs ‘000 

Consolidated 

2008 

Rs ‘000 

Company 

2009 

Rs ‘000 

2008 

Rs ‘000 

Cash flows from operating activities 

Cash generated from operations (Note A) 1,097,016 1,140,935 (119,624) 270,390 

Interest paid (304,503) (307,712) (57,890) (61,140) 

Income taxes paid (140,655) (169,652) (3,131) (4,885) 

Retiring gratuity paid (59,495) (52,690) (6,864) (16,058) 

Agents’ indemnity paid (2,622) - - - 

Net cash flow from operating activities 589,741 610,881 (187,509) 188,307 

Cash flows from investing activities 

Purchase and construction of property, plant & equipment (799,080) (679,286) (18,024) (112,753) 

Grants received 111,266 49,270 - - 

Proceeds from disposal of property, plant & equipment 3,778 8,052 48 2,104 

Other long-term investments - (1,600) - - 

Interest received 22,625 15,030 818 770 

Dividends received from non-group companies 10,609 12,377 10,609 12,377 

Dividends received from associate/subsidiary companies 8,100 8,100 344,615 301,223 

Net payments to minority shareholders (63,535) (44,144) - - 

Net cash flow from investing activities (706,237) (632,201) 338,066 203,721 

Cash flows from financing activities 

Long term loans obtained 168,844 115,620 - - 

Repayment of term loan (255,039) (323,569) (30,253) (122,800) 

Capital payment on finance lease (5,409) (6,614) - - 

Dividends paid (101,392) (227,717) (101,392) (227,717) 

Net cash flow from financing activities (192,996) (442,280) (131,645) (350,517) 

Net increase/(decrease) in cash & cash equivalents (309,492) (463,600) 18,912 41,511 

Cash & cash equivalents at beginning of the year (1,787,460) (1,320,188) (449,182) (490,693) 

Cash & cash equivalents at end of the year (Note B) (2,096,952) (1,783,788) (430,270) (449,182) 



43

Cash Flow Statements 

For the year ended March 31 2009 

Rs’000 

Consolidated 

2008 

Rs’000 

Company 

2009 

Rs’000 

2008 

Rs’000 

A. Cash generated from operations 

Profit before tax 616,437 615,969 298,694 203,995 

Adjustments for 

Interest cost 304,503 307,712 57,890 61,140 

Share of (profit) / loss of associate 381 (37,491) - - 

Depreciation on property, plant & equipment 384,000 363,089 29,958 26,208 

(Gain)/loss on disposal of property, plant & equipment (3,768) (5,183) (31) (2,104) 

Amortisation of grants (11,351) (8,162) - - 

Provision for diminution in value of investments - - 50,000 100,000 

Provision for bad & doubtful debts 19,196 16,310 43 - 

Provision for retiring gratuity 129,427 180,728 25,503 27,111 

Provision for agents’ indemnity fund 4,344 3,947 - - 

Provision for slow-moving/obsolete inventories 23,327 22,272 5,170 5,543 

Interest and dividend income (33,234) (27,407) (356,042) (314,370) 

Differences of exchange on translation of foreign entities (6,115) 91,598 - - 

1,427,061 1,523,382 111,185 107,523 

(Increase)/decrease in trade and other receivables (169,708) (283,546) (13,558) (234,313) 

(Increase)/decrease in inventories (48,784) (327,542) 59,092 (54,069) 

Increase/(decrease) in trade and other payables (111,639) 228,641 (276,343) 451,249 

(330,045) (382,447) (230,809) 162,867 

1,097,016 1,140,935 (119,624) 270,390 

B. Analysis of cash & cash equivalents at end of the year 

Cash at bank and in hand 218,654 93,172 42,919 33,845 

Short term deposits 89,600 20,000 - - 

Short term loans and overdraft (2,405,206) (1,896,960) (473,189) (483,027) 

(2,096,952) (1,783,788) (430,270) (449,182) 

Effects of exchange rate changes - (3,672) - - 

(2,096,952) (1,787,460) (430,270) (449,182) 


44 


Accounting Policies 

1. Reporting entity 

Dipped Products PLC and all its subsidiaries are limited liability companies incorporated and domiciled in Sri Lanka other 

than Dipped Products (Thailand) Limited and ICOGUANTI S.p.A. which are incorporated and domiciled in Thailand and 

Italy respectively. 

Ordinary shares of Dipped Products PLC are listed on the Colombo Stock Exchange. 

The Consolidated Financial Statements of Dipped Products PLC., as at and for the year ended March 31, 2009 comprise 

the Company and its subsidiaries, (together referred to as the “Group” and individually as “Group entities”) and the 

Group’s interest in associates. 

The registered office of the Company and the principal line of business are given on back inner cover of this report. 

The Financial Statements of all Companies in the Group other than those mentioned in note 28 to the Financial 

Statements are prepared to a common financial year, which ends on 31 st March. 

2. Basis of preparation 

2.1 Statement of compliance 

The Financial Statements have been prepared in accordance with Sri Lanka Accounting Standards (SLAS), adopted 

by the Institute of Chartered Accountants of Sri Lanka (ICASL) and the requirements of the Companies Act No. 7 

of 2007 and Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995. 

The Financial Statements were authorised for issue by the Board of Directors on May 12, 2009. 

2.2 Basis of measurement 

The Financial Statements have been prepared on the historical cost basis except that land included in property, 

plant & equipment is stated at a valuation as explained in Note 9 to the Financial Statements. 

2.3 Functional and presentation currency 

The Financial Statements are presented in Sri Lankan Rupees, which is the Group’s functional currency. All financial 

information presented in Sri Lankan Rupees has been rounded to the nearest thousand, unless stated otherwise. 

2.4 Use of estimates and judgments 

The preparation of Financial Statements in conformity with SLAS requires management to make judgments, 

estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, 

liabilities, income and expenses. Actual results may differ from these estimates and judgmental decisions. 

Estimates and underlying assumptions are reviewed on an on going basis. Revisions to accounting estimates are 

recognised in the period in which the estimates are revised if the revision affects only that period or in the period 

of the revision and future periods if the revision affects both current and future periods. 

2.5 Going concern 

The Directors have made an assessment of the Group’s ability to continue as a going concern in the foreseeable 

future, and they do not intend either to liquidate or to cease trading. 

3. Significant accounting policies 

The accounting policies set out below have been applied consistently to all periods presented in these Financial 

Statements, except for Accounting policy 5.1.2 on defined benefit plan – Retirement Gratuity, which has been revised to 

be in compliance with Sri Lanka Accounting Standard 16 - Employee Benefits ( SLAS 16), which became applicable to 

Financial Statements covering annual periods beginning on or after July 1, 2007. 

3.1. Basis of consolidation 

3.1.1 Subsidiaries 

Subsidiaries are those entities controlled by the Group. Control exists when the Group has the power to 

govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing 

control, potential voting rights that are presently exercisable are also taken into account. The Financial 

Statements of subsidiaries are included in the Consolidated Financial Statements from the date that control 

commences until the date that control ceases. 

The interest of the outside shareholders of the Group is disclosed separately under the heading of “Minority 

Interest”. 

A listing of the Group’s subsidiaries is set out in note 11 to the Financial Statements. 


45


3.1.2 Associates (Equity accounted investees) 

Associates are those entities in which the Group has significant influence, but not control, over financial 

and operating policies. Significant influence is presumed to exist when the Group holds between 20 to 50 

percent of voting power of another entity. Associates are accounted for using the equity method (equity 

accounted investees) and are recognized initially at cost. The Consolidated Financial Statements include the 

Group’s share of the income and expenses and equity movements of equity accounted investees, from the 

date that significant influence commences until the date that significant influence ceases. When the Group’s 

share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest is 

reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has 

incurred obligations or has made payments on behalf of the investee. 

3.1.3 Transactions eliminated on Consolidation 

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group 

transactions, are eliminated in preparing the Consolidated Financial Statements. Unrealised gains arising from 

transactions with equity accounted investees are eliminated against the investment to the extent of the 

Group’s interest in the investee. 

Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no 

evidence of impairment. 

3.2. Foreign currency 

3.2.1 Foreign currency transactions 

Transactions in foreign currencies are translated to the respective functional currencies of Group entities 

at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign 

currencies at the reporting date are retranslated to the functional currency at the exchange rate ruling at 

that date. Foreign currency differences arising on translation are recognised in profit & loss. 

3.2.2 Financial Statements of foreign entities 

The results and financial position of all Group entities that have a functional currency other than Sri Lankan 

Rupees are translated into Sri Lankan Rupees as follows: 

assets and liabilities for each balance sheet presented, including goodwill and fair value adjustments arising on 

the acquisition of a foreign entity, are translated at the closing rate at the date of the balance sheet; 

income and expenses are translated at the average exchange rates for the period. 

4. Assets and Bases of their Valuation 

All resulting exchange differences are recognised in the exchange fluctuation reserve directly in equity. 

Assets classified as current assets on the Balance Sheet are cash and bank balances and those which are expected to be 

realised in cash during the normal operating cycle or within one year from the Balance Sheet date, whichever is shorter. 

4.1 Property, plant & equipment 

Items of property, plant and equipment are measured at cost/valuation less accumulated depreciation and 

accumulated impairment losses. 

4.1.1 Owned assets 

The cost of property, plant & equipment includes expenditures that are 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 costs of dismantling and removing the items and restoring the site on which they are located. Purchased 

software that is integral to the functionality of the related equipment is capitalised as a part of that 

equipment. 

When parts of an item of property, plant & equipment have different useful lives, they are accounted for as 

separate items (major components) of property, plant & equipment. 

A revaluation of land is done when there is a substantial distinction between the fair value (market value) 

and the carrying amount of the asset and is undertaken by professionally qualified valuers. 

Increases in the carrying amount on revaluation are credited to the revaluation reserve in shareholders’ 

equity. Decreases that offset previous increases of the same individual asset are charged against revaluation 

reserve directly in equity all other decreases are expensed in profit & loss. 

Gains and losses on disposal of property, plant and equipment are determined by comparing the proceeds 

from disposal with the carrying amount of property, plant and equipment and are recognised net within 

46 



“other income” in profit & loss. When revalued assets are sold, the amounts included in the revaluation 

reserve are transferred to retained earnings. 

Borrowing costs that are directly attributable to 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 capitalised as a part 

of the asset. The amounts of the borrowing costs which are eligible for capitalisation are determined in 

accordance with the allowed alternative treatment in SLAS 20 - Borrowing Costs. 

4.1.2 Leased assets 

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are 

classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the 

lower of their fair value and the present value of minimum lease payments. Subsequent to initial recognition, 

the asset is accounted for in accordance with the accounting policy applicable to that asset. . 

4.2 Subsequent expenditure 

The cost of replacing part of an item of property, plant & equipment is recognised in the carrying amount of the 

item if it is probable that the future economic benefits embodied within the part will flow to the Group and its 

cost can be measured reliably. The carrying amount of those parts that are replaced is derecognised in accordance 

with the derecognition policy given below. 

The costs of the day-to-day servicing of property, plant and equipment are recognised in profit & loss as incurred. 

4.3 Derecognition 

The carrying amount of an item of property, plant and equipment is derecognised on disposal or when no future 

economic benefits are expected from its use or disposal. Gains or losses on derecognition are recognised in profit 

& loss and gains are not classified as revenue. 

4.4 Depreciation 

Depreciation is recognised in profit & loss on a straight-line basis over the estimated useful lives of each part of 

an item of property, plant & equipment. Freehold land is not depreciated. Assets held under finance lease are 

depreciated over the shorter of the lease term and their useful lives of equivalent owned assets. 

The estimated useful lives for the current and comparative periods are as follows: 

Freehold assets 

No. of Years 

Buildings 20 

Plant & machinery 10 

Laboratory, stores, office & other equipments 4 - 5 

Furniture & fittings 6 - 8 

Vehicles 4 - 5 

Leasehold right to land 

over the lease period 

Depreciation of an asset begins when it is available for use and cease at the earlier of the date that the asset is 

classified as held for sale and the date that the asset is derecognised. 

Depreciation methods, useful lives and residual values are reviewed at each reporting date. 

Formers 

Formers are depreciated at the rate of 10% of the carrying amount. 

4.5 Intangible assets 

4.5.1. Goodwill 

Goodwill arising on an acquisition represents the excess of the cost of acquisition over the Group’s interest 

in fair value of the net assets acquired. Goodwill is tested annually for impairment and is measured at cost less 

accumulated impairment losses. In respect of equity accounted investees, the carrying amount of goodwill is 

included in the carrying amount of the investment. 

Negative goodwill arising on an acquisition represents the excess of the fair value of the net assets acquired over 

the cost of acquisition. Negative goodwill is recognised immediately in profit & loss. 

4.5.2. Research and development 

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge 

and understanding, is recognised in Income Statement when incurred. Development activities involve a plan or 

design for the production of new or substantially improved products and processes. Development expenditure 

is capitalised only if development costs can be measured reliably, the product or process is technically and 


47


commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources 

to complete development and to use or sell the asset. The expenditure capitalised includes the cost of materials, 

direct labour and overhead costs that are directly attributable to preparing the asset for its intended use. Other 

development expenditure is recognised in profit & loss when incurred. 

Capitalised development expenditure is measured at cost less accumulated amortisation and accumulated 

impairment losses. 

4.5.3. Other intangible assets 

Other intangible assets that are acquired by the Group which have finite useful lives, are stated at cost less 

accumulated amortisation and accumulated impairment losses. 

4.5.4. Subsequent expenditure 

Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic 

benefits embodied in the specific asset to which it relates. All other expenditure including expenditure on internally 

generated brands is recognised in profit & loss when incurred. 

4.5.5. Amortisation 

Amortisation is recognised in profit & loss on a straight-line basis over the estimated useful lives of intangible 

assets, other than goodwill, from the date that they are available for use. The estimated useful life for capitalised 

development cost is five years. 

4.6 Investments 

4.6.1. Short term investments 

Short term investments are measured at the lower of cost and market value on an aggregate portfolio basis, 

with any resultant gain or loss recognised in profit & loss. 

4.6.2. Long term investments 

Quoted and unquoted investments in shares held on long term basis are measured at cost. 

In the parent Company’s Financial Statements, investments in subsidiaries and associates are carried at cost 

under the parent Company accounting policy for long term investments. 

Provision for fall in value is made when in the opinion of the Directors there has been a decline other than 

temporary in the carrying amount of the investment. 

4.6.3. Investment property 

Investment property, comprise freehold land and buildings, is property held either to earn rental income 

or for capital appreciation or for both and is not occupied substantially for the supply of goods or services 

or in administration, and is not intended for sale in the ordinary course of business. Investment property 

is initially measured at its cost including related transaction costs and thereafter carried at its cost less any 

accumulated depreciation and any accumulated impairment losses. 

4.7. Inventories 

Inventories are measured at the lower of cost and net realisable value. Net realisable value is the estimated selling 

price in the ordinary course of business less the estimated cost of completion and selling expenses. The general 

basis on which cost is determined is: 

All inventory items, except manufactured inventories and work-in-progress are measured at weighted average 

directly attributable cost. 

Manufactured inventories and work-in-progress are measured at weighted average factory cost which includes all 

direct expenditure and appropriate shares of production overhead based on normal operating capacity. 

4.8 Trade and other receivables 

Trade and other receivables are stated at their estimated realisable value. 

4.9 Cash & cash equivalents 

Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand 

and form an integral part of the Group’s cash management are included as a component of cash and cash 

equivalents for the purpose of the Statement of Cash Flows. 

4.10 Impairment 

The carrying amounts of the Group’s non-financial assets other than investment property, inventories and deferred 

tax assets, 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. For goodwill and intangible assets that have 

indefinite lives or that are not yet available for use, recoverable amount is estimated at each reporting date or more 

frequently, if events or changes in circumstances indicate that it might be impaired. 

48 



An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its 

recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that 

largely are independent from other assets and groups. 

Impairment losses are recognised in profit & loss. Impairment losses recognised in respect of cash-generating units 

are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the 

carrying amount of the other assets in the unit (group of units) on a pro rata basis. 

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less 

costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a 

pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to 

the asset. 

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised 

in prior periods are assessed at each reporting date for any indications that the loss has decreased or no 

longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the 

recoverable amount. 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 amortisation, if no 

impairment loss had been recognised. 

4.11 Non-current assets held for sale 

Non-current assets classified as held for sale are measured at the lower of carrying value and fair value less costs to 

sell. Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered 

through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale 

is highly probable and expected to be completed within one year from classification and the asset is available for 

immediate sale in its present condition. 

Disposal groups are classified as discontinuing operations where they represent a major line of business or 

geographical area of operations. Impairment losses on initial classifications as held for sale and subsequent gain 

or loss on re-measurement are recognised in profit & loss. Gains are not recognised in excess of any cumulative 

impairement loss. The Income Statement for the comparative period has been re-presented to show the 

discontinuing operations separate from continuing operations. 

5. Liabilities and provisions 

Liabilities classified as current liabilities on the Balance Sheet are those which fall due for payment on demand or within 

one year from the Balance Sheet date. Non-current liabilities are those balances that fall due for payment later than one 

year from the Balance Sheet date. 

All known liabilities have been accounted for in preparing the Financial Statements. 

5.1 Employee retirement benefits 

5.1.1 Defined contribution plans 

A defined contribution plan is a post-employment benefit plan under which the Company pays fixed 

contributions into a separate entity and will have no legal or constructive obligation. Obligations for 

contributions to Provident and Trust Funds covering all employees are recognised as an expense in profit & 

loss when they are due. 

5.1.2 Defined benefit plans 

Provision has been made in the Financial Statements for retiring gratuities. This has been based on an 

actuarial valuation carried out on a Projected Unit Credit (PUC) method as recommended by Sri Lanka 

Accounting Standard No. 16 “Employee Benefits”. The actuarial valuation was carried out by a professionally 

qualified firm of actuaries, as at March 31, 2009. The Company expects to carry out actuarial valuation once 

in every two years. 

The actuarial valuation involves making assumptions about discount rate, salary increment rate and balance 

service period of employees. Due to the long-term nature of the plans such estimates are subject to 

significant uncertainty. 

However according to the Payment of Gratuity Act No. 12 of 1983, the liability for payment to an employee 

arises only after the completion of 5 years continued service. 

Based on the revised Sri Lanka Accounting Standards 16 (‘SLAS 16)’ which became effective from the 

financial year commencing after July 01, 2007, the Company has adopted the actuarial valuation method 

from April 01, 2008. 

The liability is not externally funded. 


49


5.2. Agents’ indemnity fund 

Provision has been made for amount payable to agents of ICOGUANTI S.p.A.-Italy on cessation of contracts. The 

basis of calculation is given below; 

Length of contract (Years) 

Percentage of invoice value 

1 - 3 3.0 

4 - 6 3.5 

above 6 4.0 

6. Trade and other payables 

Trade and other payables are stated at cost. 

6.1. Capital commitments and contingencies 

Capital commitments and contingent liabilities of the Group are disclosed in the respective Notes to the Financial 

Statements. 

7. Income Statement 

For the purpose of presentation of the Income Statement, the function of expenses method is adopted, as it represents 

fairly the elements of company performance. 

7.1. Revenue 

Revenue is accounted for on sale of goods when all significant risks and rewards of ownership have been 

transferred to the buyer, which normally occur upon the delivery of goods. 

Revenue from rendering services is recognised in the accounting period in which the services are rendered or 

performed. 

Rental income is recognised in profit & loss on a straight-line basis over the term of the lease. 

Grants related to income are recognised in the profit & loss in the year in which it was received, except for 

plantations as explained in 11.5. 

Dividend income is recognised in profit & loss, when the Group’s right to receive payment is established. 

Interest income is recognised in profit & loss as it accrues. 

Gains/(losses) on the disposal of the investments held by the Group have been accounted for in profit & loss. 

7.2. Expenditure 

All expenditure incurred in the running of the business has been charged to profit & loss in arriving at the profit for 

the year. 

7.3. Operating leases 

Leases where the lessor effectively retains substantially all the risks and rewards of ownership over the lease term 

are classified as operating leases. Payments made under operating leases are recognised in profit & loss on a 

straight-line basis over the term of the lease. 

7.4. Borrowing costs 

Borrowing costs related to investments in “qualified assets” that require a substantial period for completion are 

capitalised with the cost of the asset. Other borrowing costs are recognised as an expense in the period in which 

they are incurred. 

7.5. Financing income and expenses 

Finance income comprises interest income on funds invested, dividend income and gain on translation of 

foreign currency. 

Financing expenses comprises interest payable on borrowings and loss on translation of foreign currency. The 

interest expense component of finance lease payments is recognised in Income Statements using the effective 

interest rate method. 

7.6. Income tax expense 

Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit & loss except 

to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. 

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the reporting 

date and any adjustments to tax payable in respect of previous years. 

50 



Deferred tax is recognised using the balance sheet method, providing for temporary differences between the 

carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation 

purposes. Deferred tax is not recognised for the initial recognition of goodwill, the initial recognition of assets 

or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable 

profit, and differences relating to investments in subsidiaries to the extent that they probably will not reverse 

in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the 

temporary differences when they reverse, based on the laws that have been enacted or substantively enacted 

by the reporting date. 

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available 

against which the asset can be utilised. 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 realised. 

Tax withheld on dividend income from subsidiaries and associates is recognised as an expense in the Consolidated 

Income Statement at the same time as the liability to pay the related dividend is recognised. 

8. General 

8.1. Discontinuing operations 

A discontinued operation is a component of the Group’s business that represents a separate major line of 

business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary 

acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or 

when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified 

as a discontinued operation, the comparative Income Statement is re-presented as if the operation had been 

discontinued from the start of the comparative period. 

8.2. Events after the Balance Sheet date 

All material post Balance Sheet events have been considered and where appropriate adjustments or disclosures 

have been made in the respective notes to the Financial Statements. 

9. Earnings per share 

The Group presents basic and diluted earnings per share (EPS) for its ordinary shares. Basic EPS is calculated by dividing 

the profit or loss attributable to ordinary shareholders of the company by the weighted average number of ordinary 

shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary 

shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential 

ordinary shares. 

10. Segment reporting 

A segment is a distinguishable component of the Group that is engaged either in providing products or services (business 

segment), or in providing products or services within a particular economic environment (geographical segment), which is 

subject to risks and rewards that are different from those of other segments. 

Segmental information is presented in respect of the Group’s business / industry and geographical segments. The primary 

format, business segments, is based on the Group’s management and internal reporting structure. 

The secondary format, geographical segments, is based on the Group’s geographical spread of operations. 

11. Plantations 

The significant accounting policies of Kelani Valley Plantations PLC, which was acquired in December 1995, is given below. 

No adjustments have been made in respect of accounting policies which differ from that of the Group. 

11.1. Property, plant & equipment 

11.1.1. Infilling cost 

The land development costs incurred in the form of infilling have been capitalised to the relevant mature 

field, only where the number of plants per hectare exceeded 3,000 plants and, also if it increases the 

expected future benefits from that field, beyond its pre-infilling performance assessment. Infilling costs so 

capitalised are depreciated over the newly assessed remaining useful economic life of the relevant mature 

plantation, or the unexpired lease period, which ever is lower. 

Infilling costs that are not capitalised have been charged to profit & loss in the year in which they are 

incurred. 


51


11.1.2. Permanent land development cost 

Permanent land development costs are those costs incurred in making major infrastructure development 

and building new access roads on leasehold lands. 

These costs have been capitalised and amortised over the remaining lease period. 

Permanent impairments to land development costs are charged to profit & loss in full or reduced to the net 

carrying amounts of such asset in the year of occurrence after ascertaining the loss. 

11.1.3. Limited life land development cost (immature and mature plantations) 

The cost of land preparation, rehabilitation, new planting, re-planting, crop diversification, inter-planting 

and fertilizing etc., incurred between the time of planting and harvesting (when the planted area attains 

the maturity), are classified as immature plantations. These immature plantations are shown at direct costs 

plus attributable overheads, including interest attributable to long-term loans used for financing immature 

plantations. 

Permanent impairments to land development costs are charged to profit & loss in full or reduced to the net 

carrying amounts of such assets in the year of occurrence after ascertaining the loss. 

The expenditure incurred on perennial crop (tea/rubber) fields, which come into bearing during the year, 

has been transferred to mature plantations. 

11.2. Depreciation 

Depreciation is recognised in profit & loss on the straight line basis over the estimated useful economic lives of 

such assets based on the cost or valuation of all property, plant & equipment. Assets are depreciated over the 

shorter of the lease term or their useful economic lives. 

The estimated useful lives are as follows : 

Freehold assets 

No of Years 

Buildings & roads 40 

Plant & machinery 13 

Hydro power plants 30 

Motor vehicles 5 

Equipment 8 

Furniture & fittings 10 

Sanitation, water & electricity supply 20 

Computer accessories 4 

Mature plantations - tea 33 

- rubber 20 

No depreciation is provided for immature plantations. 

11.3. Amortisation 

The leasehold rights of assets taken from JEDB / SLSPC are amortised in equal annual amounts over the following 

years: 

Leasehold right 

No of years 

Bare land 53 

Mature plantations 30 

Buildings 25 

Machinery 15 

Improvements to land 30 

11.4. Inventories 

The value of each category of inventory is determined on the following basis: 

Input material - At actual cost on weighted average basis 

Spares and consumables - At actual cost on weighted average basis 

Nurseries - At the cost of direct materials, direct labour and an appropriate proportion of 

directly attributable overheads less provision for overgrown plants. 

Produce stock - Manufactured up to the Balance Sheet date and sold since then until the time 

of preparation of the Financial Statements are valued at since realised prices. 

The balance stocks are valued at estimated selling price. The prices are net of all 

attributable expenses relating to the public auction. 

52 



11.5. Grants 

Grants related to property, plant and equipment other than grants received for forestry are initially deferred 

and allocated to income on a systematic basis over the useful economic life of the related Property, plant and 

equipments as follows: 

Buildings 

Sanitation & water supply 

Plant & equipment 

40 years 

20 years 

131/3 years 

Grants related to income are recognised in profit & loss in the year in which it is receivable. 

Grants received for forestry are initially deferred and credited to profit & loss at once when the related blocks of 

trees are harvested. 

11.6. Retirement benefits to employees 

The Defined Retirement Benefit Plan adopted is as required under the Payment of Gratuity Act No. 12 of 1983 

and Indian Repatriate Act No. 34 of 1978 to eligible employees. This item is grouped under retirement benefit 

obligations in the Balance Sheet. Provision for gratuity on the employees of the company is based on an actuarial 

valuation using the Projected Unit Credit (PUC) method as recommended by Sri Lanka Accounting Standard 

(SLAS) 16 - Retirement Benefit Costs. The actuarial valuation was carried out by a professionally qualified firm of 

actuaries, Messrs Actuarial and Management Consultants (Pvt.) Limited as at December 31, 2008. The company 

expects to carry out an actuarial valuation once in every two years. 

The key assumptions used by the actuary include the following: 

Rate of interest – 10% (per annum) 

Rate of salary increase 

- Workers – 22% (every two years) 

- Staff – 10% (per annum) 

Retirement age 

- Workers – 60 years 

- Staff – 60 years 

Daily wage rate 

- Tea – Rs. 200/- 

- Rubber – Rs. 200/- 

The company will continue in business as a going concern. 

However according to the Payment of Gratuity Act No. 12 of 1983, the liability for payment to an employee arises 

only after the completion of 5 years continued service. 

The liability is not externally funded. 

11.7. Revenue recognition 

In keeping with the practice in Plantation Industry, revenue and profit or loss on sale of Perennial crops are 

recognised in the financial period of harvesting. Revenue is recorded at invoice value net of brokerage, sale 

expenses and other levies related to revenue. 

12. Cash Flow Statement 

The Cash Flow Statement has been prepared using the “indirect method”. Interest paid is classified as operating cash flows, 

interest, dividends and grants received are classified as investing cash flows while dividends paid is classified as financing 

cash flows for the purpose of presenting of Cash Flow Statement. 


53

Notes to the Financial Statements 

1. Turnover 

2009 

Rs ‘000 

Consolidated 

2008 

Rs ‘000 

Dipped Products PLC. 1,229,474 1,243,201 

Grossart (Pvt) Ltd. 1,333,945 1,235,900 

Venigros (Pvt) Ltd. 1,304,405 1,452,673 

Neoprex (Pvt) Ltd. 625,251 417,442 

Texnil (Pvt) Ltd. 268,042 446,980 

Dipped Products (Thailand) Ltd. 1,367,411 1,067,590 

ICOGUANTI S.p.A 3,035,730 2,710,254 

Feltex (Pvt) Ltd. 24,956 40,580 

Hanwella Rubber Products Ltd. 907,166 807,467 

DPL Plantations (Pvt) Ltd. 1,021 - 

Kelani Valley Plantations PLC. 3,108,571 2,827,974 

13,205,972 12,250,061 

Intra-group sales/services (1,309,987) (1,097,166) 

Segment information on turnover is given in note 24. 

2. Other income 

Consolidated 

2009 

Rs ‘000 

2008 

Rs ‘000 

11,895,985 11,152,895 

2009 

Rs ‘000 

Company 

2008 

Rs ‘000 

Gain on disposal of property, plant & equipment 3,768 5,183 31 2,104 

Amortisation of grants 11,351 8,162 - - 

Lease rental - - 2,466 2,466 

3. Other expenses 

15,119 13,345 2,497 4,570 

Consolidated 

2009 

Rs ‘000 

2008 

Rs ‘000 

2009 

Rs ‘000 

Company 

2008 

Rs ‘000 

Research and development expensed as incurred 4,745 10,931 703 537 

54 



4. Finance (income)/cost 

Finance cost 

Consolidated 

2009 

Rs’000 

2008 

Rs’000 

Company 

2009 

Rs’000 

2008 

Rs’000 

Interest on finance leases 21,371 21,634 - - 

Interest on long-term borrowings 113,582 118,849 826 9,375 

Interest on short-term borrowings 169,550 167,229 57,064 51,765 

Exchange loss on working capital/trading 61,406 - - - 

Finance income 

365,909 307,712 57,890 61,140 

Interest income (22,625) (15,030) (818) (770) 

Dividend income - Quoted investments (10,609) (12,377) (10,609) (12,377) 

- Unquoted investments - - (344,615) (301,223) 

Exchange gain on working capital/trading - (56,870) (45,973) (30,092) 

(33,234) (84,277) (402,015) (344,462) 

332,675 223,435 (344,125) (283,322) 

5. Profit before tax 

Profit before tax is stated after charging all expenses including the following: 

Consolidated 

2009 

Rs’000 

2008 

Rs’000 

Company 

2009 

Rs’000 

2008 

Rs’000 

Depreciation of property, plant & equipment 384,000 363,089 29,958 26,208 

Directors’ emoluments 49,385 46,602 25,341 25,178 

Auditors’ remuneration 

- KPMG Ford, Rhodes, Thornton & Co. 3,570 3,138 520 460 

- Other auditors 3,119 2,594 - - 

Fees paid to auditors for non-audit services 

- KPMG Ford, Rhodes, Thornton & Co. 1,006 651 65 289 

- Other auditors 25 24 - - 

Bad debts written-off/provision 19,196 16,310 43 - 

Provision for slow-moving/obsolete inventories 23,327 22,272 5,170 5,543 

Staff costs ( note 5.1 ) 2,752,919 2,514,776 174,627 206,795 

Legal fees 8,607 5,013 643 234 

Donations 1,185 1,756 79 60 

5.1 Staff costs 

Consolidated 

Company 

2009 

Rs’000 

2008 

Rs’000 

2009 

Rs’000 

2008 

Rs ‘000 

Defined contribution plan costs 208,185 186,442 25,502 24,023 

Defined benefit plan costs 129,427 180,728 25,503 27,111 

Other staff costs 2,415,307 2,147,606 123,620 155,661 

2,752,919 2,514,776 174,625 206,795 

No of employees at year end 16,929 17,085 371 352 


55


6. Income tax expense / (release) 

Consolidated 

2009 

Rs ‘000 

2008 

Rs ‘000 

Company 

2009 

Rs ‘000 

2008 

Rs ‘000 

Income tax on current year profits 103,746 84,065 3,990 2,913 

(Over)/under provision in respect of previous years 49 - 108 - 

Irrecoverable economic service charge 141 1,255 - - 

Write back of ESC previously written-off (4,576) (23,984) - (4,107) 

99,360 61,336 4,098 (1,194) 

Share of associate company income tax - 10,711 - - 

Origination and reversal of temporary differences (2,394) 18,286 (9,659) (7,405) 

Withholding tax on dividends 16,743 10,293 - - 

Reconciliation of accounting profit to income tax expense 

113,709 100,626 (5,561) (8,599) 

Consolidated 

2009 

Rs ‘000 

2008 

Rs ‘000 

Company 

2009 

Rs ‘000 

2008 

Rs ‘000 


Share of (profit)/loss of associate 381 (37,491) - - 

Intra-group eliminations 476,097 258,342 - - 

1,092,915 836,820 298,694 203,995 

Disallowable expenses 504,494 651,774 126,864 165,760 

Tax deductible expenses (642,316) (407,870) (32,401) (11,334) 

Tax exempt income (905,362) (1,004,402) (381,920) (336,975) 

Tax loss b/f (1,113,943) (573,050) - - 

Adjustments for tax loss b/f (271,702) (178,974) - - 

Tax loss c/f 1,673,931 1,113,943 - - 

Taxable income 338,017 438,241 11,237 21,446 

Income tax @ 35% 20,162 13,019 3,933 1,059 

Income tax @ 33% - 55,586 - - 

Income tax @ 27.5% 53,401 - - - 

Income tax @ 15% 12,933 - - - 

Income tax @ 10% - 1,842 - 1,842 

Income tax at other tax rates 16,808 13,363 - - 

Social responsibility levy 442 255 57 12 

Income tax on current year profits 103,746 84,065 3,990 2,913 

Dipped Products PLC., and Venigros (Pvt) Ltd., have entered into an agreement with the Board of Investment of Sri Lanka 

(BOI) and have been granted a ten-year tax holiday on its business activity as “ Thrust Industries “, up to March 31,2009. 

Similarly Grossart (Pvt) Ltd., Hanwella Rubber Products Ltd., and Texnil (Pvt) Ltd., have been granted a ten-year tax holiday 

on its business activity as “ Thrust Industries “ up to March 31,2010, March 31, 2011 and March 31,2013 respectively. 

Neoprex (Pvt) Ltd., has completed ten-year tax holiday period on March 31,2008 . Feltex (Pvt) Ltd., has entered in to an 

agreement with BOI and has been granted a five-year tax holiday on its business activities from the year of making profits 

or any year of assessment not later than two years reckoned from the date of commencement of commercial operations 

or production whichever is earlier. Accordingly, tax holiday period had been commenced in 2006/2007 and Feltex (Pvt) 

Ltd., enjoys a five-year tax holiday on its business activity as “Thrust Industries”, up to March 31, 2011. 

56 



After completion of tax exemption period, the business income of Dipped Products PLC., Venigros (Pvt) Ltd., Grossart 

(Pvt) Ltd., Neoprex (Pvt) Ltd., Texnil (Pvt) Ltd., would be liable to income tax at a concessionary rate of 15% for a further 

period of ten years and Feltex (Pvt) Ltd., would be liable to income tax at a concessionary rate of 10% for a further period 

of two years in accordance with the agreement entered into with BOI. Palma Ltd., is entitled to a five-year tax holiday, 

which would commence from the year of making profits in terms of section 20(1) b of the Inland Revenue Act No:28 of 

1979 read in conjunction with section 187(2)of the Inland Revenue Act No: 38 of 2000 as amended. 

In terms of section 40, DPL Plantations (Pvt) Ltd., enjoys a concessionary rate of 15% on profits from plantation 

management. 

In terms of section 17(a)( i ) of the Inland Revenue Act No:38 of 2000 (amendment) ,“Specified Profits from agriculture” 

of Kelani Valley Plantations PLC., would be exempt from income tax for a period of five years up to December 31, 2009. 

Kelani Valley Green Tea (Pvt) Ltd., and Kalupahana Power Company (Pvt) Ltd., have entered into an agreement with BOI, 

and have been granted five-year tax holidays on its business activities from the year of making profits or any year of 

assessment not later than two years reckoned from the date of commencement of commercial operations whichever 

is earlier. Accordingly, tax holiday period of Kelani Valley Green Tea (Pvt) Ltd., commenced in 2006/2007 and tax holiday 

period of Kalupahana Power Company (Pvt) Ltd., commenced in 2007/2008. ICOGUANTI S.p.A. - Italy is liable to a 

corporate tax of 27.5% and a regional tax of 3.90% on its taxable income. Dipped Products ( Thailand ) Ltd., would be 

exempt from income tax for a period of 8 years up to December 31,2012 and would be taxed at half of corporate tax 

rate for a further period of five years. 

7. Earnings per share 

Basic earnings per share 

The basic earnings per share is based on the profits attributable to the ordinary shareholders divided by the weighted 

average number of ordinary shares in issue during the year, calculated as follows; 

Consolidated 

Company 

2009 2008 2009 2008 

Net profit for the year (Rs ‘000) 362,870 371,122 304,255 212,594 

Weighted average number of shares (in thousands) 59,861 59,861 59,861 59,861 

Basic earning per share (Rs) 6.06 6.20 5.08 3.55 

7.1 Diluted earnings per share 

There are no potentially dilutive ordinary shares of the Company and as a result the diluted earnings per share is the same 

as the basic earnings per share shown above. 

8. Dividend per share 

Company 

2009 

Rs ‘000 

2008 

Rs ‘000 

Interim dividend - Nil (2008 - Rs 1.50 per share) - 89,792 

Final dividend proposed Rs 3.00 per share (2008 Rs 1.50 per share) - note 30 179,585 89,793 

Gross dividend 175,585 179,585 

Number of Shares (in thousands) 59,861 59,861 

Dividend (inclusive of proposed dividend ) per share (Rs.) 3.00 3.00 

Dividend of Rs 3.00 per share (2008 - Rs 3.00 per share ) distributed to shareholders comprise tax exempt dividends 

received by the Company , and is tax free in the hands of shareholders. 


57


9. Property, plant & equipment 

a. Consolidated 

Land 

Mature/ 

Immature 

Plantations 

Buildings 

Plant & 

Machinery, 

Stores & 

Lab 

Equipment 

Furniture, 

Fittings 

& Other 

Equipment 

Vehicles 2009 

Total 

2008 

Total 

Rs ’000 Rs ’000 Rs ’000 Rs ’000 Rs ’000 Rs ’000 Rs ’000 Rs ’000 

Freehold 

Cost/Valuation 

At beginning of the year 220,246 - 873,374 2,735,208 233,539 181,383 4,243,750 3,804,810 

Effect of movement in foreign exchange 457 - 1,565 9,668 101 25 11,816 88,795 

Additions - - 191,450 367,611 17,817 57,922 634,800 356,411 

Disposals - - - - (10,855) (3,140) (13,995) (6,266) 

At end of the year 220,703 - 1,066,389 3,112,487 240,602 236,190 4,876,371 4,243,750 

Depreciation and impairment losses 

At beginning of the year - - 189,330 1,209,716 165,496 115,973 1,680,515 1,378,498 

Effect of movement in foreign exchange - - 217 2,677 43 (4) 2,933 13,461 

Charge for the year - - 35,281 240,001 21,814 27,967 325,063 291,953 

On disposals - - - - (10,844) (3,140) (13,984) (3,397) 

At end of the year - - 224,828 1,452,394 176,509 140,796 1,994,527 1,680,515 

Net book value at year end 220,703 - 841,561 1,660,093 64,093 95,394 2,881,844 2,563,235 

Capital work-in- progress 172,581 230,903 

Carrying amount 3,054,425 2,794,138 

Leasehold 

Cost / Valuation 

At beginning of the year 373,195 1,657,105 84,600 36,495 - 6,745 2,158,140 1,999,821 

Additions - 217,891 - - - 4,711 222,602 157,974 

Effect of movement in foreign exchange - - - - - 59 59 345 

At end of the year 373,195 1,874,996 84,600 36,495 - 11,515 2,380,801 2,158,140 

Amortisation and impairment losses 

At beginning of the year 104,091 351,423 52,586 36,495 - 4,686 549,281 478,024 

Charge for the year 7,255 46,456 3,384 - - 1,842 58,937 71,136 

Effect of movement in foreign exchange - - - - - 31 31 121 

At end of the year 111,346 397,879 55,970 36,495 - 6,559 608,249 549,281 

Net book value at year end 261,849 1,477,117 28,630 - - 4,956 1,772,552 1,608,859 

Carrying amount 4,826,977 4,402,997 

58 



Land Buildings Plant & 

Machinery, 

Stores & 

Lab 

Equipment 

Furniture, 

Fittings, 

Office & 

Other 

Equipment 

Vehicles 2009 

Total 

b. Company Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 

Cost/Valuation 

At beginning of the year 118,079 98,657 275,583 55,517 32,129 579,965 532,819 

Additions - 498 64,437 2,212 7,300 74,447 49,194 

Disposals - - - (410) - (410) (2,048) 

At end of the year 118,079 99,155 340,020 57,319 39,429 654,002 579,965 

2008 

Total 

Depreciation and impairment losses 

At beginning of the year - 49,694 223,086 44,488 23,851 341,119 316,959 

Charge for the year - 3,945 15,711 3,960 6,342 29,958 26,208 

On disposals - - - (393) - (393) (2,048) 

At end of the year - 53,639 238,797 48,055 30,193 370,684 341,119 

Net book value at year end 118,079 45,516 101,223 9,264 9,236 283,318 238,846 

Capital work in progress 15,871 72,294 

Carrying amount 299,189 311,140 

(i) 

The value of land which has been revalued by independent qualified valuer is indicated below together with the last date 

of revaluation 

Written up as at 

March 31, 2009 March 31, 2008 

Company Location Revaluation date Rs.’000 Rs.’000 

Dipped Products PLC Brahmanagama, Kottawa March 31, 2007 52,682 52,682 

Dipped Products PLC Nedungamuwa, Weliveriya March 31, 2007 46,721 46,721 

Palma Limited Gonawala, Kelaniya March 31, 2007 17,781 17,781 

Venigros (Pvt) Limited Nedungamuwa, Weliveriya March 31, 2007 28,224 28,224 

145,408 145,408 

There are no tax implications or tax liabilities pertaining to revaluation of land. 

(ii) 

(iii) 

(iv) 

Leasehold property, plant & equipment include the leasehold rights to bare land on all 27 estates of Kelani Valley 

Plantations PLC (KVPL), the immovable leased assets standing thereon at the inception of the company and improvements 

to leasehold property since the formation of the company. Unexpired lease period of KVPL land is 37 years. 

Property, plant & equipment with a carrying amount of Rs 1,969,605,903 (2008 - Rs 2,126,322,939) have been pledged as 

security to obtain banking facilities. 

The cost of revalued land given above, would amount to Rs 25,620,108 and Rs 18,676,416 respectively for the Group and 

the Company. 


59


10. Intangible assets - Goodwill 

Consolidated 

2009 2008 

Rs’000 Rs’000 

Cost 

At beginning of the year 58,152 58,152 

Incurred during the year - - 

At end of the year 58,152 58,152 

Amortisation and impairment losses 


Amortisation charge for the year - - 



The aggregate carrying amounts of goodwill allocated to each unit are as follows: 

There has been no permanent impairment of intangible assets that require a provision. Value in use was determined to 

estimate the recoverable amount. 

11. Investments 

a. Investments in subsidiaries (at cost) 

Unquoted investments 

Rs’000 

Venigros (Pvt) Ltd. 6,080 

ICOGUANTI S.p.A. 9,604 

15,684 

% Holding No. of Shares Company 

Value Rs ’000 

2009 2008 2009 2008 2009 2008 

Palma Ltd. 100 100 4,000,000 4,000,000 40,000 40,000 

Grossart (Pvt) Ltd. 100 100 4,200,000 4,200,000 42,000 42,000 

DPL Plantations (Pvt) Ltd. 100 100 10,100,000 10,100,000 101,000 101,000 

Venigros (Pvt) Ltd. 100 100 8,000,000 8,000,000 202,450 202,450 

Neoprex (Pvt) Ltd. 100 100 4,000,000 4,000,000 40,000 40,000 

Texnil (Pvt) Ltd. 100 100 7,500,000 7,500,000 75,000 75,000 

Dipped Products (Thailand) Ltd. 98 98 1,351,250 1,351,250 327,366 327,366 

ICOGUANTI S.p.A. 55 55 1,100,000 671,000 89,872 89,872 

Feltex (Pvt) Ltd. 100 100 1,500,000 1,500,000 15,000 15,000 

Hanwella Rubber Products Ltd. 70 70 6,090,000 6,090,000 31,000 31,000 

963,688 963,688 

Provision for diminution in value of investments - Palma Ltd. (20,000) (20,000) 

- Dipped Products (Thailand) Ltd. (150,000) (100,000) 

793,688 843,688 

The Company has an investment of Rs 327 million in Dipped Products (Thailand) Ltd. (DPTL). DPTL has incurred losses 

during last few years. Accordingly the Directors have made an additional provision of Rs 50 million against the investment 

in DPTL. 

60 



b. Investment in associate 

Investor Investee % Holding No. of shares 

Kelani Valley Plantations PLC Mabroc Teas (Pvt) Ltd. 40 3,600,000 

Consolidated 

2009 

Rs ‘000 

2008 

Rs ‘000 

Group investment in associate (at cost) 48,000 48,000 

Group share of associate company retained assets 42,297 50,609 

Summarised financial information of associate without adjusting to show Group share; 

90,297 98,609 

Consolidated 

2009 

Rs ‘000 

2008 

Rs ‘000 

Assets and liabilities 

Total assets 571,927 628,948 

Total liabilities 358,136 374,636 

Net assets 213,791 254,312 

Revenue and profit 

Turnover 1,076,229 1,698,598 

Profit after tax 8,885 66,953 

The results of Mabroc Teas (Pvt) Ltd., for the 12 months to December 31, 2008 have been included in the current year on 

equity accounting basis. 

c. Other long term investments (at cost) 

Consolidated 

2009 

Rs ‘000 

2008 

Rs ‘000 

Company 

2009 

Rs ‘000 

2008 

Rs ‘000 

Quoted investments 

Hayleys PLC 

3,536,159 (March 31, 2008 - 3,536,159) ordinary shares 194,457 194,457 194,457 194,457 

Royal Ceramic Lanka PLC 

1,100 (March 31, 2008 -1,100) ordinary shares 3 3 - - 

Unquoted investments 

Wellassa Rubber Company Ltd 

255,000 (March 31, 2008 - 255,000) ordinary shares 2,550 2,550 - - 

197,010 197,010 194,457 194,457 

(i) 

(ii) 

Unquoted investments consist of 220,000 shares purchased by DPL Plantations (Pvt) Ltd., and 35,000 shares purchased by Hanwella 

Rubber Products Ltd. 

The market value of Hayleys PLC., and Royal Ceramic Lanka PLC ordinary shares as at March 31, 2009 as quoted by the Colombo 

Stock Exchange was Rs 90.00 and Rs 27.50 respectively. 


61


12. Deferred tax assets and liabilities 

Consolidated 

2009 

Rs ‘000 

2008 

Rs ‘000 

Company 

2009 

Rs ‘000 

2008 

Rs ‘000 

a. Deferred tax asset 

At end of the year (note 12.b) 21,592 11,933 21,592 11,933 

b. Deferred tax liability 

At beginning of the year (net) 121,187 102,900 (11,933) (4,528) 

Transfer (to) / from Income Statement (2,394) 18,287 (9,659) (7,405) 

At end of the year (net) 118,793 121,187 (21,592) (11,933) 

Deferred tax asset 21,592 11,933 21,592 11,933 

At end of the year 140,385 133,120 - - 

13. Inventories 

Consolidated 

2009 

Rs ‘000 

2008 

Rs ‘000 

Company 

2009 

Rs ‘000 

2008 

Rs ‘000 

Raw materials & consumables 817,807 916,778 308,395 351,697 

Finished goods 221,014 237,382 12,788 33,679 

Trading stock 603,725 499,360 - - 

Work-in-progress 80,108 82,228 14,252 12,219 

Produce stock 312,571 233,072 - - 

Goods-in-transit 11,406 29,027 7,154 4,086 

2,046,631 1,997,847 342,589 401,681 

Provision for slow-moving / obsolete inventories (120,714) (97,387) (35,188) (30,018) 

1,925,917 1,900,460 307,401 371,663 

Inventories pledged as security to obtain banking facilities amount to Rs 275 million. (2008 - Rs 345 million.) 

14. Trade & other receivables 

Consolidated 

2009 

Rs ‘000 

2008 

Rs ‘000 

Company 

2009 

Rs ‘000 

2008 

Rs ‘000 

Bills receivable 1,429,500 1,262,769 306,850 252,322 

Trade receivables 1,210,573 1,193,078 2,329 9,296 

Pre-payments, deposits and staff advances 310,566 350,280 43,863 77,714 

Advance company tax recoverable 27,727 14,198 - - 

Income tax refunds due 24,592 5,224 - - 

Economic service charge recoverable 31,944 32,809 4,376 5,325 

15. Amounts due from subsidiaries 

3,034,902 2,858,358 357,418 344,657 

Company 

2009 

Rs ‘000 

2008 

Rs ‘000 

Hand Protection 953,224 953,331 

Plantations 501 589 

953,725 953,920 

62 



16. Stated Capital 

2009 

Rs ‘000 

2008 

Rs ‘000 

Issued & fully paid 

59,861,512 ordinary shares (March 31, 2008 - 59,861,512) 598,615 598,615 

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one 

vote per share at meetings of the Company. 

17. Retirement benefit obligations 

Consolidated 

2009 

Rs ’000 

2008 

Rs ’000 

Company 

2009 

Rs ’000 

2008 

Rs ’000 

a. At beginning of the year 741,653 609,204 144,054 130,351 

Amortisation of transitional liability 1,740 - 8,200 - 

Effects of movements in foreign exchange (219) 4,411 - - 

Benefit paid by the plan (59,495) (52,690) (6,864) (16,058) 

Current service cost 12,363 - 9,857 - 

Provision for the year - 180,728 - 27,111 

Interest cost 29,115 - 27,750 - 

Transfer from subsidiary - - - 2,650 

Actuarial (gain)/loss 86,209 - (20,304) - 

At end of the year 811,366 741,653 162,693 144,054 

b. Expense recognised in the Income Statement 

Administrative expenses 129,427 - 25,503 - 

c. Amortisation of transitional liability as at March 31, 2008 

Actuarial valued liability 777,973 - 185,053 - 

As per Payment of Gratuity Act 741,653 - 144,054 - 

Difference 36,320 - 40,999 - 

Amortisation for the year 8,645 - 8,200 - 

Credit for the Year (6,905) - - - 

Net amortisation for the year 1,740 - 8,200 - 

Amount to be amortised in the future 34,580 - 32,799 - 

d. Market value of unfunded gratuity 845,947 777,973 194,518 185, 053 

Total present value of the obligation 845,947 777,973 194,518 185, 053 

The Group has adopted SLAS 16 - (Revised 2006) - Employee Benefits, which is applied prospectively from April 1, 2008. 

As such comparative figures have not been adjusted. 

SLAS 16- (Revised 2006) requires the use of actuarial techniques to make a reliable estimate of the amount of retirement 

benefit that employees have earned in return for their service in the current and prior periods and discount that benefit 

using the Projected Unit Credit Method in order to determine the present value of the retirement benefit obligation 

and the current service cost. This requires an entity to determine how much benefit is attributable to the current and 

prior periods and to make estimates about demographic variables and financial variables that will influence the cost of 

the benefit. The actuarial valuation was carried out by a professionally qualified firm of actuaries, Messrs Acturial and 

Management Consultant (Pvt) Ltd. The following key assumptions were made in arriving at the above figure. 


63


Year 1 2 3 4 5 6 7 8 9+ 

Rate of discount (%) 15 15 15 14 13 12 11 10 10 

Salary increase (%) 14 14 14 13 12 11 10 9 9 

Assumptions regarding future mortality are based on a 67/70 mortality table, issued by The Institute of Actuaries, London. 

The demographic assumptions underlying the valuation with respect to retirement age early withdrawals from service and 

retirement on medical grounds. 

Retirement age: 

Executive and clerical - 60 years 

Manual grade - 55 years 

According to the transitional provisions of SLAS 16- (Revised 2006) the Group can recognize the difference between 

the liability at transition and the liability that would have been recognised at the date of transition under the Group’s new 

accounting policy over five years. 

The liability as per Payment of Gratuity Act for Group and Company as at March 31,2009 are Rs 675,510,274 and Rs 

76,588,932 respectively. 

18. Agents’ indemnity fund 

Consolidated 

2009 

Rs ‘000 

2008 

Rs ‘000 


Provision for the year 4,344 3,947 

Effects of movements in foreign exchange (162) 3,664 

38,001 33,819 

Payments during the year (2,622) - 


19. Interest bearing borrowings – due after one year 

Consolidated 

2009 

Rs ‘000 

2008 

Rs ‘000 

Company 

2009 

Rs ‘000 

2008 

Rs ‘000 

Term loans - (note 19.1) 851,260 987,116 - - 

Finance lease obligations net of interest - (note 19.2) 367,813 373,136 - - 

19.1 Term loans 

1,219,073 1,360,252 - - 

Consolidated 

2009 

Rs ‘000 

2008 

Rs ‘000 

Company 

2009 

Rs ‘000 

2008 

Rs ‘000 

At beginning of the year 1,238,191 1,388,518 30,253 153,053 

Obtained during the year 168,844 115,620 - - 

Effect of movements in foreign exchange 5,702 57,622 - - 

Repayments during the year (255,039) (323,569) (30,253) (122,800) 

At end of the year 1,157,698 1,238,191 - 30,253 

Repayments due within one year 

(included under current liabilities - note 22) (306,438) (251,075) - (30,253) 

Repayments due after one year 851,260 987,116 - - 

64 



Details of term loans 

Company 

Venigros 

(Pvt) Ltd 

Venigros 

(Pvt) Ltd 

Hanwella 

Rubber 

Products Ltd 

Kelani Valley 

Plantations 

PLC 

Kalupahana 

Power 

Company 

(Pvt) Ltd 

ICOGUANTI 

S.p.A. 

Dipped 

Products 

(Thailand) 

Ltd. 

Lender/ rate of 

interest (p.a.) 

March 31, 2009 

Rs’000 

March 31, 2008 

Rs’000 

Repayment 

Rs’000 

People’s Bank 10.50% 20,839 58,339 3,125 x 48 inst Monthly ending 

21.10.2009 

NDB Bank 6.50% 28,250 - 941 x 36 inst Monthly ending 

31.08.2012 

Bank of Ceylon 

AWPLR +1.50% 

- 5,250 1,042 x 48 inst Monthly ending 

13.08.2009 

NDB Bank 11.51% 16,534 21,042 376 x 120 inst Monthly ending 

31.08.2013 

NDB Bank 11.51% 19,641 24,088 370 x 120 inst Monthly ending 

31.05.2014 

NDB Bank 6.50% 15,375 - 375 x 48 inst Monthly ending 

31.05.2013 

Seylan Bank 12.00% 27,798 32,634 403 x 120 inst Monthly ending 

30.10.2015 

DFCC Bank 9.42% 81,200 84,000 933 x 90 inst Monthly ending 

31.03.2017 


30.11.2014 


31.07.2017 


30.06.2015 

DFCC Bank 14.47% 83,802 - 1,581 x 60 inst Monthly ending 

31.05.2014 

DFCC Bank 6.50% 10,005 - 139 x 84 inst Monthly ending 

31.12.2015 

DFCC Bank 6.05% 8,840 - 173 x 60 inst Monthly ending 

31.03.2014 

NDB Bank AWDR + 

4.00% 

BNL 6.50% (Euro 

100,000) 

Thai Military Bank 

Public Company 

Limited 

MLR - 1% - 2yrs 

MLR - next 3yrs 

HSBC - Thailand 

4.78% 

55,906 68,968 2,300 x 8 inst 

3,450 x 4 inst 

4,025 x 8 inst 

4,600 x 6 inst 

- 2,562 Euro 2.8 x 34 

Euro 2.0 x 2 

Euro 0.8 x 1 

280,898 421,725 Baht 150 x 8 inst 

Baht 500 x 12 

inst 

Baht 1,500 x 12 

inst 

Baht 4,800 x 25 

inst 

Baht 4,565 x 1 

inst 

71,850 128,554 Baht 1,480 x 36 

inst 

Baht 1,320 x 1 

inst 

851,260 987,116 

Quarterly 

ending 

31.03.2013 

Monthly ending 

31.07.2009 


30.06.2011 


31.03.2011 

Security 

Mortgage over Plant at 

Weliveriya 

Mortgage over Heater at 

Weliveriya 

Mortgage over property at 

Thunnana, Hanwella 

Primary mortgage over the 

lease-hold rights of Panawatta & 

Pedro estates have been pledged 

and a letter of undertaking 

from DPL Plantations (Pvt) Ltd 

was given to subordinate 

management fee and dividends 

in a default situation of Term Loan 


leasehold rights of Robgill and 

Fordyce estates 


leasehold rights of Halgolla, 

We-Oya, Polatagama and 

Ederapola estates and letter of 

undertaking from DPL Plantations 

(Pvt)Ltd ., was given to subordinate 

management fee and dividends in a 

default situation 

Primary mortgage over 

sub leasehold rights of 

Kalupahana Power Company (Pvt) 

Ltd, machinery and equipment of 

the Company 

None 

Mortgage over land , 

building and machinery 

Corporate Guarantee for 

THB 47,200,000/- from 

Dipped Products PLC 


65


Analysis of long term loans by the year of repayment 

Long term loans repayable within 1 year 

from the reporting date 

Long term loans repayable between 2-5 years 


Long term loans repayable after 5 years 


Consolidated 

2009 

Rs ‘000 

2008 

Rs ‘000 

Company 

2009 

Rs ‘000 

2008 

Rs ‘000 

306,438 251,075 - 30,253 

740,043 843,110 - - 

111,217 144,006 - - 

1,157,698 1,238,191 - 30,253 

Gross liability 

19.2 Finance lease obligations net of interest 

Consolidated 

2009 

Rs ‘000 

2008 

Rs ‘000 


Repayments during the year (23,658) (28,248) 

Effect of movements in foreign exchange 11 185 


Finance cost allocated to future periods (342,824) (361,074) 

Net liability 373,117 378,515 

Payable within 1 year 

Gross liability 20,212 23,652 


Net liability transferred to current liabilities (note 22) 5,304 5,379 

Payable within 2-5 years 




Payable after 5 years 




Net liability payable after 1 year 367,813 373,136 

The net liability comprises of a carrying value of a lease obtained by Dipped Products (Thailand ) Ltd., from 

National Finance Public Company to the value of Rs 538,669 (2008 - Rs 1,356,158) and carrying value of a lease 

obtained by Kelani Valley Plantations PLC., (KVPL) from JEDB/SLSPC to the value of Rs 372,579,090 (2008 - 

Rs 377,158,863). 

The lease rentals payable by KVPL for JEDB/SLSPC have been amended with effect from June 18, 1996 to an 

amount substantially higher than previous nominal lease rental of Rs 500 per estate per annum. 

The basic rental payable under the revised basis is Rs 19,598,000 per annum. This amount is to be inflated annually 

by the Gross Domestic Product (GDP) deflator in the form of contingent rent. 

This lease agreement was further amended on August 1, 2002 freezing annual lease rental at Rs 25,839,041 for a 

period of six years commencing from June 18, 2002. Hence, the GDP deflator adjustment has been frozen at 

Rs 6,241,041 per annum until June 17, 2008. 

66 



According to the ruling given by the Urgent Issue Task Force (UITF) of The Institute of Chartered Accountants of 

Sri Lanka, the amount stated in the Financial Statements have been adjusted to reflect the followings; 

i. Future liability on the annual lease payment of Rs 19,598,000 will continue until the year 2045. The Net Present Value of 

this liability at a 4% discounting rate (as recommended by UITF) would result in a liability of Rs 372,579,090. 

ii. 

iii. 

The Net Present Value of Rs 372,579,090 is represented by a gross liability of Rs 715,327,000 (Rs 19,598,000 x36 ½ 

years ) and interest in suspense of Rs 342,747,910. 

The charge to the Income Statement during the current period is Rs 21.2 million (2008 - Rs 21.4 million). 

20. Deferred income 

Grants 

Consolidated 

2009 

Rs ‘000 

2008 

Rs ‘000 

Grants 


Received during the year 111,266 49,270 


Amortisation 


Amortised during the year 11,352 8,162 



Kelani Valley Plantations PLC., received grants from the Plantation Reform Project (PRP), Plantation Human Development 

Trust and the Ministry of Community Development for workers’ facilities, and other infrastructure facilities. The amount 

incurred is capitalised under relevant classification of property, plant and equipment and the corresponding grant 

component is reflected under grants which is amortised over the useful life span of the asset. 

21. Trade & other payables 

Consolidated 

2009 

Rs ‘000 

2008 

Rs ‘000 

Company 

2009 

Rs ‘000 

2008 

Rs ‘000 

Trade payables 756,823 801,385 97,062 83,110 

Other payables including accrued expenses 516,428 580,344 57,472 39,030 

Unclaimed dividends 2,115 13,715 2,115 13,715 

22. Interest bearing borrowings - due within one year 

1,275,366 1,395,444 156,649 135,855 

Consolidated 

2009 

Rs ‘000 

2008 

Rs ‘000 

Company 

2009 

Rs ‘000 

2008 

Rs ‘000 

Finance lease obligations net of interest - (note 19.2) 5,304 5,379 - - 

Term loans - (note 19.1) 306,438 251,075 - 30,253 

Short term loans and bank overdraft (unsecured) 2,405,206 1,896,960 473,189 483,027 

23. Amounts due to subsidiaries 

2,716,948 2,153,414 473,189 513,280 

Company 

2009 

Rs ‘000 

2008 

Rs ‘000 

Hand Protection 63,333 239,390 

Plantations 324,293 453,333 

387,626 692,723 


67


24. Segment information 

a. Geographical segment information 

Turnover 

2009 

Percentage 

2008 

Percentage 

Asia/Africa 4.74 4.24 

South America 10.22 7.47 

Australasia 1.80 2.30 

Europe 52.18 50.82 

North America 12.26 16.16 

81.20 80.99 

Indirect exports 18.09 18.29 

Sri Lanka 0.71 0.72 

b. Business segment information 

100.00 100.00 

Hand Protection Plantations Inter - Segment Total 

2009 

Rs ‘000 

2008 

Rs ‘000 

2009 

Rs ‘000 

2008 

Rs ‘000 

2009 

Rs ‘000 

2008 

Rs ‘000 

2009 

Rs ‘000 

2008 

Rs ‘000 

Turnover 9,462,829 8,845,503 3,108,570 2,827,974 (675,414) (520,582) 11,895,985 11,152,895 

Profit before tax 322,833 158,192 293,603 457,777 - - 616,436 615,969 

Non- cash expenses 

Depreciation & ammortisation 

of leased assets 261,061 251,354 122,939 111,735 - - 384,000 363,089 

Retiring gratuity 32,424 42,990 97,003 137,738 - - 129,427 180,728 

Provision for agents’ 

indemnity fund 4,344 3,947 - - - - 4,344 3,947 

Capital expenditure 217,910 279,770 581,217 399,516 - - 799,127 679,286 

Total assets 6,903,919 6,564,762 4,092,104 3,621,523 (569,390) (588,062) 10,426,633 9,598,223 

Investments in associates - - 90,297 98,609 - - 90,297 98,609 

Non - interest bearing 

liabilities 1,349,163 2,156,057 1,822,471 1,699,557 (468,390) (581,461) 2,703,244 3,274,153 

Cash flows from 

- operating activities 136,514 441,821 405,147 143,536 48,080 25,524 589,741 610,881 

- investing activities (397,141) (389,198) (261,016) (217,479) (48,080 ) (25,524) (706,237) (632,201) 

- financing activities (4,869) (331,121) (188,127) (111,159) - - (192,996) (442,280) 

25. Contingent liabilities 

The contingent liability as at March 31, 2009 on guarantees given by the Company to third parties amounted to 

Rs 289,418,762 (2008 - Rs 297,620,310). Total of this sum relates to facilities obtained by subsidiaries. The contingent 

liability as at March 31, 2009 on retiring gratuity has been disclosed in Note 17. 

26. Capital expenditure commitments 

The approximate amount of capital expenditure approved by the Directors and not contracted for as at March 31, 2009 

amounts to Rs 307,006,000 (2008 - Rs 620,616,814 ). The approximate capital expenditure contracted for which no 

provision is made in the Financial Statements as at March 31, 2009 amounts to Rs 40,435,708 (2008 - Rs 82,021,289). 

27. Palma Ltd. 

The Group utilises the premises and other assets of Palma Ltd., for manufacturing operations of Texnil (Pvt) Ltd. In view of 

the suspension of commercial operations of Palma Ltd the carrying value of the investment has been written down by 

Rs 20 million, to reduce the investment to its recoverable value. 

28. Companies with different accounting years 

Kelani Valley Plantations PLC., (KVPL), Dipped Products (Thailand) Ltd. (DPTL) and ICOGUANTI S.p.A. (ICO) prepare 

their annual Financial Statements on calendar year basis. The Financial Statements of KVPL, DPTL and ICO drawn up to 

December 31, 2008 have been consolidated. 

68 



29. Related party disclosures 

Key Management Personnel comprise the Directors of the Company. Directors’ remuneration, in respect of the Company 

and the Group for the financial year ended March 31, 2009 are given in note 5 to the Financial Statements. Details of the 

Directors and their spouses shareholdings are given in Annual Report of the Board on page 27. 

Dipped Products PLC., its subsidiary companies Grossart (Pvt) Ltd., Venigros (Pvt) Ltd., Palma Ltd., Neoprex (Pvt) Ltd., Texnil (Pvt) Ltd., 

Feltex (Pvt) Ltd., DPL Plantations (Pvt) Ltd., Hanwella Rubber Products Ltd and sub subsidiary company Kelani Valley Plantations PLC., 

are provided office space with related support services and infrastructure and services such as secretarial, personnel, administration, data 

processing and export shipping by ultimate parent company Hayleys PLC., and the cost amounting to Rs 99,822,343 (2008 – 

Rs 81,061,859) has been reimbursed by these companies. 

Messrs. N. G. Wickremeratne., A. M. Pandithage., R. A. Ebell and J. A.G. Anandarajah who are Directors of the Company are 

also Directors of Hayleys PLC. 

Dipped Products PLC., its subsidiary companies Grossart (Pvt) Ltd., Venigros (Pvt) Ltd., Palma Ltd., Neoprex (Pvt) Ltd., Texnil 

(Pvt) Ltd., Feltex (Pvt) Ltd., DPL Plantations (Pvt) Ltd., Hanwella Rubber Products Ltd and sub subsidiary company Kelani 

Valley Plantations PLC., have entered into trading transactions under normal commercial terms with the following affiliate 

companies: Sales to Agro Technica Ltd., Hayleys Agro Products Ltd., Hayleys Consumer Products Ltd and HJS Condiments 

Ltd., during the year amounted to Rs 835,032 (2008 – Rs 2,179,024). The cost relating to purchases of goods and 

services from Agility Logistics (Pvt) Ltd., Civaro Lanka (Pvt) Ltd., Clarion Shipping (Pvt) Ltd., CMA-CGM Lanka (Pvt) Ltd., 

Global Holidays (Pvt) Ltd., Hayleys Advantis Ltd., Hayleys Agro Fertilizers (Pvt) Ltd., Hayleys Agro Products Ltd., Hayleys 

Consumer Products Ltd., Hayleys Electronics (Retailing) Ltd., Hayleys Industrial Solutions Ltd., Hayleys-MGT Knitting Mills 

PLC., Logiventures (Pvt) Ltd., Maritime Agencies (Pvt) Ltd., MIT Cargo (Pvt) Ltd., NYK Line Lanka (Pvt) Ltd., Puritas (Pvt) 

Ltd., Ravi Industries Ltd and Volanka Insurance Services (Pvt) Ltd., during the year amounted to Rs 239,497,590 (2008 – Rs 

146,360,569). 

Mr. N. G. Wickremeratne who is a Director of the Company is also a Director of HJS Condiments Ltd and 

Puritas (Pvt) Ltd. 

Mr. R. A. Ebell who is a Director of the Company is also a Director of Agro Technica Ltd., Hayleys Electronics (Retailing) Ltd 

and Volanka Insurance Services (Pvt) Ltd. 

Messrs N. G. Wickremeratne and A. M. Pandithage who are Directors of the Company are also Directors of Agility 

Logistics (Pvt) Ltd., Civaro Lanka (Pvt) Ltd., Clarion Shipping (Pvt) Ltd., CMA-CGM Lanka (Pvt) Ltd., Global Holidays 

(Pvt) Ltd., Hayleys Agro Fertilizers (Pvt) Ltd and NYK Line Lanka (Pvt) Ltd. 

Messrs N. G. Wickremeratne., A. M. Pandithage and R. A. Ebell who are Directors of the Company are also Directors 

of Hayleys Advantis Ltd., Hayleys Consumer Products Ltd., Hayleys Industrial Solutions Ltd., Hayleys Agro Products Ltd., 

Logiventures (Pvt) Ltd., Maritime Agencies (Pvt) Ltd., MIT Cargo (Pvt) Ltd and Ravi Industries Ltd. 

Messrs N. G. Wickremeratne., A. M. Pandithage and R. Seevaratnam who are Directors of the Company are also Directors 

of Hayleys-MGT Knitting Mills PLC. 

The Company had an agreement with Mr. J. A. G. Anandarajah, who is a Director of the Company for leasing of residential 

premises at 66B/7, Sri Maha Vihara Road, Dehiwela at a monthly rental of Rs 2,826. 

Mr. B.A.Mahipala who is a Director of Hanwella Rubber Products Ltd., is also a Director of Hanwella Estate Development 

(Pvt) Ltd. During this year, Hanwella Rubber Products Ltd., has paid Rs 172,500 (2008 – Rs 165,000) and Rs 345,000 

(2008 – Rs 330,000) to Mr. B.A.Mahipala and Hanwella Estate Development (Pvt) Ltd., respectively for leasing of factory land. 

30. Events after the Balance Sheet date 

Proposed dividend 

Directors have proposed the payment of first and final dividend of Rs 3.00 for the year ended March 31,2009 which will 

be declared at the Annual General Meeting to be held on June 26, 2009. In accordance with Sri Lanka Accounting Standard 

No.12 (Revised) on Events after the Balance Sheet date, the proposed final dividend has not been recognised as a liability 

as at Balance Sheet date. 

No other circumstances have arisen since the Balance Sheet date which would require adjustments to, or disclosure in the 

Financial Statements. 


69

Ten Year Financial Review 

Gross Dividend/Dividend Rate 

Rs. mn % 

250 

40 

200 

30 

150 

20 

100 

10 

50 

2009 

Rs’000 

2008 

Rs’000 

2007 

Rs’000 

2006 

Rs’000 

Trading Results 

Gross turnover 11,895,985 11,152,895 9,412,610 7,109,400 


Taxation (113,709) (100,627) (106,242) (66,128) 

Profit after tax 502,728 515,342 668,288 348,885 

Minority interest & 

pre acquisition profit (139,858) (144,220) (111,487) (62,422) 

Profit attributable to 

equity holders of the Company 362,870 371,122 556,801 286,463 

0 

0 

Rs. mn 

1,400 

1,200 

1,0000 

800 

600 

400 

200 

0 

Times 

20 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

Gross Dividend 

Dividend Rate 

Working Capital 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

Price Earnings Ratio 

Non-Current Assets 

Property, plant & equipment 4,826,977 4,402,997 4,014,111 3,465,853 

Investments 287,307 295,619 277,299 167,829 

Other non-current assets 37,276 27,617 20,212 16,452 

5,151,560 4,726,233 4,311,622 3,650,134 

Current Assets 5,275,073 4,871,990 4,528,946 3,501,056 

TOTAL ASSETS 10,426,633 9,598,223 8,840,568 7,151,190 

Capital & Reserves 

Stated capital 598,615 598,615 598,615 598,615 

Capital reserves 174,223 172,018 170,121 105,493 

Revenue reserves 2,306,312 2,039,771 1,876,993 1,474,928 

Shareholders’ funds 3,079,150 2,810,404 2,645,729 2,179,036 

Preliminary & deferred expenditure - - - - 

3,079,150 2,810,404 2,645,729 2,179,036 

Minority Interest 785,912 710,504 593,048 457,459 

Total Equity 3,865,062 3,520,908 3,238,777 2,636,495 

Rs. 

120 

100 

80 

60 

40 

20 

15 

10 

5 

0 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

Market Price Per Share 

All Share Price Index 

0 0 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

3,000 

2,500 

2,000 

1,500 

1,000 

500 

Non-Current Liabilities 

Deferred tax liability 140,385 133,120 107,428 87,587 

Other non-current liabilities 2,412,009 2,382,001 2,289,016 2,118,794 

2,552,394 2,515,121 2,396,444 2,206,381 

Current Liabilities 4,009,177 3,562,194 3,205,347 2,308,314 

TOTAL EQUITY AND LIABILITIES 10,426,633 9,598,223 8,840,568 7,151,190 

Ratios & Other Information 

Earnings per share (Rs) 6.06 6.20 9.30 4.79 

Return on equity (%) 11.8 13.2 21.0 13.1 

Market price per share (Rs) 55.25 79.50 109.25 82.00 

Price earnings ratio (times) 9.1 12.8 11.7 17.1 

Dividend per share (Rs) 3.00 3.00 4.50 3.00 

Net assets per share (Rs)** 51.44 46.95 44.20 36.40 

Effective rate of dividend (%) 30.00 30.00 45.00 30.00 

Dividend yield (%) 5.4 3.8 4.1 3.7 

Dividend cover (times) 2.0 2.1 2.1 1.6 

Debt equity ratio 0.78 0.85 0.87 0.97 

Current ratio (times) 1.32 1.37 1.41 1.52 

Market Price Per Share 

All Share Price Index 

Figures in brackets indicate deductions. 

** computed based on 59,861,512 shares on issue as at March 31, 2009. 

70 


Ten Year Financial Review 

2005 

Rs’000 

2004 

Rs’000 

2003 

Rs’000 

2002 

Rs’000 

2001 

Rs’000 

2000 

Rs’000 

Return On Equity 

6,138,827 4,928,955 3,682,102 2,954,096 2,749,449 2,221,028 

670,826 427,111 269,108 225,137 275,204 177,861 

(72,345) (66,948) (24,494) (1,185) (12,956) (23,328) 

598,481 360,163 244,614 223,952 262,248 154,533 

(111,296) (65,672) (34,203) (28,197) (41,991) (28,102) 

% 

25 

20 

15 

10 

487,185 294,491 210,411 195,755 220,257 126,431 

5 

0 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

3,018,582 2,249,809 2,051,792 1,993,906 1,959,473 1,890,025 

163,379 152,078 89,755 78,573 76,478 75,451 

28,914 31,470 42,296 5,200 9,019 14,901 

3,210,875 2,433,357 2,183,843 2,077,679 2,044,970 1,980,377 

3,671,383 2,950,906 2,274,056 1,713,131 1,359,215 982,827 

6,882,258 5,384,263 4,457,899 3,790,810 3,404,185 2,963,204 

Rs. mn 

4,000 

3,500 

3,000 

2,500 

2,000 

Value Addition 

598,615 249,423 207,852 184,758 184,758 184,758 

78,325 175,611 102,785 102,785 102,785 102,785 

1,470,855 1,356,672 1,186,956 1,024,862 891,212 744,858 

2,147,795 1,781,706 1,497,593 1,312,405 1,178,755 1,032,401 

- - - - - (1,445) 

2,147,795 1,781,706 1,497,593 1,312,405 1,178,755 1,030,956 

429,630 461,204 400,340 357,336 345,259 308,167 

2,577,425 2,242,910 1,897,933 1,669,741 1,524,014 1,339,123 

1,500 

1,000 

500 

0 

Rs. 

12 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

Earnings Per Share 

10 

104,232 105,151 77,114 66,755 66,755 54,968 

8 

1,732,546 1,154,977 1,131,670 1,128,465 1,167,338 1,137,875 

6 

1,836,778 1,260,128 1,208,784 1,195,220 1,234,093 1,192,843 

4 

2,468,055 1,881,225 1,351,182 925,849 646,078 431,238 

6,882,258 5,384,263 4,457,899 3,790,810 3,404,185 2,963,204 

2 

0 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

8.14 11.81 10.12 10.60 11.92 6.84 

22.7 16.5 14.0 14.9 18.7 12.2 

92.00 85.00 55.00 60.00 46.50 49.00 

11.3 7.2 5.4 5.7 3.9 7.2 

4.00 4.00 3.50 3.50 4.00 3.00 

35.88 29.76 25.02 21.92 19.69 17.25 

40.00 40.00 35.00 35.00 40.00 30.00 

4.3 4.7 6.4 5.8 8.6 6.1 

2.0 3.0 2.9 3.0 3.0 2.3 

0.81 0.65 0.76 0.86 0.99 1.10 

1.49 1.57 1.68 1.85 2.10 2.28 

Rs. mn 

800 

600 

400 

200 

0 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 


71

The Share 

1. Stock exchange listing 

The ordinary shares of Dipped Products PLC., are listed with the Colombo Stock Exchange of Sri Lanka. The audited 

Income Statements for the year ended March 31, 2009 and the audited Balance Sheets of the Company and the Group as 

at that date have been submitted to the Colombo Stock Exchange within three months of the Balance Sheet date. 

2. Ordinary shareholders 

Composition of the 2,102 shareholders as at March 31, 2009 (2008 - 2,149) 

Number of 

shares held 

Residents Non-Residents Total No of Shares 

No. of 

shareholders 

No. of 

shares 

% No. of 

shareholders 

No. of 

shares 

% No. of 

shareholders 

No. of 

shares 

1 - 1,000 1,485 378,174 0.63 3 1,236 0.00 1,488 379,410 0.63 

1,001 - 5,000 380 867,023 1.45 1 3,732 0.01 381 870,755 1.46 

5,001 - 10,000 95 696,273 1.16 - - - 95 696,273 1.16 

10,001 - 50,000 97 2,085,962 3.49 2 24,398 0.04 99 2,110,360 3.53 

50,001 - 100,000 15 1,019,692 1.70 - - - 15 1,019,692 1.70 

100,001 - 500,000 11 2,694,678 4.50 2 347,118 0.58 13 3,041,796 5.08 

500,001 - 1,000,000 4 2,252,884 3.77 - - - 4 2,252,884 3.77 

1,000,001 & over 5 41,909,666 70.01 2 7,580,676 12.66 7 49,490,342 82.67 

Total 2,092 51,904,352 86.71 10 7,957,160 13.29 2,102 59,861,512 100.00 

Of the issued Share Capital over 86% is held by residents of Sri Lanka 

March 31, 2009 March 31, 2008 

No. of 

Shares 

No. of 

Shareholders 

No. of 

Shares 

% 

No. of 

Shareholders 

Individuals 1,971 6,794,331 2,007 6,905,796 

Institutions 131 53,067,181 142 52,955,716 

Total 2,102 59,861,512 2,149 59,861,512 

3. Share valuation 

The market value of an ordinary share of Dipped Products PLC: 

March 31, 2009 March 31, 2008 

Highest Rs 87.00 (April 16, 2008 & August 04, 2008) Rs 116.00 (April 16, 2007) 

Lowest Rs 48.25 (March 1, 2009) Rs 75.00 (January 23, 2008) 

Year end Rs 55.25 Rs 79.50 

72 


The Share 

4. Dividend payments 

Proposed first and final dividend of Rs. 3.00 per share is to be declared on June 26, 2009 and will be payable on July 

3, 2009. In accordance with the rules of the Colombo Stock Exchange the shares of the Company will be quoted exdividend 

with effect from June 29, 2009. 

5. Share trading 

2009 2008 

Number of transactions 564 613 

Number of shares traded 433,700 1,208,400 

Value of shares traded (Rs) 29,579,000 117,462,325 

6. First twenty shareholders as at March 31, 2009 

2009 2008 

Shareholder No. of shares % No. of shares % 

1 Hayleys PLC 24,776,080 41.39 24,776,080 41.39 

2 D M H Capital Limited 5,986,800 10.00 5,986,800 10.00 

3 Volanka (Pvt) Limited 4,873,640 8.14 4,873,640 8.14 

4 Haycarb PLC 4,068,746 6.80 4,068,746 6.80 

5 Delta Plus Group 3,860,280 6.45 3,860,280 6.45 

6 Promar Overseas SA 3,720,396 6.22 3,720,396 6.22 

7 Waldock Mackenzie Limited /Mr L P Hapangama 2,204,400 3.68 2,178,500 3.64 

8 Mr N G Wickremeratne 607,304 1.01 607,304 1.01 

9 Ravi Industries Limited 567,000 0.95 567,000 0.95 

10 Employees Provident Fund 548,300 0.92 528,600 0.88 

11 Waldock Mackenzie Limited/Lalan Rubbers (Private) Limited 530,280 0.89 530,280 0.89 

12 H A P Investments (Private) Limited 474,162 0.79 474,162 0.79 

13 Mr H A Pieris 451,264 0.75 451,264 0.75 

14 Dr. D Jayanntha 360,000 0.60 360,000 0.60 

15 Mr R W Soysa 278,020 0.46 278,020 0.46 

16 HSBC International Nominees Ltd- SSBT- Deustche Bank 235,144 0.39 235,144 0.39 

17 Associated Electrical Corporation Limited 227,600 0.38 60,500 0.10 

18 Mr J A G Anandarajah 219,474 0.37 219,474 0.37 

19 Mr R M De Mel 214,444 0.36 214,444 0.36 

20 Mr S Krishnananthan 163,044 0.27 163,044 0.27 

Total 54,366,378 90.82 54,153,678 90.46 

7. Shares held by the Public 

As at March 31, 2009, Public held 46.50% of the share capital of the Company. 


73

The Share 

History of dividend and scrip issues (last 20 years) 

Year ended 

March 31 

Issue 

Basis 

No of 

shares 

’000 

Cumulative 

No of shares 

’000 

Dividend 

(%) 

Dividend 

paid 

Rs ’000 

1990 5,000 40 20,000 

1991 Bonus 1:05 1,000 6,000 33 19,800 

1992 6,000 26 15,600 

1993 6,000 26 15,600 

1994 Share Trust (at Rs 41.00) 600 6,600 30 19,800 

1995 6,600 35 23,100 

1996 Bonus 1:05 1,320 7,920 17.5 13,860 

Rights (at Rs 60.00) 1:05 1,584 9,504 17.5 16,632 

1997 Bonus 1:05 1,901 11,405 35 39,917 

1998 Bonus 1:05 2,281 13,686 40 54,743 

1999 Bonus 1:05 2,737 16,423 35 57,480 

2000 Bonus 1:08 2,053 18,476 30 55,427 

2001 18,476 40 73,903 

2002 18,476 35 64,665 

2003 Bonus 1:08 2,309 20,785 35 72,748 

2004 Bonus 1:05 4,157 24,942 40 99,769 

2005 Bonus 1:05 4,988 29,931 – – 

Bonus 1:01 29,931 59,861 40 239,446 

2006 59,861 30 179,585 

2007 59,861 45 269,377 

2008 59,861 30 179,585 

2009 59,861 30 179,585 

Market Capitalisation (last 20 years) 

Year ended March 31 

Market 

capitalisation 

Rs Mn 

Net assets 

Rs Mn 

1990 443 148 

1991 690 178 

1992 618 210 

1993 537 223 

1994 574 284 

1995 574 340 

1996 893 492 

1997 984 611 

1998 1,505 794 

1999 854 961 

2000 905 1,032 

2001 859 1,179 

2002 1,109 1,312 

2003 1,143 1,498 

2004 2,120 1,782 

2005 5,507 2,148 

2006 4,909 2,179 

2007 6,540 2,646 

2008 4,759 2,810 

2009 3,307 3,079 

74 


Glossary 

Accounting policies 

Specific principles, bases, conventions, rules and practices 

adopted by an enterprise in preparing and 

presenting Financial Statements. 

Borrowings 

Bank loans, overdrafts and finance lease obligations. 

Capital employed 

Total assets less interest free liabilities. 

Capital reserves 

Reserves identified for specific purposes and considered not 

available for distribution. 

Cash equivalents 

Liquid investments with original maturities of three months 

or less. 

Contingent liabilities 

Conditions or situations at the Balance Sheet date, the 

financial effect of which are to be determined by future events 

which may or may not occur. 

Current ratio 

Current assets divided by current liabilities. 

Dividend cover 

Post-tax profit divided by gross dividend. Measures the 

number of times dividend is covered by distributable profit. 

Dividend yield 

Gross dividend per share as a percentage of the market 

price. 

Earnings per share 

Profit attributable to ordinary shareholders divided by a 

weighted average number of ordinary shares in issue and 

ranking for dividend. 

Gross dividend 

Portion of profits inclusive of tax withheld distributed to 

shareholders. 

Net assets per share 

Shareholders’ funds divided by the number of ordinary shares 

issued. 

Operating profit margin 

Operating profit divided by Group turnover. 

Price earnings ratio 

Market price of a share divided by earnings per share. 

Related parties 

Parties who could control or significantly influence the 

financial and operating policies of the business. 

Return on equity 

Attributable profits divided by average shareholders’ funds. 

Revenue reserves 

Reserves considered as being available for distributions and 

investments. 

Segment 

Constituent business units grouped in terms of nature and 

similarity of operations. 

Total equity 

Share capital, reserves and minority interest. 

Value addition 

The quantum of wealth generated by the activities of the 

Group and its distribution. 

Working capital 

Capital required to finance the day-to-day operations (current 

assets minus current liabilities). 


75

Notice of Meeting 


Company Number PQ60 

NOTICE IS HEREBY GIVEN that the Thirty Third Annual General Meeting of Dipped Products PLC will be held at the 

Auditorium of The Institute of Chartered Accountants of Sri Lanka, No.30 A, Malalasekara Mawatha, Colombo 07, on 

Friday, June 26, 2009 at 3.00 p.m. and the business to be brought before the Meeting will be : 

1. To consider and adopt the Annual Report of the Board and the Statements of Accounts for the year ended 

March 31, 2009, with the Report of the Auditor’s thereon. 

2. To declare a dividend as recommended by the Directors. 

3. To re-elect Mr F. Mohideen, who has been appointed by the Board, since the last Annual General Meeting, a Director. 

4. To re-elect Mr K. A. L. S. Fernando, who has been appointed by the Board, since the last Annual General Meeting, 

a Director. 

5. To re-elect Mr L. G. S. Gunawardena who has been appointed by the Board, since the last Annual General Meeting, 

a Director. 

6. To re-elect, Mr N. B.Weerasekera, who retires by rotation at the Annual General Meeting, a Director. 

7. To re-elect, Mr R. K. Witanachchi, who retires by rotation at the Annual General Meeting, a Director. 

8. To authorise the Directors to determine contributions to charities. 

9. To authorise Directors to determine the remuneration of the Auditors, Messrs. KPMG, Ford, Rhodes, Thornton & 

Company, who are deemed to have been re-appointed as Auditors in terms of Section 158 of the Companies 

Act No.7 of 2007. 

10. To consider any other business of which due notice has been given. 

NOTE : 

(i). 

(ii). 

A shareholder is entitled to appoint a proxy to attend and vote instead of himself and a proxy need not be a 

shareholder of the Company. A Form of Proxy is enclosed for this purpose. The instrument appointing a 

proxy must be deposited at the Registered Office, No.400, Deans Road, Colombo 10 by 3.00 p.m. on 

June 24, 2009. 

It is proposed to post ordinary dividend warrants on July 3, 2009 and in accordance with the rules of the 

Colombo Stock Exchange, the shares of the Company will be quoted ex-dividend with effect from June 29, 2009. 

By Order of the Board 


HAYLEYS GROUP SERVICES (PRIVATE) LIMITED 

Secretaries 

Colombo 

May 26, 2009 

76 


Form of Proxy 


Company Number PQ 60 

I/We*……………....................................…………………………………………………………………………………………………. 

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

being a shareholder/shareholders* of DIPPED PRODUCTS PLC hereby appoint: 

1. ………………………………………………..............................................………………………………………………………… 

of …………….....…………………………………………………………………………………………............................……. or 

failing him/them * 

2. NIRMALA GIHAN WICKREMERATNE (Chairman of the Company) of Colombo, or failing him, one of the Directors 

of the Company as my/our * proxy to attend and vote as indicated hereunder for me/us* and on my/our* behalf at the 

Thirty Third Annual General Meeting of the Company to be held on Friday, June 26, 2009 and at every poll which may be 

taken in consequence of the aforesaid meeting and at any adjournment thereof. 

i. 

To adopt the Annual Report of the Board and the Statements of Accounts for 

the year ended March 31, 2009 with the Report of the Auditors thereon. 

For 

Against 

ii. 

iii. 

iv. 

v. 

vi. 

vii. 

To declare a dividend as recommended by the Directors. 

To re-elect Mr. F. Mohideen, who has been appointed by the Board since 

the last Annual General Meeting, a Director. 

To re-elect Mr. K.A.L.S.Fernando, who has been appointed by the Board 

since the last Annual General Meeting, a Director. 

To re-elect Mr. L G S Gunawardena, who has been appointed by the Board 

since the last Annual General Meeting, a Director. 

To re-elect Mr. N.B.Weerasekera, who retires by rotation at the Annual 

General Meeting, a Director. 

To re-elect Mr. R.K.Witanachchi, who retires by rotation at the Annual 

General Meeting, a Director. 

viii. To authorise the Directors to determine contributions to charities. 

ix. 

To authorise the Directors to determine the remuneration of the Auditors, 

Messrs. KPMG, Ford, Rhodes, Thornton & Company, who are deemed to have 

been re-appointed as Auditors. 

(**) The proxy may vote as he thinks fit on any other resolution brought before the Meeting. 

As witness my/our* hands this …………….............................………. day of …………….............................………. 2009. 

Witnesses: 

……………………………… 

….…………………………… 

……………………………… 

……………………………… 

…………………………………… 

Signature of Shareholder 

Note : * Please delete the inappropriate words. 

1. A proxy need not be a shareholder of the Company. 

2. Instructions as to completion appear on the reverse. 


77

Form of Proxy 

INSTRUCTIONS AS TO COMPLETION : 

1. To be valid, this Form of Proxy must be deposited at the Registered Office, No. 400, Deans Road, Colombo 10, 

by 3.00 p.m. on June 24, 2009. 

2. In perfecting the Form of Proxy, please ensure that all details are legible. 

3. If you wish to appoint a person other than the Chairman of the Company (or failing him, one of the Directors of the 

Company) as your proxy, please insert the relevant details at (1) overleaf and initial against this entry. 

4. Please indicate with an X in the space provided how your proxy is to vote on each resolution. If no indication is given, the 

proxy in his discretion will vote as he thinks fit. Please also delete (**) if you do not wish your proxy to vote as he thinks 

fit on any other resolution brought before the Meeting. 

5. In the case of a Company/Corporation, the proxy must be under its Common Seal which should be affixed and attested in 

the manner prescribed by its Articles of Association. 

6. Where the Form of Proxy is signed under a Power of Attorney (POA) which has not been registered with the Company, 

the original POA together with a photocopy of same or a copy certified by a Notary Public must be lodged with the 

Company along with the Form of Proxy. 

78 


Corporate Information 

Name of the Company 

Dipped Products PLC 

Legal Form 

A Public Limited Company 

With limited liability. 

Incorporated in Sri Lanka in 

1976 

Company No PQ 60 

Directors 

N G Wickremeratne, Chairman 

J A G Anandarajah, Managing Director 

R W Soysa (Retired March 31, 2009) 

Dr. W S E Fernando (Retires May 31, 2009) 


N Y Fernando 



A M Pandithage (Alternate R A Ebell) 

R Seevaratnam 

F Mohideen (Appointed July 10, 2008) 

K A L S Fernando (Appointed April 01, 2009) 

L G S Gunawardena (To be appointed June 01, 2009) 


R Seevaratnam – Chairman 


F Mohideen (Appointed October 30, 2008) 

Secretaries 

Hayleys Group Services (Pvt) Ltd 

Bankers 

Bank of Ceylon 

Citibank N A 

Deutsche Bank 

Hatton National Bank 

Hongkong & Shanghai Banking Corporation 

NDB Bank 

People’s Bank 

Sampath Bank 

Seylan Bank 

Standard Chartered Bank 

Auditors 

KPMG Ford, Rhodes, Thornton & Co 

Chartered Accountants 

P O Box 186 

Colombo 

Principal lines of Business 

Manufacture and marketing of industrial 

and general purpose gloves, 

Management of tea and rubber plantations 

Registered Office 

Hayley Building 

400 Deans Road 

Colombo 10 

Sri Lanka 

Tel: +94-11-2683964 

Fax: +94-11-2699018 

E-mail: postmast@dplgroup.com 

Website: www.dplgroup.com

DIPPED PRODUCTS PLC / ANNUAL REPORT 2008—2009

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