Our Annual Report is also available online. Please visit our website at www.teejay.com to access the report. 2 Teejay Lanka PLC Annual Report 2020/21 At Teejay Lanka we’re interwoven into the very fabric of people’s lives— creating opportunities for progressive growth, while supporting the ever-evolving needs of the people through a commendable performance; geared by our culture, resilient strategies and undeterred team spirit. Since our inception, our team has consistently served as an integral partner in the lives of our stakeholders by supporting their endeavours and ambitions, delivering constant streams of value through both good times and bad. The report you hold is a tribute to how our people transformed adversity into opportunities - challenging themselves to formulate a promising future in our hope of achieving USD 300 Mn. Today we’re propelling ourselves to leverage our impact with advanced technologies - a testament to our remarkable resilience and combined strength, which have enriched the lives of thousands of stakeholders. CONTENTS About this Report 4 Our Philosophy and Direction 5 On the Road to USD 300 Mn, the Milestones of 6 Financial Year 2020/21 Performance Highlights 7 Chairman’s Review 9 CEO’s message 12 Board of Directors 16 Executive Committee 19 Leadership Team 21 Factory Leadership Team - Teejay Lanka 23 Factory Leadership Team - Teejay prints 25 Factory Leadership Team - Teejay India 26 Management Discussion & Analysis 28 Corporate Governance 37 Enterprise Risk Management 52 Audit Committee Report 58 Remuneration Committee Report 60 Related Party Transactions Review 61 Committee Report Annual Report of the Board of Directors 62 for the year ended 31 March 2021 Statement of the Directors’ responsibility 66 for financial reporting 2 Teejay Lanka PLC Annual Report 2020/21 FINANCIAL STATEMENTS Independent Auditor’s Report 69 Statement of Comprehensive Income 72 Statement of Financial Position 74 Statement of Changes In Equity - Group 76 Statement of Changes In Equity - Company 77 Statement of Cash Flows 78 Notes to the Financial Statements 79 Five years Financial Summary - Group 135 Shareholding Information 136 Notice of Meeting 139 Notes 141 Form of Proxy 143 Corporate Information IBC Teejay Lanka PLC Annual Report 2020/21 3 ABOUT THIS REPORT Welcome to our 10th Integrated Annual Report in which we share the AVAILABLE FORM strategies and solutions that have made 2020/21 a success for the Teejay TEEJAY LANKA PLC Group. Under the theme of ‘People Powered’, this report highlights the ANNUAL REPORT 2020/21 collective determination of our team, and pays tribute to our people who responses which continued to redefine our corporate presence and strengths even amid a challenging operational environment. This year as Teejay reflects upon decades of consistency, we are venturing into the future powered by our people - the contributors of our progress and Available Online as PDF success. www.teejay.com FEEDBACK SCOPE & BOUNDARY CORPORATE GOVERNANCE: We understand that Reporting is a This Report covers the operations of Teejay Continued Listing Requirements of the journey of continuous improvement Lanka PLC and its operating subsidiaries Colombo Stock Exchange and would appreciate any in Sri Lanka and India from April 1, 2020 suggestions you may have in terms Code of Best Practice on Corporate to March 31, 2021.This Report presents of what you would like to see in Governance issued by Securities and the performance of the Group’s fabric our next report. Please direct your Exchange Commission of Sri Lanka (2017) manufacturing, operations, non-financial feedback to, and operational information presented Company Act No. 07 of 2007 herein (unless specifically mentioned) represents the same. There were no ABOUT THE CHAPTERS Mr. Salman Nishtar material restatements, significant changes • Our Leadership Team (Pages 21-26) Chief Financial Officer to the Group size, structure or supply chain Teejay Lanka PLC. • Management Discussion and Analysis during the year. The Group follows an Block D8-D14, (Pages 28-36) Annual Reporting cycle and our previous Seethawaka Export report for the financial year ending 31 • Governance Structure (Page 37) Processing Zone, March 2020 was covered in the 2019/20 Avissawella. Annual Report. EXTERNAL ASSURANCE We adopt a combined assurance model E mail: [email protected] STANDARDS AND PRINCIPLES to ensure the credibility and integrity of The following standards and guidelines our reporting. External assurance on the were used to prepare the report. financial statements have been provided Tel: 036 4279500 by the Messers. PricewaterhouseCoopers Financial Information: while financial, compliance and operating Sri Lanka Financial Accounting & Reporting controls are assessed by our internal audit Standards function. The Company’s Audit Committee also monitors adequacy and effectiveness of Company Act No. 07 of 2007 the financial reporting and internal control Company Act No. 15 08 1995 systems. MATERIALITY In selecting the content to be included in this Report we have adopted the principle of materiality and structured the discussion based on the material issues which matter most to our stakeholders and to our business. 4 Teejay Lanka PLC Annual Report 2020/21 OUR PHILOSOPHY AND DIRECTION OUR OUR OUR VISION MISSION VALUES To be the preferred To become a Integrity fabric solutions USD 300 Mn Company Innovate to Lead provider for branded in 2022/23 providing Collaboration clothing. customers with world- class fabric solutions Togetherness delivered through sustainable operations and best in class talent. • We Breed Integrity. ‘Integrity’ stands at the core of our culture. Doing the right thing always is our passion. • We are Collaborative ‘Innovate to Lead’ setting the benchmark to the industry while leading in an innovative and Team Driven. deck is a way of life for us. • We are Operational ‘Collaboration’ is a practice at Teejay. We OUR Collaborate with all our stakeholders for Excellence Driven. the well-being of everyone. CULTURE • We Focus on Speed, ‘Togetherness’ is a norm for us. Team work is the success behind Teejay’s continual Innovation and growth and performance. Sustainability. Teejay Lanka PLC Annual Report 2020/21 5 ON THE ROAD TO USD 300 MN, THE MILESTONES OF FINANCIAL YEAR 2020/21 ON-BOARDING NEW BUSINESSES Focusing on developing relationships with 2 to 3 new strategic customers. INNOVATION CENTER Teejay Lanka invested in a brand-new Innovation Centre, geared to develop new innovative fabrics. DIGITAL TRANSFORMATION JOURNEY SAP S4 HANA - This will usher in higher productivity levels through use of a single ERP across the group, new best practices, automation, business intelligence and analytics tools etc. EXPANSION OF TEEJAY INDIA The USD 26 Mn project is anticipated to increase the daily capacity of the Teejay India plant by 20 tonnes, thereby enhancing output to 55 tonnes in daily capacity. BREAKING INTO NEW MARKET SEGMENTS Penetrating into PPE wear during the pandemic opened opportunities to Teejay to break into new market segment. 6 Teejay Lanka PLC Annual Report 2020/21 PERFORMANCE HIGHLIGHTS Group Performance Metric 2021 2020 % Variance Operations Revenue Rs: 000’s 31,780,287 33,276,976 -4% Gross profits Rs: 000’s 3,789,959 4,229,042 -10% Profit from operations Rs: 000’s 2,441,402 2,728,431 -11% Profit after taxation Rs: 000’s 2,139,602 2,383,784 -10% Revenue growth % -4.5 4.8 -194% Operating profit margin % 7.7 8.2 -6% Return on equity (ROE) % 12.1 16.1 -25% Return on assets (ROA) % 6.9 9.7 -29% Return on capital employed (ROCE) % 12 13.1 -8% Financial Position Non current assets Rs: 000’s 10,499,504 10,673,443 -1% Current assets Rs: 000’s 20,599,835 16,289,050 26% Non current liabilities Rs: 000’s 1,999,689 2,065,360 -3% Current liabilities Rs: 000’s 11,335,426 9,248,490 24% Capital and reserves Rs: 000’s 17,764,224 15,648,643 13% Current ratio No. of Times 1.8 1.8 0% Quick assets ratio No. of Times 1.2 1.1 6% Shareholder Information No. of shares in issue Number 709,322,545 701,956,580 1% Market value per share (closing) Rs: 40.0 23.3 72% Dividend per share Rs: 1.65 2.4 -31% Earnings per share Rs: 3.04 3.4 -10.5% Net assets per share Rs: 25.0 22.3 12% P/E ratio No. of Times 13.3 6.9 92% Property, plant and equipment Rs: 000’s 8,710,818 8,777,251 0% Capital expenditure Rs: 000’s 715,458 1,461,606 -51% Total employees No. 2,711 2,651 2% Payments to employees Rs: 000’s 2,408,658 2,360,123 2% No. of promotions No. 7 36 -81% Investment in training Rs: 000’s 3,033 25,575 -88% Total training hours Hours 4,051 61,915 -93% Average training hours/employee Hours 2.65 21.41 -88% New products approved* No. 70 78 -10% Teejay Lanka PLC Annual Report 2020/21 7 PERFORMANCE HIGHLIGHTS Group Performance Metric 2021 2020 % Variance Investment in R&D Rs: 000’s 112,510 80,937 39% Strategic customers No. 8 8 0 Water consumption m3 ‘000 1,774 2,028 -13% Specific electricity consumption kWh/kg 1.8132 1.8257 -1% * Teejay Lanka 40 112,510 1,774 (Rs.) 13.3 (Rs: 000’s) (m3 ‘000) Market value per share P/E ratio Investment in R&D Water consumption 72% 92% 39% 13% 8 Teejay Lanka PLC Annual Report 2020/21 CHAIRMAN’S REVIEW It gives me great pride to welcome you to the 10th Annual General Meeting of Teejay Lanka PLC and to present before you the Annual Report and Audited Financial Statements for the year ended 31st March 2021. Despite a very difficult year, Team Teejay worked tirelessly to overcome obstacles and ended the Financial Year on a strong note.