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Orient Garments Limited

Introductory Document


for listing
of 54,916,656 Ordinary Voting Shares of the Company
on Diri Savi Board
of the Colombo Stock Exchange

The delivery of this Introductory Document shall not under any circumstance constitute a
representation or create any implication or suggestion, that there has been no material
change in the affairs of the Company since the date of this Introductory Document.

If you are in any doubt regarding the contents of this document you should consult your
stockbroker, bank manager, lawyer or any other professional advisor.

This Introductory Document is dated 6
th
June 2011.

For further inquiries, please contact the Managers to the Introduction.




MANAGERS TO THE INTRODUCTION






NAVARA CAPITAL PVT LIMITED

Responsibility for the Content of the Introductory Document
This Introductory Document has been prepared from information provided by Orient
Garments Limited and other publicly available information. The Directors of the
Company, collectively and individually, having made all reasonable inquiries, confirm
that to the best of their knowledge and belief, the information contained herein is true
and correct in all material respects and that there are no other material facts, the
omission of which, would make any statement herein misleading.

No person is authorized to give any information or to make any representations not
contained in this Introductory Document and if given or made, any such information or
representation must not be relied upon as having been authorized by the Company.

Copies of the Introductory Document may be obtained from the Manager or any
member firm and trading member firm of the Colombo Stock Exchange as specified in
section 2.4 on page 3 titůĞĚ ͞Member Firms and Trading Member Firms of the Colombo
Stock Exchange͟


The Colombo Stock Exchange (CSE) has taken reasonable care to ensure full and fair
disclosure of information in this Introductory Document. However, the CSE assumes
no responsibility for the accuracy of the statements made, opinions expressed or
reports included in this Introductory Document.


Abbreviations

Bn Billion
BOI Board of Investment of Sri Lanka
CSE Colombo Stock Exchange
EGM Extra Ordinary General Meeting
EU European Union
GSP Generalized System of Preferences
GSP + Generalized System of Preferences Plus
GYT Garments, yarn & other textile items
ICTAD Institute of Construction, Training and Development
JAAF The Joint Apparel Association Forum ʹ Sri Lanka
Mn Million
N/A Not applicable
OGL Orient Garments Limited
OGL Group Orient Garments Limited and its subsidiaries, Stafford Orient
(Pvt) Limited and Priority Garments (Pvt) Limited
PGL Priority Garments (Pvt) Limited
Rs. Sri Lankan Rupees
SOL Stafford Orient (Pvt) Limited


Glossary of Terms

Board/ Board of Directors The Board of Directors of Orient Garments Limited
Company/ The Company Orient Garments Limited
Finco Group Finco Holdings (Pvt) Limited, Finco Investments (Pvt) Limited and
subsidiaries of Finco Investments (Pvt) Limited and Finco
Holdings (Pvt) Limited
Ordinary Share(s) Ordinary Voting Share(s) of the Company


Table of Contents
1. Corporate Information .................................................................................................. 1
2. Information Relevant to the Introduction ...................................................................... 3
2.1. Introduction of Ordinary Voting Shares for Listing ................................................................ 3
2.2. Copies of the Introductory Document ................................................................................... 3
2.3. Managers to the Introduction ................................................................................................ 3
2.4. Member Firms and Trading Member Firms of the Colombo Stock Exchange ....................... 3
3. Overview of the Apparel Industry .................................................................................. 6
3.1. Introduction ............................................................................................................................ 6
3.2. History of the Sri Lankan Textile and Garment Industry ........................................................ 6
3.3. Multi Fibre Agreement ........................................................................................................... 8
3.4. Impact of the Global Recession .............................................................................................. 8
3.5. Generalized System of Preferences ..................................................................................... 10
3.6. Future Outlook of the Sri Lankan Garment Manufacturing Industry ................................... 11
4. Company Profile .......................................................................................................... 13
4.1. Introduction .......................................................................................................................... 13
4.2. Corporate Vision and Mission .............................................................................................. 15
4.3. History .................................................................................................................................. 16
4.4. Product Range and Clientele ................................................................................................ 17
4.5. Production Facilities ............................................................................................................. 17
4.6. Marketing Philosophy .......................................................................................................... 19
4.7. Financial Highlights ............................................................................................................... 20
4.8. Key Financial Ratios .............................................................................................................. 23
4.9. Loans, Overdrafts and Other Borrowings ............................................................................. 23
4.10. IT Infrastructure.................................................................................................................... 24
4.11. Accreditation and Certifications ........................................................................................... 25
5. Future Strategies and Risk Analysis .............................................................................. 26
5.1. Future Strategies .................................................................................................................. 26
5.2. Underlying Assumptions on which future strategies are based on ..................................... 27
5.3. Analysis of Associated Risks pertaining to the future strategies ......................................... 27


6. Human Resources ........................................................................................................ 29
6.1. Staff Strength........................................................................................................................ 29
6.2. Corporate Management Team ............................................................................................. 29
6.3. Collective Agreements and Labour Unions .......................................................................... 30
6.4. Statement ʹ Managing Director/ Chief Executive Officer .................................................... 31
7. Corporate Structure .................................................................................................... 32
7.1. Share Capital Structure ........................................................................................................ 32
7.2. Other Information as to the Share Capital ........................................................................... 32
7.3. Shareholding Structure ........................................................................................................ 34
7.4. Group Structure of Orient Garments Limited ...................................................................... 36
7.5. Board of Directors ................................................................................................................ 40
7.6. Statement ʹ Board of Directors ........................................................................................... 43
7.7. uŝƌĞĐƚŽƌƐ͛ LŵŽůƵŵĞŶƚƐ ......................................................................................................... 43
8. Other Information Relating to the Company ................................................................ 44
9. Corporate Governance Practices .................................................................................. 45
10. Statutory Declaration .................................................................................................. 47
11. Statutory and Other General Information .................................................................... 48

Annexure I - Interim Financial Statements for the 11 months ended February 28, 2011 ......... 50
Annexure II - Auditors Report and Financial Statements as at March 31, 2010 ....................... 60
Annexure III - Auditors Report and Financial Statements as at March 31, 2009 ...................... 79
Annexure IV - Auditors Report and Financial Statements as at March 31, 2008 ....................... 92


Introductory Document ʹ Orient Garments Limited
1
1. Corporate Information

Company Name
Orient Garments Limited

Legal Form
The Company was incorporated in Sri Lanka on March 4
th
, 1982 as a private limited
liability company under the Companies Ordinance No 51 of 1938 of Sri Lanka, re-
registered under the Companies Act No. 07 of 2007 on November 14
th
, 2008 and
subsequently converted to a public limited liability company on November 10
th
2010.

Company Registration Number
PV 9346 PB

Main Line of Business
Manufacturing and exporting of garments

Registered Office
49/16, Iceland Building
Galle Road
Colombo 03
Sri Lanka.

Business Office
78 B, Polgasovita Road
Mattegoda
Sri Lanka.
Tel: +94 11 5387222 Fax: +94 11 5553412

Board of Directors
Mr. Sarath Chandra Weerasooria ʹ Non-Executive Chairman
Mr. Rajinda Priyanjith Weerasooria ʹ Managing Director
Mr. Harsha Mahendra de Saram ʹ Executive Director
Mr. Sunil Karunanayaka ʹ Non-Executive Independent Director
Mr. Dinesh de Zoysa ʹ Non-Executive Independent Director

Company Secretary
P W Corporate Secretarial (Pvt) Limited
3/17, Kynsey Road
Colombo 08
Sri Lanka.
Tel: +94 11 4640360 ʹ 3, Fax: +94 11 4740588









2 Introductory Document ʹ Orient Garments Limited

Company Auditors
Amerasekera & Co.
Chartered Accountants
12, Rotunda Gardens
Colombo 03
Sri Lanka.


Bankers to the Company
Bank of Ceylon
Off ʹ shore Banking Division
No. 4, Bank of Ceylon Mw
Colombo 01
Sri Lanka.

Hatton National Bank PLC
Corporate Branch
Level 17, HNB Towers
479, T B Jayah Mawatha
Colombo 10
Sri Lanka.

Commercial Bank of Ceylon PLC
Foreign Branch
No 21, Bristol Street
Colombo 01
Sri Lanka.

Company Lawyers
Mrs. Avanthika Rukshani Senarathne
49/16, Iceland Building
Galle Road
Colombo 03
Sri Lanka.



Introductory Document ʹ Orient Garments Limited
3
2. Information Relevant to the Introduction

2.1. Introduction of Ordinary Voting Shares for Listing

This Introductory Document dated 6
th
June 2011 is published for the purpose of
obtaining a listing on the Diri Savi Board of the Colombo Stock Exchange for the Ordinary
Voting Shares of Orient Garments Limited.


2.2. Copies of the Introductory Document

Copies of the Introductory Document will be obtained from the Managers to the
Introduction or members and trading members of the Colombo Stock Exchange.


2.3. Managers to the Introduction

Navara Capital (Pvt) Limited
No͘ ϭϮ 8͕ CƌĞŐŽƌLJ͛Ɛ 8ŽĂĚ
Colombo 07
Sri Lanka.

Tel: +94 11 4378387, Fax: +94 11 2698524
E-mail: info@navaracapital.com


2.4. Member Firms and Trading Member Firms of the Colombo Stock Exchange

Acuity Stockbrokers (Pvt) Limited
Level 6, Acuity House
53, Dharmapala Mawatha
Colombo 03.
Tel: 2206206
Fax: 2206298/9
E-mail: sales@acuitystockbrokers.com

Asia Securities (Pvt) Limited
Level 21, West Tower
World Trade Center
Echelon Square
Colombo 01.
Tel: 2423905, 5320000
Fax: 2336018
E-mail: enquiry@asiacapital.lk
Bartleet Mallory Stockbrokers (Pvt) Limited
Level "G", Bartleet House
65, Braybrooke Place
Colombo 02.
Tel: 5220200
Fax: 2434985
E-mail: info@bartleetstock.com
Capital Trust Securities (Pvt) Limited
42, Mohamed Macan Marker Mawatha
Colombo 03.
Tel: 5335225
Fax: 5365725
E-mail: inquiries@capitaltrust.lk












4 Introductory Document ʹ Orient Garments Limited

CT Smith Stockbrokers (Pvt) Limited
4-14, Majestic City
10, Station Road
Colombo 04.
Tel: 2552290-4
Fax: 2552289
E-mail: ctssales@sltnet.lk
D N H Financial (Pvt) Limited
Level 16, West Tower
World Trade Center
Colombo 01.
Tel: 5732222
Fax: 5736264
E-mail: info@dnhfinancial.com

Ceylinco Stockbrokers (Pvt) Limited
Level 9 - Ceylinco House
69, Janadhipathi Mawatha
Colombo 01.
Tel: 4714300, 4714388, 4714389
Fax: 2387228
E-mail: info@ecsbl.com
J B Securities (Pvt) Limited
150, St. Joseph Street
Colombo 14.
Tel: 2490900, 0772490900
Fax: 2430070, 2446085, 2447875
E-mail: jbs@jb.lk

John Keells Stockbrokers (Pvt) Limited
130, Glennie Street
Colombo 02.
Tel: 2306250, 2342066-7, 2446694-5
Fax: 2326863, 2342068
E-mail: jkstock@keells.com

Lanka Securities (Pvt) Limited
228/2, Galle Road
Colombo 04.
Tel: 4706757, 2554942
Fax: 4706767
E-mail: lankasec@sltnet.lk
NDB Stockbrokers (Pvt) Limited
5th Floor, NDB Building
40, Navam Mawatha
Colombo 02.
Tel : 2314170-8
Fax: 2314180
E-mail: mail@ndbs.lk

SC Securities (Pvt) Limited
2
nd
Floor
55, D.R. Wijewardena Mawatha
Colombo 10.
Tel : 4711000, Fax: 2394405
E-mail: cscres@sltnet.lk
Somerville Stockbrokers (Pvt) Limited
137, Vauxhall Street
Colombo 02.
Tel: 2329201-5, 2332827, 2338292-3
Fax: 2338921
E-mail: ssb@web-lk.com
Capital Alliance Securities (Pvt) Limited
Level 5, "Millennium House"
46/58 Navam Mawatha
Colombo 02
Tel: 2317777, Fax: 2317788
E-mail: general@capitalalliance.lk

Heraymila Securities Limited
Level 8, South Wing
Millennium House
46/58 Nawam Mawatha
Colombo 02
Tel: 2359100, Fax: 2305522
E-mail: info-hasl@heraymila.com

First Guardian Equities (Pvt) Limited
32nd Floor, East Tower,
World Trade Centre, Echelon Square
Colombo 01
Tel: 5884400
Fax: 5884401
E-mail: info@firstguardianequities.com







Introductory Document ʹ Orient Garments Limited
5
SKM Lanka Holdings (Pvt) Limited
377/3, Galle Road
Colombo 03
Tel: 2372413-5
Fax: 2372416
E-mail: info@skmlankaholdings.com

SMB Securities (Pvt) Limited
47, Dharmapala Mawatha
Colombo 03
Tel: 5539593
Fax: 5510750
E-mail: smbsecurities@gmail.com

IIFL Securities Ceylon (Pvt) Limited
27th Floor, East Tower
World Trade Centre, Echelon Square
Colombo 01.
Tel. 011 2333000, Fax: 011 2333383
E-Mail: info.ceylon@iiflcap.com

TKS Securities (Pvt) Limited
19-01, East Tower
World Trade Centre, Echelon Square
Colombo 1.
Tel: 7857799, Fax: 7857857
E-mail: ralph@tks.lk

Richard Pieris Securities (Pvt) Limited
69, Hyde Park Corner
Colombo 02.
Tel: 7448900, Fax: 2675064
E-mail: jayantha@rpsecurities.com

Claridge Stockbrokers (Pvt) Limited
No.10, Gnanartha Pradeepa Mawatha
Colombo 08
Tel: 2697974, Fax: 2677576
E-mail: fonseka@mackwoods.com

New World Securities (Pvt) Limited
2nd Floor, 45/2, Braybrooke Street
Colombo 2.
Tel: 2358700/20, Fax: 2358701
E-mail: info@nws.lk

Arrenga Capital (Pvt) Limited
Level 23, East Tower
World Trade Centre, Colombo 1.
Tel: 7277000 to 98, Fax: 7277099
E-mail: dihand@arrengacapital.com

Asha Phillip Securities Limited
Level 4, "Millennium House"
46/58, Navam Mawatha, Colombo 2.
Tel. 2429100
Fax: 2429199
E-mail: apsl@ashaphillip.net

Assetline Securities (Pvt) Ltd
No. 282, Kaduwela Road
Battaramulla.
Tel. 4700111, 2307366
Fax: 4700112, 2307365
E-mail:dpgs1@sltnet.lk

Taprobane Securities (Pvt) Ltd.
2
nd
Floor, No. 10, Gothami Road
Colombo 08.
Tel: 5328200
Fax: 5328277
E-mail: info@taprobane.lk











6 Introductory Document ʹ Orient Garments Limited

3. Overview of the Apparel Industry

3.1. Introduction

After passing through many transitional chapters the garment manufacturing sector has
reached the forefront of the Sri Lankan economy becoming the chief exporter of the
country. In 2009, Sri Lanka derived an income of nearly Rs. 376 Bn solely from exporting
garments, yarn and other textile items, which accounted for circa 46% of export
earnings.

The garment manufacturing industry of Sri Lanka contributes to many world renowned
fashion apparel brands which include, among others, ToŵŵLJ PŝůĨŝŐĞƌ͕ vŝĐƚŽƌŝĂ͛Ɛ SĞĐƌĞƚ,
Burberry, Van Heusen, NEXT, Nike, Triumph, Gap, Polo Ralph Lauren, Abercrombie &
Fitch, Marks & Spencer, Liz Claiborne, and Jones New York. Garments and textile related
products manufactured in Sri Lanka encompasses shirts, blouses, dresses, pants,
sweaters, jackets, briefs and lingerie, stockings, hats, terry towels, etc.

In the global apparel sphere, Sri Lanka is recognized as a sourcing country with the
strengths associated such as ownership of a prestigious international customer base,
reputation as a quality manufacturer, high compliance with international labour
regulations, competitive pricing, reputation of ͚ŽŶ-ƚŝŵĞ͛ ĚĞůŝǀĞƌLJ ĂŶĚ ĚŝƐĐŝƉůŝŶĞĚ͕ ƐŬŝůůĞĚ
and trainable workforce.


3.2. History of the Sri Lankan Textile and Garment Industry

The history of the Sri Lankan textile and garment industry spans back to the 1950s when
the government established a few large scale textile mills to produce yarn, raw fabrics
and finished fabrics with the primary objective of curtailing textile imports. The
ownership of such mills was gradually acquired by semi-government organizations while
the industry was being upheld by emerging privately owned power-loom and hand-loom
centers which catered to the domestic market.

Resultant to the open economic policies introduced in 1977, the Sri Lankan economy
was reshaped to embrace an export oriented economic culture. The new trend
prompted the government to establish free trade zones and export processing zones
offering a series of concessions to investors. In parallel, the government established the
Board of Investment of Sri Lanka (BOI), formerly known as the Greater Colombo
Economic Commission, to lure foreign direct investments by granting an array of tax
concessions and other government support for the establishment of business ventures
in Sri Lanka.







Introductory Document ʹ Orient Garments Limited
7
Sri Lanka was able to entice a considerable amount of foreign direct investments in the
garment manufacturing sector owing to the advent of tax incentives via BOI and the
concessions made available by the Multi Fibre Agreement. Later on, many Sri Lankan
entrepreneurs and corporates also forayed into this booming sector by shifting their
investments to the garment manufacturing industry from other conventional business
sectors. In this endeavour Sri Lankan entrepreneurs successfully absorbed market
intelligence and the technology brought in by foreign investors to explore opportunities
in the prosperous global fashion industry.

In the wake of new economic developments the garment and textile industry became Sri
LĂŶŬĂ͛Ɛ ůĂƌŐĞƐƚ ƐŝŶŐůĞ ƐŽƵƌĐĞ ŽĨ ĞdžƉŽƌƚ ƌĞǀĞŶƵĞ ƐƵƌƉĂƐƐŝŶŐ ƚĞĂ ĞdžƉŽƌƚƐ͕ ǁŚŝĐŚ had been
reckoned as the main foreign revenue earner for decades. In 1977, export earnings from
garments and textiles accounted for as low as 2% of total exports which increased to
28% in 1986 attaining the prominence over tea in the Sri Lankan export sector. Since
then the apparel manufacturing industry progressively penetrated into the Sri Lankan
economy and in 2000 Sri Lanka earned 54% of its export revenue from garments, yarn &
other textile items (GYT).

The comparison of export revenue from GYT against total export revenue is indicated
below (Figure 3.1).

Figure 3.1: Annual Export Revenue from GYT
Source: Central Bank of Sri Lanka



49%
51%
53%
54%
53%
52%
50%
49%
46%
45%
44% 43%
46%
42%
0%
10%
20%
30%
40%
50%
60%
0
200
400
600
800
1,000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Rs. Bn
Total exports GYT Exports GYT exports as % to total exports



8 Introductory Document ʹ Orient Garments Limited

3.3. Multi Fibre Agreement

In the global apparel manufacturing context, the apparel exports from developing
countries were constrained by various informal bilateral voluntary quota systems as
measures of safeguarding domestic manufacturers in developed countries. Such
restrictions were initially formalized in 1961 when the Short Term Agreement on
International Trade in Cotton Textiles was signed, followed in 1962 by the Long Term
Agreement (LTA) on International Trade in Cotton Textiles allowing developed countries
to adjust imports from the developing countries.

LTA was successively renewed and finally replaced by the Multi Fibre Agreement (MFA)
on January 1, 1974 encompassing exports of man-made (synthetic) fiber, silk blend,
vegetable fiber textiles, and apparel products in addition to cotton textiles.

The MFA regime brought a multitude of benefits to developing countries in Asia, Africa,
and South America. With guaranteed sales through quotas, the garment manufacturing
industry boosted up in developing countries which had no significant garment
manufacturing industry before. After an existence of nearly twenty years, the MFA
regime was substituted by the Agreement on Textile and Clothing (ATC), which sought to
phase out quota restrictions in four phases during a time span of 10 years. The complete
abolition of quota restrictions on December 31, 2004 intensified competition and
exerted a downward pressure on prices.

As a consequence Sri Lankan apparel manufacturers encountered the challenge of
etching their presence in the competitive global garment industry which was
consolidated around a relatively small number of winners with strong capabilities.

The Sri Lankan garment manufacturing sector weathered this setback exceptionally well
and is witnessed by burgeoning export earnings from GYT which recorded nearly 40%
growth during the 6-year duration from the abolition of the MFA.


3.4. Impact of the Global Recession

Historically garment exports of Sri Lanka were heavily concentrated on USA and UK
markets. Approximately 83% of garment exports have been made to these two countries
in 2002. Over the years the reliance on UK and USA gradually transferred towards other
countries such as Italy, Germany, Belgium, Netherland and France. This resulted in
garment exports revenue from USA and UK declining to 68% of total garment exports
revenue in 2009.



Introductory Document ʹ Orient Garments Limited
9
The shift in the main market composition for Sri Lanka͛Ɛ garment exports during the
period between 2002 and 2010 is illustrated in Figure 3.2.

Figure 3.2 : Garments Exported to top 5 Countries



Resultant to the global economic crisis, the world͛Ɛ demand for garments drastically fell
imposing an immense pressure on prices. This negatively affected developing economies
such as Sri Lanka which relied on garment exports as the main source of foreign
exchange earnings. The situation was further aggravated for Sri Lankan manufacturers
when some of the international apparel buyers shifted its sourcing towards low cost
countries such as Bangladesh, Vietnam and Cambodia while other buyers demanded for
price cuts.

The influence of the global economic turmoil on Sri Lanka is illustrated in the Figure 3.3
and Figure 3.4. Accordingly, garment exports to USA in 2007, which stood at Rs. 174 Bn
in terms of revenue, had dropped by 15% to Rs. 148 Bn in 2009. Nevertheless the drop
was mitigated by the surge in the exports of garments to EU Countries which multiplied
by nearly 1.5 times to Rs. 187 Bn in 2009 accounting for 52% of the revenue generated
by Sri Lanka from garment exports.

Figure 3.3: Export Earnings from Garments Figure 3.4: Garment Export Earnings Trends

Source: Central Bank of Sri Lanka


2002 2003 2004 2005 2006 2007 2008 2009 2010
Other 10% 10% 9% 8% 9% 10% 11% 13% 15%
Belgium 2% 2% 2% 2% 2% 2% 2% 2% 3%
Germany 3% 3% 3% 3% 4% 4% 5% 6% 5%
Italy 2% 3% 4% 5% 6% 9% 10% 11% 11%
U.K. 20% 20% 23% 22% 23% 25% 26% 27% 25%
U.S.A. 63% 61% 58% 59% 56% 50% 45% 41% 41%
0%
20%
40%
60%
80%
100%
-
50
100
150
200
2002 2003 2004 2005 2006 2007 2008 2009 2010
USA EU Other countries
31%
32%
37%
36%
40%
45%
49%
52%
51%
63%
61%
58%
59%
56%
50%
45%
41%
41%
2002 2003 2004 2005 2006 2007 2008 2009 2010
10%
20%
30%
40%
50%
60%
70%
Garment exports to EU as % to total garment exports
Garment exports to USA as % to total garment exports



10 Introductory Document ʹ Orient Garments Limited

3.5. Generalized System of Preferences

The EU͛Ɛ CĞŶĞƌĂůŝnjĞĚ SLJƐƚĞŵ ŽĨ Þƌeferences (GSP) is a trade arrangement through which
the EU provides preferential access to the EU market to beneficiary countries and
territories. Under this scheme the following three regimes have been successfully
implemented with the objective of bringing a multitude of trading advantages to
beneficiary economies.

Standard GSP allows 176 developing countries and territories to access the EU
market in the form of reduced tariffs covering 6,350 products.

Generalized System of Preferences plus (GSP+) scheme facilitates 16 beneficiary
countries to receive additional preferences encompassing 6,450 products on the
condition that such countries must ratify and effectively implement 27 specified
international conventions in the fields of human rights, core labour standards,
sustainable development and good governance.

͞LǀĞƌLJƚŚŝŶŐ 8Ƶƚ AƌŵƐ͟ ;L8AͿ ƌĞŐŝŵĞ ŽĨ CSÞ ŝƐ ĚĞƐŝŐŶĞĚ ĨŽƌ ϰϵ ůĞĂƐƚ ĚĞǀĞůŽƉŝŶŐ
countries that are privileged to access the EU market with duty free and quota free
incentives.


Implication of GSP+ Regime on Sri Lankan Garment Manufacturing Industry
Until 2005, garment export revenue generated from EU countries remained in the range
of Rs. 50 Bn to Rs. 100 Bn accounting for 30% to 36% of the total garment export
revenue. With the introduction of GSP+ trade concessions to Sri Lanka, a clear change in
the composition of the garment export market was witnessed as in 2009, over half of
export revenue from garments was reported under EU Countries. Garment export
earnings from EU Countries in 2009 grew by nearly twofold to Rs. 187 Bn compared to
Rs. 100 Bn in 2005.


Introductory Document ʹ Orient Garments Limited
11
The growth in the export revenue from garments exported to EU countries is illustrated
in the Figure 3.5.

Figure 3.5: Growth in the Export Revenue from Garments ʹ EU Countries



During the global downturn, GSP+ has helped Sri Lanka to secure a steady momentum in
garment exports irrespective of the steep decline in exports to the USA market, in
addition to mitigating the negative impact on the Sri Lankan garment manufacturing
industry resultant to the demise of MFA.

In February 2010, the EU decided to withdraw preferential tariff benefits under the GSP+
scheme from Sri Lanka with effect from 15 August 2010, due to non compliance with the
conventions in the fields of human rights, creating another challenge for the local
garment manufacturing industry to confront.


3.6. Future Outlook of the Sri Lankan Garment Manufacturing Industry

As per the Joint Apparel Association Forum ʹ Sri Lanka (JAAF), Sri Lanka stood alone as
ƚŚĞ ŽŶůLJ ĐŽƵŶƚƌLJ ƚŚĂƚ ĞŵďƌĂĐĞĚ ͚LƚŚŝĐĂů 8ƵƐŝŶĞƐƐ ĂŶĚ MĂŶƵĨĂĐƚƵƌŝŶŐ ÞƌĂĐƚŝĐĞƐ͛ ĂƐ Ă ǁĂLJ
of life in terms of high standards of labour and safety compliance. As a result Sri Lanka
was highlighted as a leading outsourcing destination in Asia.

The concept has been further enhanced by efforts such as the ͚CĂƌŵĞŶƚƐ WŝƚŚŽƵƚ CƵŝůƚ͛
scheme launched by JAAF to reassure overseas buyers that clothing sourced from Sri
Lanka has been produced in factories that are free from child and forced labour,
discrimination and sweatshop conditions. With the global fashion industry awakening to
ethical practices, such developments are envisaged to bring a multitude of benefits to Sri
Lanka to sustain its competitive advantage.



31%
32%
37%
36%
40%
45%
49%
52% 51%
10%
20%
30%
40%
50%
60%
70%
-
50
100
150
200
2002 2003 2004 2005 2006 2007 2008 2009 2010
Rs. Bn
Value of the Garments Exported to EU Garment Exports to EU as % to Total Garment Exports
GSP+



12 Introductory Document ʹ Orient Garments Limited

Moreover, farsighted local garment manufacturers are now in pursuit of high level of
productivity to move up in the value chain to sustain its market share profitably while
attempting to secure new markets in the global apparel environ.

It has been evident that some of the world͛Ɛ leading apparel buyers have shifted their
sourcing towards low cost countries such as Bangladesh, Vietnam and Cambodia from
Sri Lanka in the light of the global economic turmoil. However due to the reason that
particular low cost destinations have failed to accomplish service levels with required
standards such buyers are gradually returning to Sri Lanka.

Challenged with currency appreciation, subsidy withdrawals and escalating labour costs
China is rapidly turning into an unprofitable garment manufacturing destination. This
trend in China presents an opening for Sri Lanka to reinforce its position as a cost
effective sourcing country in the global fashion industry.

The Sri Lankan garment manufacturing sector has been consistently successful in
deriving the maximum dividends from growth opportunities in the global apparel
market. In this endeavor, Sri Lanka has been successful in overcoming the hurdles which
surfaced from time to time such as the abolishment of the MFA, the global economic
crisis, the emergence of low cost destinations and the withdrawal of GSP+ concessions.

With unassailable economic growth, political stability and proactive measures taken by
the JAAF such as the ͚CĂƌŵĞŶƚƐ WŝƚŚŽƵƚ CƵŝůƚ͛ initiative, the garment manufacturing
sector in Sri Lanka is now poised to capture future opportunities.




Introductory Document ʹ Orient Garments Limited
13
4. Company Profile

4.1. Introduction

Orient Garments Limited is the garment manufacturing arm of Finco Group, a diversified
conglomerate, with a history which spans back to 1963. The Group has spread its wings
across an array of significant business clusters creating a strong brand presence in each
respective arena.

Construction and Property Development Cluster
Finco Group maintains a strong presence in the construction sector through
International Construction Consortium (Pvt) Limited (ICC), Nivasie Developers (Pvt)
Limited, ICC Housing (Pvt) Limited and Durra Building Systems (Pvt) Limited.

Finco Group has forayed into the construction sector through ICC, which is a M1
contractor as per the classification of ICTAD. ICC is mainly involved in the construction of
high rise commercial buildings, roads, bridges, and power stations and its construction
capacity is further assisted by its own support services such as ready mixed concrete
plant, precast concrete yard and asphalt concrete production unit. In this aspect,
landmark architectural projects built by ICC such as Hemas Hospital ʹ Wattala, Access
Towers ʹ Union Place and Sri Lanka Institute of Information Technology ʹ Malabe are
considered as the evidence of its sophisticated construction excellence.

Nivasie Developers (Pvt) Limited, with its fortitude inherited from the parent company
lCC͕ ŚĂƐ ǀĂƐƚůLJ ĐŽŶƚƌŝďƵƚĞĚ ƚŽ Sƌŝ LĂŶŬĂ͛Ɛ ĚǁĞůůŝŶŐ ŵĂƌŬĞƚ ďLJ ĚĞǀĞůŽƉŝŶŐ ƉƌŽũĞĐƚƐ Ăƚ
different scales. Nivasipura ʹ Ekala, a product in the CŽŵƉĂŶLJ͛Ɛ ƉŽƌƚĨŽůŝŽ ǁŝƚŚ ϭ͕Ϯϱϯ
houses, is considered as one of the large township development projects in Sri Lanka.
The Company has already initiated many housing projects in a bid to benefit from the
impending revival of the real estate sector including a project to construct 350-house
project in Digana, Kandy.

ICC Housing (Pvt) Limited has been formed to address the residential needs of the cream
of the market by offering exclusive residential space in prime locations of Colombo. The
Company is solely accountable for the success story of Iceland Residencies, a land mark
architectural project in the heart of Colombo.

The construction cluster of Finco Group has not restricted itself to the construction and
property development but has further broadened its portfolio with the inclusion of
manufacturing construction materials. In this context, Durra Building Systems (Pvt)
Limited, a BOI approved company, formed in collaboration with an Australian Company,
produces easy-to-install construction panel boards using densely compressed rice straw
as raw materials.









14 Introductory Document ʹ Orient Garments Limited

Services Cluster
SƚƌĞŶŐƚŚĞŶŝŶŐ ƚŚĞ CƌŽƵƉ͛Ɛ ĐŽŵƉĞƚĞŶĐLJ ŝŶ ƚŚĞ ĐŽŶƐƚƌƵĐƚŝŽŶ ĐůƵƐƚĞƌ͕ ŝƚƐ scope has been
extended to include provision of services using specialized construction materials as
diverse as concrete admixtures, water proofing material, polythene flooring and geo
textiles via Engineering Sales Directorate of Finco (Pvt) Limited. It is the sole agent for
several such reputed brands as BITUMAT water proofing system, XYPEX water proofing
system, TENCATE Geosynthetics and COOLARO weather protection system.


Travel and Leisure Cluster
The diversified business portfolio of Finco Group has not been limited to construction
and services but has ventured into travel, tour and leisure sector endorsing its
multifaceted business strategy.

Alpha Tours (Pvt) Limited, the travel arm of Finco Group, is a member of Federation of
Airline General Sales Agents and certified as a General Sales Service Agency by IATA (The
Air Transport Association). While it represents Korean Air as the General Sales Agent for
cargo and passengers in Sri Lanka, it has explored opportunities as a destination
manager in the fields of inbound tours, conventions and exhibitions.

Signifying GroƵƉ͛Ɛ ƉƌĞƐĞŶĐĞ ŝŶ ƚŚĞ ůĞŝƐƵƌĞ ƐĞĐƚŽƌ͕ Ulagalla Walawwa Resort (Pvt) Limited
operates an exclusive eco-friendly five-star chalet resort named Ulagalla Resorts in
Anuradhapura. Ulagalla Resorts comprises of 20 chalets scattered throughout its 58-acre
property nestled in a natural woodland and offers a range of luxurious amenities.


Information Technology and Communication Cluster
1ŚĞ CƌŽƵƉ͛Ɛ lŶĨŽƌŵĂƚŝŽŶ 1ĞĐŚŶŽůŽŐLJ ĂŶĚ CŽŵŵƵŶŝĐĂƚŝŽŶ ĐůƵƐƚĞƌ͕ ƌĞƉƌĞƐĞŶƚĞĚ ďLJ
Genesiis Software (Pvt) Ltd and Finco Technologies (Pvt) Limited, provides software and
hardware solutions to local and international clients.

1ŚĞ ĐĂƌĞĞƌ ǁĞď ƐŝƚĞ ƉŽƌƚĂů ͞ƚŽƉũŽďƐ͘ůŬ͟, a famous interactive website among private
sector employers and job seekers, developed by Genesiis Software (Pvt) Ltd symbolizes
the CƌŽƵƉ͛Ɛ ƉƌĞƐĞŶĐĞ ŝŶ ƚŚe sector.


Manufacturing Cluster
lŝŶĐŽ CƌŽƵƉ͛Ɛ ŵƵůƚŝĚŝŵĞŶƐŝŽŶĂů ďƵƐŝŶĞƐƐ ĨŽĐƵƐ ŝƐ ƵŶĚĞƌƉŝŶŶĞĚ ďLJ ŝƚƐ ŵĂŶƵĨĂĐƚƵƌŝŶŐ
cluster which comprises of Alpha Industries (Pvt) Limited and Orient Garments Limited.

Alpha Industries (Pvt) Limited is a leading manufacturer of office furniture and
ĞƋƵŝƉŵĞŶƚ ƵŶĚĞƌ ƚŚĞ ǁĞůů ŬŶŽǁŶ ďƌĂŶĚ ͞AůƉŚĂ͘͟ 1ŚĞ ƉƌŽĚƵĐƚ ƉŽƌƚĨŽůŝŽ ŽĨ ƚŚĞ ĐŽŵƉĂŶLJ
consists of a variety of office furniture and equipment such as office security equipment,
light metal furniture, wooden furniture and hospital furniture, in addition to undertaking
interior fit-out and furnishing projects.



Introductory Document ʹ Orient Garments Limited
15
Orient Garments Limited
At present, Orient Garments Limited (OGL), shares of which are mainly held by Finco
Investments (Pvt) Limited, Finco Holdings (Pvt) Limited and Finco (Pvt) Limited, remains
as the holding company of the garment manufacturing sector of Finco Group. The Group
enjoys the ownership of a series of modern self contained factory units, established
under OGL and its subsidiaries namely Stafford Orient (Pvt) Limited and Priority
Garments (Pvt) Limited.

The business focus of OGL Group is predominantly aimed at designing, manufacturing
and selling a wide range of garments catering to the needs of leading international
fashion brands and retailers such as NEXT, Tesco, Tommy Hilfiger, Polo Ralph Lauren and
Burberry. The infrastructure of the Group consists of five garment manufacturing plants
accounting for a total of near 1,500 direct sewing machines, 2 embroidery units with 105
embroidery sewing heads, and an employment base of nearly 3,500 personnel.

Please refer Section 7.4 for details with respect to the group structure of Orient
Garments Limited.

4.2. Corporate Vision and Mission

OGL CƌŽƵƉ͛Ɛ ǀŝƐŝŽŶ ĂŶĚ ŵŝƐƐŝŽŶ ƐƚĂƚĞŵĞŶƚƐ ĂƌĞ as follows;

Vision
To nurture the values of a world-class manufacturing organization, who would be the
preferred partner to our customers, embed professionalism and honesty in our efforts,
while always aspiring for greater achievement in our industry, consistently exceed our
own expectations, delivering the best value to our shareholders and employees, while
always being responsible to our community and the environment.

Mission
Integrity, ethics and honesty are words that are often overstated and underused. At
Orient we overlook the fancy words and follow a simple philosophy - inspired by
standards set during our early days. These have now evolved into strong pillars of
corporate ideals which continue to give us an edge over the competition.

We believe that the wellbeing of our staff depends on how well we achieve our own
corporate objectives - because when we profit, the cycle continues to benefit those who
work for us and with us. This is good enough reason for us to maintain the strictest
standards of value and integrity in the smallest detail of our operation.

Our responsibility however goes further than just ensuring profits. We watch over our
own carefully, always aware about their wellbeing and their own communities and their
families.






16 Introductory Document ʹ Orient Garments Limited

4.3. History

1982
The Finco Group ventured into the apparel manufacturing industry with the
establishment of its first factory in Kotte under Orient Garments Limited.

1992
OGL kicked off its second garment manufacturing plant in Weligama in 1992 under the
auspices of the Board of Investments of Sri Lanka. The factory was established under the
͞ϮϬϬ CĂƌŵĞŶƚ lĂĐƚŽƌLJ ÞƌŽũĞĐƚ͟ ůĂƵŶĐŚĞĚ ďLJ ƚŚĞ ŐŽǀĞƌŶŵĞŶƚ ŝŶ ŝƚƐ ĞĨĨŽƌƚ ƚŽ ĐƌĞĂƚĞ
employment opportunities in deprived areas of the South.

1998
Finco Group partnered with Stafford Textiles Limited (Canada), a company which had
strong ties with leading apparel brands in USA such as NIKE, and incorporated Stafford
Orient (Pvt) Limited (SOL) to establish a garment manufacturing plant at Pitabeddara in
Deniyaya Electorate. The ĨĂĐƚŽƌLJ͕ ǁŚŝĐŚ ǁĂƐ ŽŶĞ ŽĨ ƚŚĞ ƉƌŽũĞĐƚƐ ŽĨ ͞ϱϬ CĂƌŵĞŶƚ lĂĐƚŽƌLJ
ÞƌŽŐƌĂŵ͟ ŝŵƉůĞŵĞŶƚĞĚ ďLJ BOI, created over 700 employment opportunities in
the locality.

2000
The operations of its first factory in Kotte were shifted to a newly established state of
the art factory in Mattegoda with an expanded direct sewing machine capacity.

2001
lŝŶĐŽ CƌŽƵƉ͛Ɛ ŶĞdžƚ ŐĂƌŵĞŶƚ ŵĂŶƵĨĂĐƚƵƌŝŶŐ ƉůĂŶƚ ǁĂƐ ŽƉĞŶĞĚ ŝŶ kŽŐŐĂůĂ LdžƉŽƌƚ
Processing Zone with a capacity of 90 direct sewing machines. The factory capacity has
been now expanded to house 270 direct sewing machines creating over 500
employment opportunities in the locality.

2008
Finco Group added its fifth garment manufacturing plant, situated in Kahapola in the
electorate of Piliyandala, to its portfolio by forming Priority Garments (Pvt) Limited (PGL)
in collaboration with Fascination Exports (Pvt) Limited.

2010
lŝŶĐŽ CƌŽƵƉ͛Ɛ apparel manufacturing sector was reshaped with the intention of
converging GƌŽƵƉ͛Ɛ ŐĂƌŵĞŶƚ ŵĂŶƵĨĂĐƚƵƌŝŶŐ ƌĞƐŽƵƌĐĞƐ͘ lŶ ƚŚŝƐ ĞŶĚĞĂǀŽƌ͕ SCL ĂŶĚ ÞCL
were converted into the subsidiaries of OGL.









Introductory Document ʹ Orient Garments Limited
17
4.4. Product Range and Clientele

OGL designs, manufactures and exports a wide range of garments for men, women and
children spanning outerwear, bottoms and casual wear catering to the needs of several
leading international fashion brands and retailers. At present in excess of 95% of
garments manufactured at OGL factories dock into the EU and USA.

In response to changes in the macro environment, OGL has steered away from its
previous marketing approach under which it concentrated on broadening its client base.
The Company has now built strong strategic relations with a few world renowned
retailers and brands including NEXT, Tesco, Tommy Hilfiger, Polo Ralph Lauren and
Burberry.

The following table (Table 4.1) and the graphs (Figure 4.1 and Figure 4.2) set forth the
number of garments manufactured and exported by OGL Group in the financial years
2007/08, 2008/09 and 2009/10 under different product categories and countries.

Table 4.1 : Garments Exported by OGL

Financial year 2007/08 2008/09 2009/10
Garment exports (In pieces) 3,294,123 3,227,946 3,213,517
Value of the garment exports (In US $)
22,248,944 25,710,945 23,924,542


Figure 4.1
Garments Exported by OGL ʹ Product wise
Figure 4.2
Garments Exported by OGL ʹ Region wise




4.5. Production Facilities

During a near three decade time span, OGL has succeeded in expanding its reach to a
total capacity in excess of 1,500 direct sewing machines by means of five fully fledged
garment manufacturing plants spreading from Colombo to Weligama creating
approximately 3,500 employment opportunities mainly in the areas with less economic
development activities.

90%
99%
90%
10%
16%
16%
0%
0%
1%
2007/8 2008/9 2009/10
Woven Bottoms Woven Outerwear Knits
80% 92%
86%
15%
17%
16%
5%
6% 5%
2007/8 2008/9 2009/10
Europe USA Other



18 Introductory Document ʹ Orient Garments Limited

The ƉĂƌƚŝĐƵůĂƌƐ ŽĨ CCL͛Ɛ ŵĂŶƵĨĂĐƚƵƌŝŶŐ ďĂƐĞ ĂƌĞ encapsulated in the following table.
Table 4.2 : Particulars of OGL͛ƐManufacturing Base

Factory Details
Factory
Mattegoda
Factory
Weligama
Factory
Koggala
Factory
Deniyaya
Factory
Kahapola
Factory

Holding Company

Orient
Garments
Limited

Orient
Garments
Limited

Orient
Garments
Limited

Stafford
Orient (Pvt)
Limited


Priority
Garments
(Pvt) Limited


Address

78B,
Polgasowita
Road,
Mattegoda



Leonard
State,
Midigama,
Weligama



EPZ, Koggala






Hulandawa
State,
Kaduruwana
State,
Pitabaddara
Deniyaya

Regidal
Estate,
Kahapola,
Madapatha


Land Extent
3 Acres &
9.6 Perches
2 Acres

3 Acres

4 Acres &
3 Perches
148.46
Perches
Building Extent (Sq.ft.)

77,000

41,600

22,500

53,000

32,000

Ownership

Free Hold

Free Hold

50 Year Lease
Hold
(Commencing
from April
27, 2000)

25 Year Lease
Hold
(Commencing
from January
1, 2003)

Free hold

Employees as at April 30, 2011
Factory
Mattegoda
Factory
Weligama
Factory
Koggala
Factory
Deniyaya
Factory
Kahapola
Factory
Total
Labour Cadre 651 804 502 673 380 3,010
Non Executives 127 73 40 58 13 311
Executives 95 23 07 18 16 159
Total 873 900 549 749 409 3,480

Capacity overview
Factory
Mattegoda
Factory
Weligama
Factory
Koggala
Factory
Deniyaya
Factory
Kahapola
Factory
Total
Direct Sewing Machines 330 360 270 330 180 1,470
No of garments produced
in 2009/10
688,110 708,131 735,618 682,830 322,703 3,137,392



Introductory Document ʹ Orient Garments Limited
19
4.6. Marketing Philosophy

In order to face the obstacles which occurred in the global garment manufacturing
landscape due to the demise of the MFA and the global economic crisis, OGL took the
path of moving up the value chain by serving a niche client base.

In this attempt, OGL shifted away from the previous marketing strategy that had been
designed to broaden the client base. Under the new marketing philosophy, OGL scaled
down its client base with the intention of retaining a profitable niche segment. This
niche client base is catered to with a customized service delivering high standards. In
line with the new strategy the serviceƐ ƉƌŽǀŝĚĞĚ ďLJ CCL͛Ɛ ŵĂŶƵĨĂĐƚƵƌŝŶŐ Ɖůants were
revamped to offer an end to end solution, from product design and development to
fabric and trim sourcing.
Simultaneously, the measures were taken to adopt steady productivity improvement
initiatives on the production floor which enables OGL to consistently provide an
unparalleled service to its valuable client base at a competitive price level.
Against this backdrop in focus, OGL has now reinforced its position in its niche market
capitalizing on its competitive strengths such as design capabilities, skilled work force
and a level of service characterized by shorter lead-time, quality, reliability, transparency
and flexibility.





20 Introductory Document ʹ Orient Garments Limited

4.7. Financial Highlights

The financial year 2009/10 witnessed several changes in the corporate structure of OGL
Group as OGL turned into a Group of Companies with two subsidiaries. Therefore SOL
and PGL financials are being consolidated with OGL commencing from 2009/10.

Salient extracts from the Income Statement and the Balance Sheet highlighting the
historical performance of the Company during the three year period ended March 31,
2010 and the eleven month period ended February 28, 2011 together with comparative
figures are given below.


Table 4.3 : Financial Performance during the three year period ended March 31, 2010
All Figures In Rs. Mn Company Group
For the year ended March 31 2008 2009 2010 2010
Turnover 2,492.9 2,854.0 2,782.9 2,801.7
Cost of Sales 2,207.0 2,514.3 2,426.3 2,428.6
Gross Profit 285.9 339.7 356.6 373.1

Other Operating Income 0.2 1.1 10.1 46.5*
Administration Expenses 110.0 158.5 144.0 154.4
Selling and Distribution Expenses 42.1 50.4 47.9 47.9
Finance Expenses 79.2 83.4 71.5 78.1
Profit Before Tax 54.8 48.5 103.4 139.2

Tax - 3.0 17.5 18.6
Profit for the Year 54.8 45.5 86.0 120.6

Attributable to
Equity Holders of the Company 125.7
Non Controlling Interest (5.1)
Profit for the Year 120.6

* The other operating income of SOL, which is indicated in the consolidated accounts of
OGL, includes a reversal of the long term loan amounting to Rs. 33,958,647.00. This
loan has been advanced at the inception to meet the capital commitments and
working capital requirements of SOL by related parties. Since OGL acquired 100%
ownership of SOL during 2009/10, such related parties relinquished their rights of
those advances.









Introductory Document ʹ Orient Garments Limited
21
Table 4.4 : Financial Performance during the eleven month period ended February 28,
2011 together with the Comparative Figures (Unaudited)
All Figures In Rs. Mn Company Group
For the Eleven Months ended February 28, 2010 2011 2011
Turnover 2,567.9 3,312.8 3,326.0
Cost of Sales (2,233.3) (2,967.0) (2,967.6)
Gross Profit 334.6 345.8 358.4

Other Operating Income 10.0 34.4 35.1
Administration Expenses (129.6) (132.5) (148.2)
Selling and Distribution Expenses (44.8) (64.4) (64.4)
Finance Expenses (66.1) (72.6) (74.6)
Profit Before Tax 104.0 110.7 106.3
Tax (15.9) (14.0) (14.9)
Profit for the Year 88.2 96.7 91.4

Attributable to
Equity Holders of the Company


98.2
Non Controlling Interest (6.7)
Profit for the Year 91.4


Table 4.5 : Financial Position as at the end of the Financial Year
All Figures in Rs. Mn Company Group
As At March 31 2008 2009 2010 2010
Property, Plant & Equipment 368.3 365.6 438.4 575.2
Investments in Non Listed Companies/
Subsidiaries
24.6 20.5
Other Investments 139.7 87.5 86.3 1.3
Goodwill on Acquisitions 55.1
Total Non Current Assets 508.0 477.7 545.2 631.6

Current Assets 741.4 862.0 782.8 774.3
Total Assets 1,249.4 1,339.7 1,328.0 1,405.9

Non - Current Liabilities 58.6 152.4 149.3 170.8
Current Liabilities 825.3 839.9 672.2 722.8
Total Liabilities 883.9 992.3 821.5 893.6

Net Assets 365.5 347.4 506.5 512.3

Stated Capital 90.5 90.5 90.5 90.5
Revaluation Reserve 178.4 158.5 231.6 199.2
Revenue Reserves 96.6 98.4 184.4 222.6
Stated Capital and Reserves 365.5 347.4 506.5 512.3






22 Introductory Document ʹ Orient Garments Limited

Table 4.6 : Financial Position as at the end of February 2011 together with
Comparative Figures (Unaudited)



All Figures In Rs. Mn Company Group

As at end of
March
2010
February
2011
March
2010
February
2011
Property, Plant & Equipment 438.4 425.3 575.2 548.5
Investments in Non Listed Companies/ Subsidiaries 20.5 20.5
Other Investments 86.4 66.3 1.3
Goodwill on Acquisition 55.1 55.1
Total Non-Current Assets 545.2 512.1 631.6 603.6

Current Assets 782.8 1,291.5 774.3 1,299.8
Total Assets 1,328.0 1,803.6 1,405.9 1,903.4

Non - Current Liabilities 149.4 153.7 170.8 174.7
Current Liabilities 672.2 1,046.7 722.8 1,125.0
Total Liabilities 821.6 1,200.4 893.6 1,299.6

Net Assets 506.5 603.1 512.3 603.7

Stated Capital 90.5 90.5 90.5 90.5
Revaluation Reserve 231.6 231.6 199.2 199.2
Revenue Reserves 184.4 281.0 222.6 314.0
Stated Capital and Reserves 506.5 603.1 512.3 603.7

Introductory Document ʹ Orient Garments Limited
23
4.8. Key Financial Ratios

Table 4.7 : Key Financial Ratios
Company Group
For the year ended
Eleven
Months
ended
For the
year
ended
Eleven
Months
ended

March
2008
31
st
March
2009
31
st
March
2010
28
th
Feb
2011
31
st
March
2010
28
th
Feb
2011
Gross Profit Ratio 11.5% 11.9% 12.8% 10.4% 13.3% 10.8%
EBITDA/ Turnover 6.5% 5.5% 7.2% 5.7% 9.0% 5.9%
Net Profit Ratio 2.2% 1.6% 3.1% 2.9% 4.5% 3.0%

Return on Average Equity 15.8% 12.8% 20.1% 17.4% N/A N/A
Return on Average Total Assets 4.5% 3.5% 6.4% 6.2% N/A N/A

Debt to Equity Ratio (Times) 1.96 2.29 1.07 1.60 1.11 1.66
Current Ratio (Times) 0.90 1.03 1.16 1.23 1.07 1.16
Equity to Asset Ratio (Times) 0.29 0.26 0.38 0.33 0.36 0.32

Earnings per Share (Rs.) * 1.00 0.83 1.57 1.76 2.29 1.79
Net Book Value per Share (Rs.) * 6.66 6.33 9.22 10.98 9.02 10.87
* Estimated based on number of shares as at April 30, 2011 (post split)


4.9. Loans, Overdrafts and Other Borrowings
The details of the loans, overdrafts and other borrowings of OGL Group as at April 30,
2011 are depicted below.

Table 4.8 : Borrowings of OGL as at April 30, 2011
Lender Type of borrowing Currency
Outstanding
balance as at
April 30 2011
Payable
within one
year
Payable
after one
year

Bank of Ceylon
Overdraft USD 411,241 411,241 -




Bank of Ceylon Import Loans
(Revolving Facility)
USD
4,188,743 4,188,743 -

Hatton National Bank
Import Loans USD 2,170,756 2,170,756 -

(Revolving Facility)

Commercial Bank Term Loan USD 658,477 207,936 450,541

Hatton National Bank
Term Loan USD 22,692 22,692 -


Board of Investment
Non- Interest Bearing Loan Rs. 7,809,600 1,301,600 6,508,000








24 Introductory Document ʹ Orient Garments Limited

Table 4.9 : Borrowings of SOL as at as at April 30, 2011
Lender Type of borrowing Currency
Outstanding
balance as at
April 30 2011
Payable
within one
year
Payable
after one
year
Commercial Bank Term Loan USD 60,000 22,500 37,500



4.10. IT Infrastructure

The consistent focus on exploiting information technology to enhance CCL͛Ɛ efficiency
and productivity continues to be a critical element of its success. The function
descriptions below provide an outline of the systems and procedures which have been
improved ĚƵĞ ƚŽ CCL͛Ɛ l1 strategy.
Product design process ensuring rapid turnaround times
Raw material consumption control enabling strong cost management
Optimal working capital management ensuring timely inventory management,
debtor collections and creditor payments
Financial reporting system enabling the delivery of accurate and relevant
information to management
Direct connectivity with the customers and suppliers through Electronic Data
Interchange (EDI) systems
Human resources management

























Introductory Document ʹ Orient Garments Limited
25
4.11. Accreditation and Certifications

Constant pursuit of excellence in business practices and provision of high quality service
have enabled OGL to earn the recognition from its clientele and as well the global
garment manufacturing industry. The following are some of the certificates achieved by
OGL.

Compliance Certificates in Code of Conduct by Tommy Hilfiger Europe B.V., NEXT
Sourcing Limited, Tesco Plc and Polo Ralph Lauren confirming that the systems and
procedures of factories of OGL Group of Companies are in line with the international
standards.

Organic Exchange (OE 100) Certification and Organic Exchange (OE Blend)
Certification from the Organic Exchange enabling the company to supply its
products to clients who are members of Organic Exchange.

Garments without Guilt Certification from Joint Apparel Association Forum
confirming that OGL has adhered to the Garments without Guilt code of conduct,
which says no to child labour, forced labour and discrimination of any kind.

Fair Trade Certificate from FLO-CERT, which is the inspection and certification body
for Fair-trade Labeling Organizations International (FLO), confirming that the cutting,
making and trimming process of OGL͛Ɛ WĞůŝŐĂŵĂ lĂĐƚŽƌLJ ŝƐ ŝŶ ĐŽŵƉůŝĂŶĐĞ ǁŝƚŚ ƚŚĞ
Fair-trade Standards set by FLO.




26 Introductory Document ʹ Orient Garments Limited

5. Future Strategies and Risk Analysis

5.1. Future Strategies

OGL seeks to achieve the growth momentum by penetrating into the already established
clientele by increasing the production capacity and the value added services in addition
to pursuing new geographical markets. In this context, OGL has formulated the following
strategies.

Capacity Expansion
In order to facilitate the continuous growth in the business activities of its selected client
base in their own territories, the Company seeks to widen its capacity in two phases. The
initial expansion program will include increasing machine capacity in existing facilities.
Secondly, it is intended to acquire or lease a new manufacturing plant with a capacity of
approximately 200 direct sewing machines. It is planned to invest approximately Rs. 50
Mn in the event of an acquisition.

Design & Product Development Services
Going forward, development of new products and designs will remain as the priority of
the Company in creating a value proposition to its clients. The Company will offer a wide
range of own designs to its clients and in addition will undertake direct developments by
offering concepts developed using fabrics sourced by our own development teams in
keeping with OGL͛Ɛ Őoal to help the customers to make the design process efficient in
terms of cost and speed.

Market Penetration through Improved Lead Times
The Company plans to seize the demand in European countries for apparel orders
shipped within a short lead time which is currently catered by Turkey and other Eastern
European countries at a premium price. In this regard, OGL will allocate 20% of its
existing capacity to process export orders which require quick response time. Under the
new scheme, the Company will deliver goods within nearly 70/80 days from the order
acceptance instead of 100/120 days. This will enable the Company to increase the
market share by capturing new market segments while increasing its profitability by way
of adding a premium to its price.

New Markets
In order to mitigate the risk of overdependence on USA and Europe, to which over 95 %
of OGL͛Ɛ ƉƌŽĚƵĐƚƐ ĂƌĞ ƐŚŝƉƉĞĚ͕ ƚŚĞ ĞŵƉŚĂƐŝƐ ǁŝůů ďĞ ŵĂĚĞ ƚŽ broaden its horizon to the
Asia Pacific region covering countries such as Japan, Hong Kong, Taiwan and South Korea
via the existing clientele that have market access and representation in such countries.

Continuous Efforts in Improving the Efficiency and Productivity
The Company will continue to enhance its efficiency and the productivity on the
production floor by improving internal processes and investing in new machinery.



Introductory Document ʹ Orient Garments Limited
27
5.2. Underlying Assumptions on which future strategies are based on

It is envisaged that the business horizon of OGL͛Ɛ selected client base will continue to
grow at or above the historical average in the near future in parallel to the growth in the
global fashion and apparel industry.

In addition the Company expects that the demand and expectations of its selected
clients will not vary to an unprecedented degree during the next 5 years and the
Company will prolong its partnership with its existing clientele to retain the current
business opportunities and to achieve new prospects.


5.3. Analysis of Associated Risks pertaining to the future strategies

Loss of major clients
Though OGL has ensured strong and long-term ties with its clients, any adversity in
ĐůŝĞŶƚƐ͛ ƉĞƌĨŽƌŵĂŶĐĞ ŝŶ their own territory due to any unpredictable internal and
external factors relating to their business may hinder the growth opportunities of OGL in
terms of capacity expansion and market penetration through improved lead time. In
addition, this may cause a decrease in the volume of apparels sourced from OGL and
exert pressure on prices which will eventually affect the revenue and profitability of the
Company.

Foreign currency risk
Since OGL is primarily an export oriented apparel manufacturer revenue is generated in
foreign currency. Moreover clients compare the garment exported from Sri Lanka with
that of the competitors in denomination of US Dollars. The appreciation of Sri Lankan
Rupee against US Dollars tends to push the revenue and profitability of the Company to
the downward direction including the viability of its future strategies.

People risk
The experienced key management team together with the skilled workforce has played
a vital role ŝŶ ĂĐŚŝĞǀŝŶŐ ƚŽĚĂLJ͛Ɛ success of the Company. In an environ where it has been
a challenge to attract and retain right people with the right talent, significant change in
the management structure or trained factory workforce could cause delays to the
production floor and to service standards. This may deprive OGL specifically in the
implementation of its strategy to capture the demand in European countries for apparel
orders shipped within a short lead time.

Risk of changes in the fashion trends
The partnership with OGL͛Ɛ ƐĞůĞĐƚĞĚ ĐůŝĞŶƚĞůĞ ŝƐ ƵŶĚĞƌƉŝŶŶĞĚ ďLJ CŽŵƉĂŶLJ͛Ɛ innovative
and creative designing capabilities. Therefore it is critical to identify and recognize
international fashion on a timely manner. Any shortcomings in this factor will weaken
the relationship of OGL with its clientele and ŵĂLJ ĂĨĨĞĐƚ CCL͛Ɛ ƐƚƌĂƚĞŐLJ ƚŽ ƐƚƌĞŶŐƚŚĞŶ ƚŚĞ
design & product development arm of the Company.






28 Introductory Document ʹ Orient Garments Limited

Risk of reliance on external fabric suppliers
OGL relies on external suppliers for raw materials which constitute a substantial
component of the production cost and the lead time. Any delays or non conformance to
quality requirements caused by our suppliers may results in setbacks in operations,
unexpected cost escalations and customer dissatisfaction which will have an impact on
CŽŵƉĂŶLJ͛Ɛ immediate and long term profitability.

Risk of emergence of competition from other manufacturing countries with better
trade concessions
Emergence of trade concession schemes equivalent to GSP+ targeting developing
countries excluding Sri Lanka may cause serious pricing pressures on Sri Lankan
manufacturers including OGL and the growth plans of OGL.

Global economic risks
Any downturn in the global economy will directly have an adverse impact on the global
fashion apparel industry. Such factors will not only deteriorate CŽŵƉĂŶLJ͛Ɛ profitability
but hinder his plans to explore new business opportunities.

Introductory Document ʹ Orient Garments Limited
29
6. Human Resources

6.1. Staff Strength

As at 30
th
April 2011, OGL Group consisted of 3,480 employees. The composition of the
staff base of OGL is detailed in the Table 6.1

Table 6.1 : Staff composition of OGL Group
Company Group
Corporate Managers 3 3
Senior Managers 11 13
Middle Managers 23 37
Executives 88 106
Clerical Staff 240 311
Workers 1,957 3,010
Total No of Employees 2,322 3,480


6.2. Corporate Management Team

Mr. Rajinda Priyanjith Weerasooria ʹ Managing Director/ Chief Executive Officer
Mr. Weerasooria graduated from the Bentley College U.S.A. with a Bachelor of Science
in Marketing and he counts over 17 years of experience within OGL and other Finco
Group of Companies specializing in the areas of production, marketing, merchandising,
finance, shipping and human resources.

He joined OGL in 1993 as the Commercial Manager and in 1996 he was promoted to the
post of Managing Director/ Chief Executive Officer of OGL. He functions as the Managing
Director of Alpha Industries (Pvt) Limited and holds directorates in number of companies
in Finco Group in addition to his role in OGL.

In his capacity as the Managing Director/ Chief Executive Officer, Mr. Weerasooria has
ďĞĞŶ ŝŶƐƚƌƵŵĞŶƚĂů ŝŶ ĞdžƉĂŶĚŝŶŐ ƚŚĞ CŽŵƉĂŶLJ͛Ɛ product range from a specialty
outerwear manufacturer to one with a diverse range of casual apparel and CŽŵƉĂŶLJ͛Ɛ
functions to offer value added design and product development services to its
customers.

He was also instrumental in increasing the operations of the Company to five
manufacturing plants securing long term relationships with the loyal client base and
ĂĐŚŝĞǀŝŶŐ ƚŽĚĂLJ͛Ɛ ŽǀĞƌĂůů ƐƵĐĐĞƐƐ ŽĨ OGL Group of Companies through timely strategic
initiatives implemented under his leadership.








30 Introductory Document ʹ Orient Garments Limited

Mr. Ramli Ghaffoor ʹ Chief Operating Officer
Mr. Ghaffoor functions as the Chief Operations Officer of OGL and has an experience of
over ten years in ensuring the smooth operations of OGL͛Ɛ ĨŝǀĞ ŵĂŶƵĨĂĐƚƵƌŝŶŐ ƉůĂŶƚƐ͘
Mr. Ghaffoor is entrusted with responsibilities of heading the key functions such as
marketing, merchandising, sourcing and procurement, production planning and
monitoring, outsourcing, export documentation and shipping, finance and general
administration.

Commencing his career in the field of financial accounting at KMPG Ford Rhodes
Thornton & Company in 1989, he counts over 20 years of experience in the fields of
accounting, merchandising and marketing.

Prior to joining OGL in 1999 as the General Manager Marketing and Merchandising, he
has gained an extensive exposure to merchandising field during his five year stay at
Brandix Apparel.


Mr. Deshantha Silva ʹ Chief Financial Officer
Mr. Silva counts over 14 years of experience in the fields of financial and general
management out of which approximately 10 years in Finco Group including OGL.

He joined OGL as the Group Financial Controller in 2001 and subsequently promoted to
the post of General Manager ʹ Finance & Planning. In 2007, he was appointed as the
Chief Financial Officer ʹ Manufacturing Cluster of Finco Group of Companies including
OGL where he is responsible for overlooking the functions of financial, import & exports,
human resources, production planning and IT. In addition to his duties in OGL, he plays a
vital role as the Chief Operating Officer of Alpha Industries (Pvt) Limited.

He is an Associate Member of the Chartered Institute of Management Accountants ʹ UK,
an Associate Member of the Chartered Institute of Marketing ʹ UK, an Associate of the
Institution of Engineering & Technology ʹ UK and a Fellow Member of the Institute of
Certified Management Accountants ʹ Sri Lanka. In addition, he is holding a Master of
Business Administration from University of Colombo and B.Sc. (Engineering) from the
University of Moratuwa.



6.3. Collective Agreements and Labour Unions

1ŚĞ CŽŵƉĂŶLJ͛Ɛ ĞŵƉůŽLJĞĞƐ ŚĂǀĞ ŶŽƚ ĂƌƌŝǀĞĚ Ăƚ ĂŶLJ ĐŽůůĞĐƚŝǀĞ ĂŐƌĞĞŵĞŶƚƐ ĂŶĚ ĂƌĞ ŶŽƚ
unionised.



Introductory Document ʹ Orient Garments Limited
31
6.4. Statement ʹ Managing Director/ Chief Executive Officer

The Managing Director/ Chief Executive Officer of the Company has not been involved in
any of the following:

A petition under any bankruptcy laws filed against such person or any partnership in
which he was a partner or any corporation of which he was an executive officer;

Conviction for fraud, misappropriation or breach of trust or any other similar offence
which the CSE considers a disqualification.







32 Introductory Document ʹ Orient Garments Limited

7. Corporate Structure

7.1. Share Capital Structure

As at the date of this Introductory Document, the stated capital of OGL is Rs. 90,483,320
comprising 54,916,656 issued and fully paid ordinary voting shares. Other than these
ordinary voting shares, the Company has no other classes of shares.

There are no restrictions on the purchase of shares of the Company by non-residents.


7.2. Other Information as to the Share Capital

New Share Issues
OGL has not issued any shares during the last two years preceding the date of this
introductory Document.

Outstanding Convertible Debt Securities
OGL has no outstanding Convertible Debt Securities.

Free Transferability of Securities
There are no statutory restrictions on the free transferability of the issued shares.

Shares Repurchased/ Redeemed ʹ March 20, 2009
The Company has not been engaged in any share re-purchase, redemption or stated
capital reduction exercises in the two years preceding the date of this introductory
Document except the share repurchase which was effected on March 20, 2009 wherein
OGL repurchased 2,183,750 number of its own shares at a repurchase price of Rs. 20.00
under section 63 (1) (b) and section 31 (2) (c) of the Companies Act No. 07 of 2007
utilizing the revenue reserves.

The effect of the share repurchase on the capital structure of OGL is as follows;

Table 7.1 : The Effect of the Share Repurchase on the Capital Structure of OGL

Number of issued and fully
paid shares
Stated Capital (Rs.)
Before the share repurchase
9,048,332 90,483,320
Share repurchase
(2,183,750) -
After the share repurchase
6,864,582 90,483,320





Introductory Document ʹ Orient Garments Limited
33
Subdivision of Shares ʹ September 28, 2010
Pursuant to the Articles of Association of OGL, each of the 6,864,582 issued ordinary
shares representing the stated capital of Rs. 90,483,320.00, was subdivided into 8
ordinary shares thereby increasing the issued ordinary shares to 54,916,656 which
ordinary shares shall rank pari-passu in respect of voting and other rights attached to the
ordinary shares that are being subdivided with effect from September 28
th
2010.

The effect of the subdivision of shares on the capital structure of OGL is as follows;

Table 7.2 : The Effect of the Subdivision of Shares on the Capital Structure of OGL

Number of Issued
and Fully Paid Shares
Stated Capital
(Rs.)
Before the sub division of shares
6,864,582 90,483,320
After the subdivision of shares on the basis of 1 to 8
54,916,656 90,483,320


Transfer of Shares ʹ December 31, 2010
On December 31, 2010, 5,562,175 ordinary shares of OGL, which were held by Finco
Holdings (Pvt) Limited, were transferred to the following shareholders at a price of Rs. 23.00
per share.

Table 7.3 : Transfer of Shares

Number of
shares held
before the
transfer
Number of
shares
transferred
Number of
shares held
after the
transfer
Finco Holdings (Pvt) Ltd 14,280,000 (5,562,175) 8,717,825
Mr. Harsha N De Silva - 2,225,000 2,225,000
Mr. Mushtaq Mohamed Fuad - 1,000,000 1,000,000
Mr. Nalin Dharshake Samarawickrema - 652,175 652,175
Mr. Mohamed Sabri Ismail Marikar - 300,000 300,000
Mr. Rukshan Medard Peter Dias - 220,000 220,000
Almar Trading Company (Private) Limited - 220,000 220,000
Mr. Warnakulasuriya Sebastian Loyela Coonge - 220,000 220,000
Mr. Hiran Arjuna Suren Madanayake - 200,000 200,000
Mr. Mark Raaymakers - 100,000 100,000
Adam Apparels (Private) Limited - 100,000 100,000
Mr. Charitha Prasanna De Silva - 100,000 100,000
The Regent Group (Private) Limited - 100,000 100,000
Mr. Don Ananda Panapitiya - 50,000 50,000
Mr. Shermal Hemaka Jayasuriya - 50,000 50,000
Ms. Mildred De Silva - 15,000 15,000
Ms. Omathage Amalee Prashanthi Perera - 10,000 10,000

Other than the share transfer which took place on 31
st
December 2010, no other shares
of the Company have been transferred or sold by the major shareholders within the
immediate period of one year from the date of this Introductory Document.



34 Introductory Document ʹ Orient Garments Limited

7.3. Shareholding Structure

Ten Major Shareholders
Tabulated below is the list of ten major shareholders of OGL as at April 30, 2011.

Table 7.4 : Ten Major Shareholders of OGL as at April 30, 2011

Name of the Share Holder
No. of Shares
held
Percentage of
Shareholding
1 Finco Investments (Pvt) Limited 35,758,000 65.11%
2 Finco Holdings (Pvt) Limited 8,717,825 15.87%
3 Finco (Pvt) Limited 3,168,000 5.77%
4 Mr. Harsha N De Silva 2,225,000 4.05%
5 Mr. Mushtaq Mohamed Fuad 1,000,000 1.82%
6 Mr. Nalin Dharshake Samarawickrema 652,175 1.19%
7 Ms. Swarupuranee Weerasooria 551,048 1.00%
8 Mr. Nishan Eshendra Weerasooria 551,040 1.00%
9 Nikan (Pvt) Limited 343,600 0.63%
10 Mr. Mohamed Sabri Ismail Marikar 300,000 0.55%
Total 53,266,688 96.99%


Public holding of OGL shares as at April 30, 2011 is 10.13%.


ŝƌĞĐƚŽƌƐ͛/ŶƚĞƌĞƐƚŝŶ^ŚĂƌĞƐ
1ŚĞ uŝƌĞĐƚŽƌƐ͛ ĚŝƌĞĐƚ ƐŚĂƌĞŚŽůĚŝŶŐƐ as at April 30, 2011 are tabulated below.

Table 7.5 : Shares held by the Directors
Name of the Director No. of shares held
1 Mr. Sarath Chandra Weerasooria 234,008
2 Mr. Harsha Mahendra de Saram 400
3 Mr. Rajinda Priyanjith Weerasooria 240














Introductory Document ʹ Orient Garments Limited
35
Distribution of Shareholding
Distribution of shareholding of OGL as at April 30, 2011 is depicted in the Table 7.6.

Table 7.6 : Distribution of shareholding
Holding
No of
Shareholders
No of Shares
Shareholding
Percentage
Less than 10,000 3 10,640 0.02%
Between 10,001 to 50,000 5 142,520 0.26%
Between 50,001 to 100,000 4 400,000 0.73%
Between 100,001 to 1,000,000 11 4,494,671 8.18%
Between 1,000,001 to 5,000,000 2 5,393,000 9.82%
Over 5,000,000 2 44,475,825 80.99%
Grand Total 27 54,916,656 100.00%


Analysis of Shareholding
Analysis of shareholding based on the type of the shareholder as at April 30, 2011 is as
follows.

Table 7.7 : Analysis of shareholding
Type of Shareholder
No of
Shareholders
No of Shares
Shareholding
Percentage
Individual 20 6,506,431 11.85%
Institutions 7 48,410,225 88.15%
Grand total 27 54,916,656 100.00%








36 Introductory Document ʹ Orient Garments Limited

7.4. Group Structure of Orient Garments Limited

AƐ Ăƚ ƚŚĞ ĚĂƚĞ ŽĨ ƚŚŝƐ lŶƚƌŽĚƵĐƚŽƌLJ uŽĐƵŵĞŶƚ͕ ƚǁŽ ƐƵďƐŝĚŝĂƌŝĞƐ ĂƌĞ ŽƉĞƌĂƚĞĚ ƵŶĚĞƌ CCL͛Ɛ
wing. With the increase of the shareholding of OGL in Stafford Orient (Pvt) Limited upto
100%, the Company became a subsidiary of OGL during the financial year 2009/10.

Moreover, OGL acquired 43.75% of the shares of Priority Garments (Pvt) Limited along
with the management control of the Company. With this step, Priority Garments (Pvt)
Limited also became a subsidiary of OGL in the same financial year.

The structure of OGL Group is depicted in Figure 7.1 below.

Figure 7.1 : Group Structure of Orient Garments Limited



Finco
Investments
(Pvt) Limited

Finco
Holdings
(Pvt) Limited

Finco (Pvt)
Limited
Others


65.11% 15.87% 5.77% 13.25%



Orient Garments
Limited

100% 43.75%

Stafford
Orient (Pvt)
Limited
Priority
Garments
(Pvt) Limited




Finco Holdings (Pvt) Limited
Finco Holdings (Pvt) Limited, which has been incorporated on October 9, 1995 is one of
the holding companies that directly and indirectly owns investments in companies which
form the Finco Group. (See Table 7.8 which highlights the shareholding structure of
Finco Group of Companies). The CŽŵƉĂŶLJ͛Ɛ ƉƌŝŶĐŝƉĂů ďƵƐŝŶĞƐƐ ĂĐƚŝǀŝƚŝĞƐ ŝŶĐůƵĚĞ
investment holdings. The board of directors of the Company is represented by the
following personnel.
Mr. Sarath Chandra Weerasooria
Mr. Harsha Mahendra de Saram
Mr. Nishan Eshendra Weerasooria
Mr. Rajinda Priyanjith Weerasooria




Introductory Document ʹ Orient Garments Limited
37
Finco Investments (Pvt) Limited
Finco Investments (Pvt) Limited is the other holding company that holds direct and
indirect investments in the companies which form the Finco Group as specified in the
Table 7.8 on page 38. Having established in January 5, 2010, Finco Investments (Pvt)
Limited is engaged in investment holdings. The board of directors of the Company
consists of the following.
Mr. Sarath Chandra Weerasooria
Mr. Harsha Mahendra de Saram
Mr. Nishan Eshendra Weerasooria
Mr. Rajinda Priyanjith Weerasooria


Finco (Pvt) Limited
The Company is primarily involved in the real estate and property development and
supply of waterproofing materials, other engineering materials and chemicals for the
construction industry. The date of incorporation of the company was January 23, 1967
and the following personnel currently serve the board of Finco (Pvt) Limited.
Mr. Sarath Chandra Weerasooria
Mr. Nishan Eshendra Weerasooria
Mr. Rajinda Priyanjith Weerasooria
Mr. Rohan Sarath Delgoda
Mr. Nihal Abeysekera
Dr. Sumitha Anura Bandara Ekanayeke


Stafford Orient (Pvt) Limited (SOL)
SOL, which has been established as a BOI company under the BOI agreement dated July
16, 1998, is engaged in manufacturing of garments for export purpose. SOL operates a
manufacturing plant in Pitabeddara, Deniyaya. SOL became a fully owned subsidiary of
OGL in March 2010, when OGL increased its interest in SOL to 100% to hold 4,400,000
shares of SOL.


Priority Garments (Pvt) Limited (PGL)
PGL, a BOI approved company under the BOI agreement dated June 9, 2008, is engaged
in the similar line of business as OGL and SOL. In March 2010, 43.75% of the share
capital of PGL was acquired by OGL with the management control. At present OGL holds
700,000 shares of PGL while Fascination Exports (Pvt) Limited, Unifashion (Pvt) Limited
and Ian Burke Limited hold 400,000, 400,000 and 100,000 shares of PGL respectively.




38 Introductory Document ʹ Orient Garments Limited

Table 7.8 : Finco Group Structure

Company Shareholders
Number of Shares
held
Percentage of
Shareholding
Finco (Pvt) Ltd Finco Holdings (Pvt) Ltd 29,100 38.80%
Finco Investments (Pvt) Ltd 15,000 20.00%
Alpha Industries (Pvt) Ltd 8,450 11.27%
Others 22,450 29.93%
Total 75,000 100.00%
International Construction
Consortium (Pvt) Limited (ICC)
Finco Holdings (Pvt) Ltd 2,342,480 39.04%
Finco Investments (Pvt) Ltd 1,817,380 30.29%
Others 1,840,140 30.67%
Total 6,000,000 100.00%
Durra Building Systems (Pvt) Ltd ICC 10,000,000 100.0%
Others 2 0.0%
Total 10,000,002 100.0%
ICC Housing (Pvt) Ltd ICC 655,198 62.40%
Finco Holdings (Pvt) Ltd 275,000 26.19%
Others 119,802 11.41%
Total 1,050,000 100.00%

Nivasie Developers (Pvt) Ltd ICC 4,000,000 100.0%
Others 2 0.0%
Total 4,000,002 100.0%


Ulagalla Walawwa Resort (Pvt)
Limited
Finco Leisure (Pvt) Ltd 88,002,000 100.00%
Others 2 0.0%
Total 88,002,002 100.00%

Genesiis Software (Pvt) Ltd Alpha Tours (Pvt) Ltd
100,000 28.57%
Finco (Pvt) Ltd
12,480 3.57%
ICC
50,000 14.29%
Others
187,520 53.58%
Total
350,000 100.00%











Introductory Document ʹ Orient Garments Limited
39
Company Shareholders
Number of shares
held
Percentage of
shareholding
Finco Technologies (Pvt) Ltd Finco (Pvt) Ltd 1,359,998 73.12%
Others 500,002 26.88%
Total 1,860,000 100.00%

Alpha Industries (Pvt) Ltd Finco Investments (Pvt) Ltd 400,000 48.8%
Finco Holdings (Pvt) Ltd 311,000 37.9%
Others 109,000 13.3%
Total 820,000 100.0%

Alpha Tours (Pvt) Ltd Finco Holdings (Pvt) Ltd 26,816

42.91%
Finco Investments (Pvt) Ltd 30,000 48.00%
Alpha Industries (Pvt) Ltd 4,862 7.78%
Others 822 1.32%
Total 62,500 100.00%

Finco Leisure (Pvt) Ltd ICC 70,000,000 72.65%
ICC Housing (Pvt) Ltd 16,950,000 17.59%
Finco Holdings (Pvt) Ltd 5,200,000 5.40%
ICC Investments (Pvt) Ltd 3,368,675 3.50%
Finco (Pvt) Ltd 840,000 0.87%
Others 2 0.00%
Total 96,358,677 100.00%










40 Introductory Document ʹ Orient Garments Limited

7.5. Board of Directors

Name Residential Address Other Directorships
Mr. Sarath
Chandra
Weerasooria
226/4
Thalawathugoda Road
Kotte

Alpha Industries (Pvt) Limited
Finco (Pvt) Limited
Alpha Tours (Pvt) Limited
Finco Holdings (Pvt) Limited
Finco Investments (Pvt) Limited
Nivasie Developers (Pvt) Limited
Stafford Orient (Pvt) Limited
Ulagalla Walawwa Resort (Pvt) Limited
Autodrome Plc.,
ICC Housing (Pvt) Limited
Durra Building Systems (Pvt) Limited
Finco Leisure (Pvt) Limited

Mr. Rajinda
Priyanjith
Weerasooria
28/8
De Fonseka Road
Colombo 5
International Construction Consortium (Pvt) Limited
Alpha Industries (Pvt) Limited
Finco (Pvt) Limited
Alpha Tours (Pvt) Limited
Finco Holdings (Pvt) Limited
Finco Investments (Pvt) Limited
Priority Garments (Pvt) Limited
Stafford Orient (Pvt) Limited
Union Commodities (Pvt) Limited
Finco Leisure (Pvt) Limited

Mr. Harsha
Mahendra
de Saram
49/4, 29A
Iceland Residencies
Galle Road
Colombo 3

International Construction Consortium (Pvt) Limited
Alpha Tours (Pvt) Limited
Alpha Industries (Pvt) Limited
Durra Building Systems (Pvt) Limited
Finco Holdings (Pvt) Limited
Finco Investments (Pvt) Limited
ICC Housing (Pvt) Limited
Ulagalla Walawwa Resort (Pvt) Limited
Finco Leisure (Pvt) Limited

Mr. Sunil
Karunanayaka
116 A
Koswatta Road
Nawala

Ceylon Grain Elevators PLC
Three Acre Farms PLC

Mr. Dinesh de
Zoysa

No. 9
Bois Place
Colombo 5
ADZ Insurance Brokers (Pvt) Limited
AEC Limited
Corporate Druids (Pvt) Limited
Capital Alliance Holdings Limited
Capital Alliance Limited
Ceylon Tea Brokers PLC
Commercial Agencies Ceylon Limited





Introductory Document ʹ Orient Garments Limited
41
Mr. Sarath C. Weerasooria ʹ Chairman (Non-Executive)
Mr. Sarath C. Weerasooria is a Fellow Member of the Institute of Chartered Accountants
- Sri Lanka, a Fellow Member of the Institute of Certified Management Accountants of
Sri Lanka and a Member of Industrial Association of Sri Lanka.

He has acted as the Senior Vice Chairman of Finco Group of Companies for a period of 25
years until he assumed duties as the Executive Chairman of the same in 1994. His
contribution was instrumental in escalating Finco Group of Companies to the current
position, which is today a large scale diversified conglomerate with over 15 associate
companies representing a varied business portfolio.

As Chairman of the Finco Group of Companies, including OGL, he is responsible for
formulation of overall policy and provision of leadership to the senior management of
the companies within the Group in the implementation of corporate strategies and
achieving corporate goals.

Mr. Weerasooria is currently holding the Chairmanship of the Nordic Business Council in
Sri Lanka and is also a member of the Industrial Association of Sri Lanka both affiliated to
the Ceylon Chamber of Commerce.


Mr. Rajinda P. Weerasooria ʹ Managing Director
Mr. Weerasooria graduated from the Bentley College U.S.A. with a Bachelor of Science
in Marketing and he counts over 17 years of experience within the Finco Group. He
joined OGL in 1993 as the Commercial Manager and in 1996 he was promoted to the
post of Managing Director/ Chief Executive Officer of OGL. He functions as the Managing
Director of Alpha Industries (Pvt) Limited and holds directorates in number of companies
in Finco Group in addition to his role in OGL.

In his capacity as the Managing Director/ Chief Executive Officer, Mr. Weerasooria has
ďĞĞŶ ŝŶƐƚƌƵŵĞŶƚĂů ŝŶ ĞdžƉĂŶĚŝŶŐ ƚŚĞ CŽŵƉĂŶLJ͛Ɛ product range from a specialty
outerwear manufacturer to one with a diverse range of casual apparel and CŽŵƉĂŶLJ͛Ɛ
functions to offer value added design and product development services to its
customers.

He was also instrumental in increasing the operations of the Company to five
manufacturing plants securing long term relationships with the loyal client base and
ĂĐŚŝĞǀŝŶŐ ƚŽĚĂLJ͛Ɛ ŽǀĞƌĂůů ƐƵĐĐĞƐƐ ŽĨ OGL Group of Companies through timely strategic
initiatives implemented under his leadership.











42 Introductory Document ʹ Orient Garments Limited

Mr. Harsha M. de Saram ʹ Executive Director
Mr. de Saram is a member of the Chartered Management Institute ʹ UK by profession.

Mr. de Saram was instrumental in establishing International Construction Consortium
(Pvt) Limited (ICC) which has today grown into one of the leading construction industries
with multi disciplinary capabilities. ICC has undertaken several landmark projects in Sri
Lanka and is also engaged in overseas construction projects. Mr. de Saram is the
Managing Director of ICC ĂŶĚ ƚŚĞ uĞƉƵƚLJ CŚĂŝƌŵĂŶ ŽĨ lCC͛Ɛ ƐĞǀĞƌĂů ĂƐƐŽĐŝĂƚĞ ĐŽŵƉĂŶŝĞƐ͘


Mr. Sunil Karunanayaka ʹ Non-Executive Independent Director
Mr. Karunanayaka is a Fellow Member of the Institute of Chartered Accountants of Sri
Lanka and a Fellow Member of the Chartered Institute of Management Accountants ʹ
UK. In addition he holds a Masters Degree in Business Administration from the
Postgraduate Institute of Management, University of Sri Jayawardenapura, Sri Lanka.

Mr. Karunanayaka counts over 20 years of experience in the corporate financial
management, treasury management, planning and budgetary control. He is currently
serving as the Chief Financial Consultant of The Associated Newspapers of Ceylon
Limited. In addition he is holding directorships in the boards of Ceylon Grain Elevators
PLC and Three Acre Farms PLC.

He holds memberships in the Best Corporate Reports Committee of the Institute of
Chartered Accountants of Sri Lanka, the Management Board of The Mercantile Service
ÞƌŽǀŝĚĞŶƚ SŽĐŝĞƚLJ͕ MĂŶĂŐĞŵĞŶƚ CŽŵŵŝƚƚĞĞ ŽĨ ƚŚĞ LdžƉŽƌƚĞƌ͛Ɛ AƐƐŽĐŝĂƚŝŽŶ ŽĨ Sƌŝ LĂŶŬĂ
and the National Hospital Committee of Sri Lanka.

He joined the board of OGL in September 2010.

















Introductory Document ʹ Orient Garments Limited
43
Mr. Dinesh de Zoysa ʹ Non-Executive Independent Director
Mr. de Zoysa graduated from the University of Technology in Sydney, with a Bachelor of
Business (Finance and IT) and possesses over 17 years of experience in the fields of
Manufacturing, IT, Finance, HR Consulting, Risk Management and Insurance services.

Having joined Associated Electrical Corporation Limited in 1991 as the General Manager,
Mr. de Zoysa is now holding the position of Managing Director of Associated Electrical
Corporation Limited. He could be singularly credited in developing the refrigerator brand
͞SISIL͟, a landmark brand of Associated Electrical Corporation Limited which was
subsequently sold to SINGER. The transaction was marked in the corporate history of Sri
Lanka as the first ever sale of a BRAND.

In addition to his responsibilities at Associated Electrical Corporation Limited, he has also
functioned as the Director - IT and Systems of Associated Motorways Limited and has
served the Audit and Risk management Committee of Associated Motorways Limited.

He is currently on the boards of Capital Alliance Holdings Limited, Ceylon Tea Brokers
Limited and Corporate Druids (Pvt) Limited and serving ADZ Insurance Brokers (Pvt)
Limited (Representative of Marsh McLennan Companies (USA) for Sri Lanka and the
Maldives) in the capacity of the Managing Director.

He was appointed to the board of OGL in September 2010.


7.6. Statement ʹ Board of Directors

No director or a person nominated to become a director of the Company has been
involved in any of the following:

A petition under any bankruptcy laws filed against such person or any partnership in
which he was a partner or any corporation of which he was an executive officer;

Conviction for fraud, misappropriation or breach of trust or any other similar offence
which the CSE considers a disqualification;


7.7. ŝƌĞĐƚŽƌƐ͛ŵŽůƵŵĞŶƚƐ

uŝƌĞĐƚŽƌƐ͛ ĞŵŽůƵŵĞŶƚƐ ĨŽƌ ƚŚĞ ĨŝŶĂŶĐŝĂů LJĞĂƌ ϮϬϬϵ/10 amounted to Rs. 2,579,000.00. It is
estimated that for the financial year 2010/ϭϭ uŝƌĞĐƚŽƌƐ͛ ĞŵŽůƵŵĞŶƚƐ ǁŽƵůĚ ĂŵŽƵŶƚ ƚŽ
approximately Rs. 4.7 Mn.









44 Introductory Document ʹ Orient Garments Limited

8. Other Information Relating to the Company

Degree of Dependence on Key Suppliers
OGL sources its raw materials from a large number of suppliers based locally as well as
overseas and the Company does not depend on any key suppliers, as no single supplier
accounts for more than 10% of raw materials and outsourced services.


Degree of Dependence on Key Customers
The Company depends on a niche client base which consists of five to six international
fashion brands which accounts for nearly 90% to 95% of its revenue.

The selected clientele of OGL account for a strong presence in the global fashion
industry stemming from USA and Europe and now spreading its reach to the Asian
market in response to the imminent affluent Asian economy. The clientele have
recognized Sri Lanka as a reliable sourcing destination for garments and envisages
continuing its partnership with OGL in catering to its thriving global demand for fashion
apparel.


Litigation, Disputes and Contingent Liabilities
As at the date of this Introductory Document, there are no material legal, arbitration or
mediation proceedings which may have or have had in the recent past affected the
financial position or profitability of the Company.

As at the date of this Introductory Document, there are no contingent liabilities that
would affect current and future profits of the Company.

As at the date of this Introductory Document, there are no penalties imposed by any
regulatory or state authority against the Company.



Introductory Document ʹ Orient Garments Limited
45
9. Corporate Governance Practices

The board of directors of OGL has given the due emphasis to the importance of highest
standard corporate governance practices in promoting business integrity, accountability
and transparency.

The following framework forms the part and parcel of corporate governance code of the
Company.

Constitution of the Board
The Company has one Non-Executive Director, two Non-Executive Independent
Directors and two Executive Directors on the Board with the expertise mainly in the area
of financial management, general management and operations of garment
manufacturing plants.

Non-Executive Directors
The Board of OGL consists of the following Non-Executive Directors.
Mr. Sarath C. Weerasooria ʹ Chairman
Mr. Sunil Karunanayaka
Mr. Dinesh de Zoysa

Non-Executive Independent Directors
The following directors of OGL have fulfilled the requirements to be Non-Executive
Independent Directors of OGL.
Mr. Sunil Karunanayaka
Mr. Dinesh de Zoysa

Remuneration Committee
The remuneration committee consists of the following one Non-Executive Director and
two Independent Non-Executive Directors.
Mr. Sarath C. Weerasooria, Chairman of the Committee
Mr. Sunil Karunanayaka
Mr. Dinesh De Zoysa

The remuneration committee is responsible for making recommendations to the Board
on the remuneration of Executive Directors and Non-Executive Directors. The committee
is also responsible for setting up the remuneration policy, which provides guidelines to
the Board on the overall remuneration framework to ensure that remuneration levels
are at a satisfactory level to attract and retain the requisite professionals to support the
success of the Company.








46 Introductory Document ʹ Orient Garments Limited

Audit Committee
The audit committee comprises of the following one Non-Executive Director and two
Independent Non-Executive Directors;
Mr. Sarath C. Weerasooria, Chairman of the Committee
Mr. Sunil Karunanayaka
Mr. Dinesh De Zoysa

The Chief Financial Officer attends meetings of the audit committee by invitation.

The audit committee is responsible for reviewing the functions and processes of internal
controls in the Company and ensuring the effectiveness of such controls. The Committee
monitors all audit activities and operations and ensures their compliance with overall
policies and procedures as well as adherence to statutory and regulatory requirements
and industry best practices.

Introductory Document ʹ Orient Garments Limited
47
10. Statutory Declaration

Declaration by the Board of Directors

Date: June 6, 2011

We the undersigned, who are named in the Introductory Document as Directors of
Orient Garments Limited, hereby declare and confirm that we have read the provisions
of the CSE listing rules and of the Companies Act No. 07 of 2007 and any amendments to
it relating to the issue of this Introductory Document and those provisions have been
complied with.

This Introductory Document has been seen and approved by us and we collectively and
individually accept full responsibility for the accuracy of the information given and
confirm that after making all reasonable enquires and to the best of our knowledge and
belief, there are no other facts the omission of which would make any statement herein
misleading or inaccurate.

Where representations regarding the future performance of Orient Garments Limited
have been given in the Introductory Document, such representations have been made
after due and careful enquiry of the information available to Orient Garments Limited
and making assumptions that are considered to be reasonable at the present point in
time in our best judgment.

Name Designation Signature

Mr. Sarath Chandra Weerasooria Chairman (Signed)

Mr. Rajinda Priyanjith Weerasooria Managing Director (Signed)

Mr. Harsha Mahendra de Saram Director (Signed)

Mr. Sunil Karunanayaka Director (Signed)

Mr. Dinesh De Zoysa Director (Signed)




48 Introductory Document ʹ Orient Garments Limited

11. Statutory and Other General Information

Inspection of Documents
The Introductory Document and The Articles of Association of Orient Garments Limited
will be available on the website of the CSE (www.cse.lk) and on the Company website
(http://www.orientgarments.lk) for a period of not less than fourteen 14 days.

Reports by Experts
Apart from the Independent Auditors Report, this Introductory Document does not
include any other reports or statements made by experts.



Introductory Document ʹ Orient Garments Limited
49





















Interim Financial Statements













ORIENT GARMENTS LIMITED
INCOME STATEMENT FOR THE 11 MONTHS ENDED FEBRUARY 28, 2011
Group
Unaudited Unaudited Unaudited
Note 28th Feb. 2011 28th Feb. 2011 28th Feb. 2010
Turnover 1 3,325,953,519 3,312,790,583 2,567,880,536
Cost of Sales (2,967,599,527) (2,967,023,323) (2,233,251,393)
Gross Profit 358,353,993 345,767,261 334,629,143
Other Income 2 35,143,263 34,414,586 10,000,000
Administrative Expenses (148,236,242) (132,467,729) (129,616,409)
Marketing and Logistic Expenses (64,408,236) (64,408,236) (44,833,228)
Profit from Operations 3 180,852,778 183,305,881 170,179,506
Finance Expenses 4 (74,583,788) (72,637,669) (66,139,328)
Profit Before Taxation 106,268,990 110,668,212 104,040,178
Provision for Income Tax (14,856,714) (13,987,074) (15,868,583)
Profit for the Period 91,412,276 96,681,138 88,171,595
Attributable to :
Equity Holders of the Company 98,154,854 96,681,138 88,171,595
Non Controlling Interest (6,742,578)
Earnings Per Share before Split (Rs.) 5 14.30 14.08 12.84
Earnings Per Share after Split (Rs.) 5 1.79 1.76 1.61
(Expressed in Sri Lankan Rupees)
Company
50 Introductory Document-Orient Garments Limited
51
ORIENT GARMENTS LIMITED
STATEMENT OF CHANGES IN EQUITY
(Expressed in Sri Lankan Rupees)
For the period ended February 28, 2011
Stated Revaluation General Retained Total
Capital Reserves Reserves Earnings
Balance as at March 31, 2010 90,483,320 231,626,097 170,162,500 14,191,240 506,463,157
Profit for the Period - - - 96,681,138 96,681,138
Balance as at February 28, 2011 90,483,320 231,626,097 170,162,500 110,872,378 603,144,295
For the period ended February 28, 2010
Balance as at 31st March 2009 90,483,320 158,487,659 95,162,500 3,226,750 347,360,229
Profit for the Period - - - 88,171,595 88,171,595
Balance as at February 28, 2010 - 158,487,659 95,162,500 91,398,345 435,531,824
52 Introductory Document-Orient Garments Limited
ORIENT GARMENTS (PRIVATE) LIMITED
CASH FLOW STATEMENT FOR THE 11 MONTHS ENDED FEBRUARY 28, 2011
Unaudited
Feb. 28, 2011
March 31, 2010
Unaudited
Feb. 28, 2011
Unaudited
Feb. 28, 2010
Operating Activities
Profit Before Taxation 106,268,990 139,246,345 110,668,212 104,040,178
Adjustments for:
Depreciation 46,519,378 34,733,313 32,174,062 24,546,724
Provision for Gratuity 13,175,292 14,373,047 10,088,926 10,088,926
Gain on Disposal of Property, Plant and Equipment (5,545,474) (2,083,333) (4,816,796) -
Money Received under Export Development Rebate Scheme (2,500,000) (10,000,000) (2,500,000) (10,000,000)
Interest Cost 72,788,827 77,018,588 72,487,539 66,139,328
Amortisation of Prepaid Lease - Lease Hold Land 50,360 54,938 50,360 50,360
Amortisation of Finance Lease Interest 150,130 984,217 150,130 902,198
Write Back of Long Term Loans (26,500,000) (33,958,647) (26,500,000) -
Interest Income (597,789) (435,319) (597,789) -
Operating Profit Before Working Capital Changes 203,809,714 219,933,149 191,204,643 195,767,714
Working Capital Changes
Inventories (225,262,331) (40,192,746) (225,262,331) 1,788,033
Trade and Other Receivables (260,083,434) 112,208,484 (245,729,248) (38,368,219)
Trade Creditors (16,195,990) 45,956,245 (18,026,372) 60,003,684
Cash Generated from Operations (297,732,041) 337,905,132 (297,813,307) 219,191,212
Gratuity Paid (5,487,498) (5,342,910) (4,885,403) (4,475,790)
Income Tax / ESC Paid (11,810,000) (7,644,109) (10,892,525) (7,200,143)
Net Cash Flow from Operating Activities (315,029,539) 324,918,113 (313,591,236) 207,515,279
Investing Activities
Purchase of Property, Plant and Equipment (19,822,072) (14,255,004) (19,140,430) (14,025,200)
Proceeds from Sale of Property, Plant and Equipment 5,545,474 2,083,333 4,816,796 -
Decrease in Investments 1,333,334 - 20,061,534 (524,176)
Interest Received 597,789 435,319 597,789 -
Net Cash used in Investing Activities (12,345,477) (11,736,352) 6,335,690 (14,549,376)
Financing Activities
Proceeds from Loans 19,285,969 10,260,000 19,285,969 -
Re-payment of Loans (27,221,450) (34,484,588) (24,870,200) (30,283,608)
Repayment of Short Term Borrowing on Trade Finance 393,713,876 (175,434,804) 393,713,876 (97,131,513)
Interest Paid (72,788,827) (77,018,588) (72,487,539) (66,139,328)
Money Received under Export Development Rebate Scheme 2,500,000 10,000,000 2,500,000 10,000,000
Net Cash Flow from / (used in) Financing Activities 315,489,569 (266,677,980) 318,142,105 (183,554,449)
Net Change in Cash and Cash Equivalents for the Period (11,885,446) 46,503,781 10,886,560 10,459,806
Cash and Cash Equivalents at the Beginning of the Year 4,653,593 (41,850,189) 6,187,848 (33,638,455)
Cash and Cash Equivalents at the End of the Period (7,231,853) 4,653,592 17,074,408 (23,178,649)
Cash and Cash Equivalents at the End of the Year Represented by:
Unaudited
Feb. 28, 2011
March 31, 2010
Unaudited
Feb. 28, 2011
Unaudited
Feb. 28, 2010
Cash at Bank and In Hand 80,199,708 30,428,578 75,682,550 14,413,862
Bank Overdrafts (87,431,561) (25,774,986) (58,608,141) (37,592,511)
(7,231,853) 4,653,592 17,074,408 (23,178,649)
(Expressed in Sri Lankan Rupees)
Company Group
Introductory Document-Orient Garments Limited 53
ORIENT GARMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE 11 MONTHS ENDED FEBRUARY 28, 2011
(Expressed in Sri Lankan Rupees)
Group
Unaudited
Feb 28, 2011
Unaudited
Feb 28, 2011
Unaudited
Feb 28, 2010
1 Turnover
Imcome from Exports 3,325,953,519 3,312,790,583 2,567,880,536
2 Other Income
Interest Income 597,789 597,789 -
Gain on Disposal of Property, Plant and Equipment 5,545,474 4,816,796 -
Writte Back of Long Term Loan 26,500,000 26,500,000 -
Grant Received from Export Development Rebate Scheme 2,500,000 2,500,000 10,000,000
35,143,263 34,414,586 10,000,000
3 Profit Before Taxation
Directors Remuneration 2,364,389 2,364,389 1,436,722
Auditors Remuneration 175,000 100,000 70,000
Depreciation 46,519,378 32,174,062 24,597,084
Defined Contribution Plan cost - EPF/ETF 60,513,927 43,899,999 39,536,159
Defined Benefit Plan cost - Retiring Gratuity 0 0
Other Staff Cost 141,414,039 117,738,414 112,854,382
Legal Fees 250,875 250,875 48,510
4 Finance Expenses
Interest on Long Term Loans and Borrowings 3,782,872 3,482,608 4,059,859
Interest on Short Term Loans and Borrowings 70,650,786 69,004,931 53,724,812
Interest on Finance Leases 150,130 150,130 424,786
74,583,788 72,637,669 58,209,457
5 Basic Earnings Per Share
Amount used as the Numerator
Profit Attributable to the Equity Shareholders (Rs.) 98,154,854 96,681,138 88,171,595
Amount used as the Denominator
Number of Shares - before Split 6,864,582 6,864,582 6,864,582
Number of Shares - after Split 54,916,656 54,916,656 54,916,656
Earnings Per Share before Split (Rs.) 14.30 14.08 12.84
Earnings Per Share after Split (Rs.) 1.79 1.76 1.61
Company
Operating Profit/(Loss) after charging all expenses including
Pursuant to the approval by the Shareholders at an extra ordinary general meeting, the Shares of the Company were split on 28th
September 2010 on the basis of 1 Ordinary Share in to 8 Ordinary Shares. Consequent to the Share split, the number of ordinary
Shares of the Company increased from 6,864,582/- to 54,916,656/- without any change to the Stated Capital.
54 Introductory Document-Orient Garments Limited
ORIENT GARMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE 11 MONTHS ENDED FEBRUARY 28, 2011
6 Property, Plant and Equipment
Group
Freehold Assets
Land and Land Development Cost 55,802,397 - - 55,802,397
Buildings 380,117,274 - - - 380,117,274
Plant and Machinery 310,416,213 6,104,186 - - 316,520,399
Factory Equipment and Office Equipment 38,748,087 6,150,029 - - 44,898,116
Furniture and Fittings 29,505,761 - - 29,505,761
Motor Vehicles 14,727,759 - (6,012,884) 12,799,500 8,714,875
Leasehold Assets
Land Development Cost 27,828,291 - - - 27,828,291
Motor Vehicles 15,514,500 7,567,857 - (12,799,500) 23,082,357
872,660,282 19,822,072 (6,012,884) - 886,469,470
Freehold Assets
Buildings 1,705,885 20,599,945 - - 22,305,830
Plant and Machinery 207,394,362 20,668,762 - - 228,063,123
Factory Equipment and Office Equipment 29,181,170 1,060,023 - - 30,241,192
Furniture and Fittings 28,494,543 694,760 - - 29,189,303
Motor Vehicles 13,331,150 1,396,608 (6,012,884) 12,799,500 21,514,374
-
Leasehold Assets -
Land Development Cost 6,119,056 590,889 - - 6,709,945
Motor Vehicles 13,414,046 1,508,392 - (12,799,500) 2,122,937
299,640,212 46,519,378 (6,012,884) - 340,146,705
Carrying Value 573,020,071 546,322,765
Property, Plant and Equipment
Company
Freehold Assets
Land and Land Development Cost 47,225,000 - 47,225,000
Buildings 297,047,203 - - 297,047,203
Plant and Machinery 266,975,723 6,053,586 - 273,029,309
Factory Equipment and Office Equipment 27,304,426 5,518,986 32,823,413
Furniture and Fittings 17,276,242 - 17,276,242
Motor Vehicles 10,848,962 (3,756,587) 12,799,500 19,891,875
Leasehold Assets
Land Development Cost 20,910,821 - - 20,910,821
Motor Vehicles 15,514,500 7,567,857 - (12,799,500) 10,282,857
703,102,877 19,140,430 (3,756,587) - 718,486,720
Freehold Assets
Buildings - 13,878,747 - 13,878,747
Plant and Machinery 204,430,305 13,627,584 - 218,057,889
Factory Equipment and Office Equipment 18,605,447 891,322 19,496,769
Furniture and Fittings 16,798,063 488,045 17,286,108
Motor Vehicles 9,452,353 1,396,608 (3,756,587) 12,799,500 19,891,874
Leasehold Assets
Land Development Cost 4,182,164 383,365 - 4,565,529
Motor Vehicles 13,414,046 1,508,392 - (12,799,500) 2,122,937
266,882,378 32,174,062 (3,756,587) - 295,299,853
Carrying Value 436,220,499 423,186,867
Balance as at
Feb. 28, 2011
Depreciation
Cost/Valuation
(Expressed in Sri Lankan Rupees)
Disposals
Additions Disposals
Transfer
Balance as at
Feb. 28, 2011
Depreciation
Balance as at
April 1, 2010
Transfer
Transfer
Charge for the
Period
Disposals
Cost/Valuation Additions
Balance as at
April 1, 2010
Balance as at
April 1, 2010
Balance as at
Feb. 28, 2011
Balance as at
Feb. 28, 2011
Disposals
Charge for for
the Period
Balance as at
April 1, 2010
Transfer
55
ORIENT GARMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
Unaudited
28th Feb. 2011
31st March
2010
Unaudited
28th Feb. 2011
31st March 2010
7 Prepaid Lease - Leasehold Land
Balance at the Beginning of the Period 2,197,499 2,252,437 2,197,499 2,252,437
Charge for the Period (50,360) (54,938) (50,360) (54,938)
Net Balance as at February 28, 2011 2,147,139 2,197,499 2,147,139 2,197,499
8 Intangible Assets
Goodwill on Acquisition 55,098,462 55,098,462 55,098,462 55,098,462
55,098,462 55,098,462 55,098,462 55,098,462
Company
9 Investment in Subsidiaries 28th Feb. 2011 28th Feb. 2011 31st March 2010
Subsidiaries Principle Activity Holdings Cost Cost Cost
Stafford Orient (Pvt) Limited Manufacture of Garments 100% - - 20,473,788
Priority Garments (Pvt) Limited Manufacture of Garments 43.75% - - 7,000,000
Provision for Impairment of Investments - - (7,000,000)
- - 20,473,788
Unaudited
28th Feb. 2011
31st March
2010
Unaudited
28th Feb. 2011
31st March 2010
10 Other Investments
Long Term Receivables
Priority Garments (Private) Limited - - - 12,500,000
Stafford Orient (Private) Limited - - 66,291,327 72,519,527
- - 66,291,327 85,019,527
11 Inventories
Raw Materials 395,495,094 183,916,334 395,495,094 183,916,334
Work-In-Progress 144,651,011 112,802,085 144,651,011 112,802,085
Finished Goods 79,777,291 79,240,921 79,777,291 79,240,921
Goods-In-Transit 17,981,913 36,683,638 17,981,913 36,683,638
637,905,309 412,642,978 637,905,309 412,642,978
12 Trade and Other Receivables
Trade Debtors 531,385,153 296,916,913 527,293,044 292,696,083
Other Receivables/Prepayments 31,588,193 12,814,607 30,863,702 11,732,525
Amount due from Related Companies / Subsidiaries 1,492,402 - 4,274,597 17,770,612
VAT Recoverable 17,243,759 21,466,959 15,460,204 19,340,978
581,709,509 331,198,479 577,891,547 341,540,198
13 Cash and Cash Equivalents
Short Term Investments - FCBU Deposits/Fixed Deposits 57,891,838 14,380,803 54,191,838 14,380,803
Cash at Bank and In Hand 22,307,870 16,047,775 21,490,712 14,205,558
80,199,708 30,428,578 75,682,550 28,586,361
14 Non Current Assets - Held for Sale
Investments held for sale - Orient Design (Pvt) Ltd - (Note 14.1) - 1,333,334 - 1,333,334
- 1,333,334 - 1,333,334
14.1
15 Stated Capital
Issued and Fully Paid
54,916,656 Ordinary Shares 90,483,320 90,483,320 90,483,320 90,483,320
(Expressed in Sri Lankan Rupees)
Company
Group Company
Group
Group
The Company divested it's Investments in Orient Design (Private) Limited on 15th February 2011 for a total consideration of Rs.
1,333,334/-. There was no material gain or loss resulting from the transfer in to the Company/Group. The Investment was sold at cost for sum
of Rs. 1,333,334/-
56 Introductory Document-Orient Garments Limited
ORIENT GARMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE 11 MONTHS ENDED FEBRUARY 28, 2011
Unaudited
28th Feb. 2011
31st March
2010
Unaudited
28th Feb. 2011
31st March 2010
16 Borrowings
Non-Current Portion of the Interest Bearing Borrowings
Term Loans 16.1 80,485,090 88,896,874 75,690,340 81,843,124
Finance Lease Obligations 16.2 6,033,439 1,408,047 6,033,439 1,408,047
86,518,529 90,304,921 81,723,779 83,251,171
Current Portion of the Interest Bearing Borrowings:
Term Loans 16.1 25,146,475 29,749,922 22,673,725 27,184,922
Finance Lease Obligations 16.2 2,129,772 1,525,284 2,129,772 1,525,284
27,276,247 31,275,206 24,803,497 28,710,206
16.1 Term Loans
Non-Current
At the Beginning of the Year 118,646,797 139,618,982 109,028,047 139,618,982
Loans Obtained During the Year 11,718,106 10,260,000 11,718,106 -
130,364,903 149,878,982 120,746,153 139,618,982
Repayments During the Year (24,733,338) (31,232,185) (22,382,088) (30,590,935)
At the End of the Year 105,631,565 118,646,796 98,364,065 109,028,046
Transferred to Current Liabilities (Repayable Within One Year) 25,146,475 29,749,922 22,673,725 27,184,922
Transferred to Non-Current Liabilities (Repayable After One Year) 80,485,090 88,896,874 75,690,340 81,843,124
16.2 Finance Lease Obligations
Gross Liability at the Beginning of the Year 3,065,929 6,318,332 3,065,929 6,318,332
Lease Faclility Obtained During the Period 9,340,037 9,340,037
12,405,966 6,318,332 12,405,966 6,318,332
Repayments During the Year (2,488,112) (3,252,403) (2,488,112) (3,252,403)
Lease Obligation at the End of the Year 9,917,854 3,065,929 9,917,854 3,065,929
Finance Charges Amortized (1,754,643) (132,598) (1,754,643) (132,598)
Net Liability at the End of the Year 8,163,211 2,933,331 8,163,211 2,933,331
Transferred to Current Liabilities (Repayable Within One Year) 2,129,772 1,525,284 2,129,772 1,525,284
Transferred to Non-Current Liabilities (Repayable After One Year) 6,033,439 1,408,047 6,033,439 1,408,047
17 Trade and Other Creditors
Trade Creditors 119,118,311 139,547,102 110,299,325 135,235,258
Accrued Expenses 62,508,601 56,163,459 42,596,068 35,207,935
Amount due to Related Parties 290,383 244,906 290,383 244,906
Other Payables 24,128,588 52,716,406 6,580,991 33,605,042
206,045,883 248,671,873 159,766,767 204,293,140
18 Short Term Borrowing on Trade Finance
Hypothecation/Packing Credit Loans 801,130,052 407,416,176 801,130,052 407,416,176
801,130,052 407,416,176 801,130,052 407,416,176
19
20
21
22
23
(Expressed in Sri Lankan Rupees)
There are no material post Balance Sheet events that require adjustments to or disclosure in Financial Statement.
The Financial Statements of the Company and those Consolidated with such for the Interim Period have been prepared on the same
basis as the most recent Audited Financial Statement and are in compliance with Sri Lanka Accounting Standards 35 - Interim Financial
Reporting.
There were no material commitments, financial or other contracted or consented by the Board of Directors as at the Balance Sheet date.
There were no material contingent liabilities as at the Balance Sheet date which require adjustments to or disclosure in the Financial
Statements.
Company
The accounting policies have been consistently applied by the Group and are consistent with those used in previous year. The
Group
presentation and to be comparable with year ending reporting.
presentation and classification of the Financial Statement of the previous period have been adjusted where relevant, for better
Introductory Document-Orient Garments Limited 57

Introductory Document ʹ Orient Garments Limited
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Introductory Document ʹ Orient Garments Limited
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Audited Financial Statements













Page 2
ORIENT GARMENTS (PRIVATE) LIMITED
INCOME STATEMENT
Group
2010 2010 2009
For the Year Ended 31 March Restated
Note
Turnover 3 2,801,673,323 2,782,889,411 2,853,980,805
Cost of Sales (2,428,591,232) (2,426,246,456) (2,514,298,098)
Gross Profit 373,082,091 356,642,955 339,682,707
Other Income 4 46,477,299 10,092,735 1,083,000
Administrative Expenses (154,390,613) (143,949,710) (158,553,205)
Marketing and Logistic Expenses (47,864,689) (47,864,689) (50,384,517)
Finance Expenses 5 (78,057,743) (71,500,526) (83,350,606)
Profit Before Taxation 6 139,246,345 103,420,765 48,477,378
Income Tax Expenses 7 (18,648,087) (17,456,275) (2,988,741)
Profit for the Year 120,598,258 85,964,490 45,488,637
Attributable to ;
Equity Holders of the Company 125,747,787 85,964,490 45,488,637
Non - Controlling Interest (5,149,529) - -
Profit for the Year 120,598,258 85,964,490 45,488,637
Basic Earnings Per Share Before Split (Rs.) 8 18.32 12.52 6.63
Basic Earnings Per Share after Split (Rs.) 8 2.29 1.57 0.83
Audit Report on Page 1
Figures in brackets indicate deductions
Accounting Policies and Notes to the Financial Statements on pages 6 to 19 form an integral part of these Financial Statements
(Expressed in Sri Lankan Rupees)
Company
Introductory DocumentͲOrient Garments Limited 61
62
Page 4
ORIENT GARMENTS (PRIVATE) LIMITED
STATEMENT OF CHANGES IN EQUITY
(Expressed in Sri Lankan Rupees)
Group
Stated Revaluation General Retained Non - Controlling Total
Capital Reserves Reserves Earnings Interest
Balance as at March 31, 2009 as Previously Reported 90,483,320 178,448,693 95,162,500 6,660,096 - 370,754,609
Effect of difference in amortization of Land Development cost as per
SLAS 18 (Note 28 (a))
(1,547,428) - (1,547,428)
Recognition of Deferred Tax Liability as per SLAS 10 (Note 28 (b)) (19,961,034) (1,885,918) - (21,846,952)
Balance as at March 31, 2009 (Restated) 90,483,320 158,487,659 95,162,500 3,226,750 - 347,360,229
Non Controlling Interest as at April 01, 2009 - - - - 3,614,730 3,614,730
Profit for the Year - - - 125,747,787 (5,149,529) 120,598,258
Revaluation Surplus - 47,948,612 - - - 47,948,612
Share of Loss of Non Controlling Interest Borne by the Equity Holding
of the Parent.
(1,534,799) 1,534,799 -
Deferred Tax Arising on Revaluation - (7,192,293) - - - (7,192,293)
Transferred to General Reserves - - 75,000,000 (75,000,000) - -
Balance as at March 31, 2010 90,483,320 199,243,978 170,162,500 52,439,738 - 512,329,536
Company
Stated Revaluation General Retained Total
Capital Reserves Reserves Earnings
Balance as at April 01, 2008 90,483,320 178,448,693 90,098,101 6,477,512 365,507,626
- - (43,675,000) - (43,675,000)
Profit for the Year - - - 48,921,983 48,921,983
Transferred to General Reserves - - 48,739,399 (48,739,399) -
Balance as at March 31, 2009 as Previously Reported 90,483,320 178,448,693 95,162,500 6,660,096 370,754,609
Effect of difference in amortization of Land Development cost as per
SLAS 18 (Note 28 (a))
(1,547,428) (1,547,428)
Recognition of Deferred Taxation as per SLAS 10 (Note 28 (b)) (19,961,034) (1,885,918) (21,846,952)
Balance as at March 31, 2009 (Restated) 90,483,320 158,487,659 95,162,500 3,226,750 347,360,230
Profit for the Year - - - 85,964,490 85,964,490
Revaluation Surplus - 86,045,222 - - 86,045,222
Deferred Tax Arising on Revaluation - (12,906,784) - - (12,906,784)
Transferred to General Reserves - - 75,000,000 (75,000,000) -
Balance as at March 31, 2010 90,483,320 231,626,097 170,162,500 14,191,240 506,463,157
Audit Report on Page 1
Figures in brackets indicate deductions
Accounting Policies and Notes to the Financial Statements on pages 6 to 19 form an integral part of these Financial Statements
Net Gain / (Loss) recognized directly in Equity on Repurchase of Shares
Attributable to Equity Holders of the Parent
Introductory DocumentͲOrient Garments Limited 63
Page 5
ORIENT GARMENTS (PRIVATE) LIMITED
CASH FLOW STATEMENT
Group
2010 2010 2009
As at 31 March Restated
Operating Activities
Profit Before Taxation 139,246,345 103,420,765 48,477,378
Adjustments for:
Depreciation 34,733,313 26,751,385 25,715,133
Provision for Gratuity 14,373,047 11,006,102 5,923,552
Prior Year Adjustments - - 1,547,428
Gain on Disposal of Property, Plant and Equipment (2,083,333) - (1,083,000)
Money Received under Export Development Rebate Scheme (10,000,000) (10,000,000) -
Provision for Impairment of Investment in Subsidiaries - 7,000,000 -
Amortization of Pre Paid Lease - Lease Hold Land 54,938 54,938 -
Amortization of Finance Leasing Interest in Suspense 984,217 984,217 -
Interest Cost 77,018,588 70,461,371 -
Long Term Loans Written Back (33,958,647) - -
Interest Income (435,319) (92,735) -
Operating Profit Before Working Capital Changes 219,933,149 209,586,043 80,580,491
Working Capital Changes
Inventories (40,192,746) (43,877,100) 15,095,983
Trade and Other Receivables 112,208,484 119,234,514 (73,240,190)
Trade Creditors 45,956,245 52,987,219 (32,072,765)
Cash Generated from Operations 337,905,132 337,930,677 59,301,315
Gratuity Paid (5,342,910) (4,784,885) (4,471,435)
Income Tax / ESC Paid (7,644,109) (7,200,143) (1,102,823)
Net Cash Flow from Operating Activities 324,918,113 325,945,649 53,727,057
Investing Activities
Purchase of Property, Plant and Equipment (14,255,004) (13,598,778) (24,507,535)
Proceeds from Sale of Property, Plant and Equipment 2,083,333 - 1,083,000
Increase in Investments - (2,873,788) (19,438,199)
Interest Received 435,319 92,735 -
Net Cash Flow from / (used in) Investing Activities (11,736,352) (16,379,831) (42,862,733)
Financing Activities
Proceeds from Loans 10,260,000 - 118,780,595
Interest Paid (77,018,588) (70,461,371) -
Repayment of Loans / Leases (34,484,588) (33,843,338) (41,751,532)
Repayment of Short Term Borrowings on Trade Finance (175,434,805) (175,434,805) 68,937,796
Money Received under Export Development Rebate Scheme 10,000,000 10,000,000 -
Net Cash Flow from / (used in) Financing Activities (266,677,980) (269,739,513) 77,029,063
Net Change in Cash and Cash Equivalents During the Year 46,503,781 39,826,304 87,893,386
Cash and Cash Equivalents at Beginning of the Year (41,850,189) (33,638,456) (121,531,842)
Cash and Cash Equivalents at End of the Year 4,653,592 6,187,848 (33,638,456)
Cash and Cash Equivalents at End of the Year Represented by: March 31,2010 March 31,2010 March 31,2009
Cash at Bank and in Hand 30,428,578 28,586,362 33,610,130
Bank Overdrafts (25,774,986) (22,398,514) (67,248,586)
4,653,592 6,187,848 (33,638,456)
Audit Report on Page 1
Figures in brackets indicate deductions
Accounting Policies and Notes to the Financial Statements on pages 6 to 19 form an integral part of these Financial Statements
(Expressed in Sri Lankan Rupees)
Company
64 Introductory DocumentͲOrient Garments Limited
65
Introductory Document-Orient Garments Limited
Page 6
ORIENT GARMENTS (PRIVATE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2010
1. CORPORATE INFORMATION
1.1 General
Orient Garments (Private) Limited is a Limited Liability Company incorporated and domiciled in Sri Lanka. The
registered office of the company is located at 49/16, Iceland Building, Galle Road, Colombo 03, while its principal
place of business is Located at 78B, Polgasowita Road, Mattegoda.
The Company is a BOI Venture for the manufacturing and exporting of Outerwear, Casual-wear apparels. Orient
Group has five fully equipped modern factory complexes located at Mattegoda, Weligama, Koggala (EPZ),
Deniyaya and Piliyandala.
1.2 Principle Activities and Nature of Operations
During the year, the principal activities of the Company were manufacturing and exporting of apparels.
1.3 Parent Enterprise
The parent undertaking is Orient Garments (Private) Limited and the ultimate parent of the Group is also the same.
1.4 Date of Authorization for Issue and Revision of the Financial Statements
The Financial Statements were authorized for issue by the Directors on 01, September 2010, however the Financial
Statements of the Company for the year ended 31 March 2010 were re-cast based on the recommendation given by
the Colombo Stock Exchange (CSE) by their letter dated 25, March 2011, and the amended Financial Statements
were authorized on 07 April 2011. Further, on the recommendation given by the CSE by their letter dated 21 April
2011, the Financial Statements once again were re-cast and the amended Financial Statements were approved by the
Board of Directors on 06 May 2011.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 GENERAL ACCOUNTING POLICIES
2.1.1 Basis of Preparation
These Financial Statements presented in Sri Lankan Rupees have been prepared under the historical cost or
revaluation in accordance with Generally Accepted Accounting Principles and the Accounting Standards laid down
by the Institute of Chartered Accountants of Sri Lanka.
2.1.2 Statement of Compliance
The Balance Sheet, Statements of Income, Changes in Equity and Cash Flow together with Accounting Policies and
Notes (Financial Statements) of the Company and the Group as at 31, March 2010 and for the year then ended have
been prepared in compliance with the Sri Lanka Accounting Standards (SLAS) issued by the Institute of Chartered
Accountants of Sri Lanka and the requirements of the Companies Act No 7 of 2007.
2.1.3 Significant Accounting Judgments, Estimates and Assumptions
The preparation of groups consolidated and Company Financial Statements in conformity with SLASs, requires
management to make judgments, estimates, and assumptions that affects the application of accounting policies and
reported amounts of assets, liabilities, income and expenses and disclosure of contingent liabilities, at the reporting
date. However, uncertainty about these assumptions and estimates could result in outcome that require material
adjustments to the carrying amounts of assets or liabilities effected in future periods.
The judgments, estimates and underlying assumptions are based on historical experience and various other factors
that are believed to be reasonable under the circumstances, the results of which form the basis of making the
judgments, estimates and assumptions about the carrying amount of assets, liabilities and contingent liabilities that
are not readily identified from other sources.
The judgments, estimates and underlying assumptions are reviewed on and ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the
period of the revision and future periods if the revision affects both current and future periods.
Judgments, estimates and assumptions made by the management in application of SLASs that could have a
significant effect on the Financial Statements are mentioned below.
Notes to the Financial Statements continued on Page 7
Introductory Document-Orient Garments Limited
66
Page 7
ORIENT GARMENTS (PRIVATE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2010
Policy
Valuation of Property, Plant & Equipment 2.3.1
Deferred Taxation 2.1.9
Valuation of Employee Benefits 2.4.2
2.1.4 Comparative Information
The accounting policies have been consistently applied by the Company and are consistent with those of the
previous year. The previous year figures and phrases have been re-arranged wherever necessary to conform to the
current year`s presentation.
2.1.5 Discontinuing Operations
A discontinuing operation is clearly a distinguishable component oI the Company`s business that is an abandoned or
terminated pursuant to a single plan and which represents a separate major line of industry or geographical area of
operations.
As at the balance sheet date, the Company does not have any discontinuing operations.

2.1.6 Investments
All investments, which are held as Long term, are valued at cost, and test for impairment.
2.1.7 Foreign Currency Transactions
All foreign exchange transactions are converted to Sri Lankan Rupees, which is the reporting currency at the rates of
exchange prevailing at the time the transactions were effected.
Monetary assets and liabilities denominated in foreign currencies are translated to Sri Lankan Rupee equivalents
using the year end foreign exchange rates, the resulting gains or losses are accounted in the Income Statement.
2.1.8 Taxation
The Group recognizes liability for anticipated tax based on estimates of taxable income where the final tax outcome
of these matters is different from the amount that were initially recorded, such differences will impact the current
and deferred income tax assets and liabilities in the period in which such determination is made.
2.1.9 Deferred Tax
Deferred tax is recognized using the Liability Method, providing for temporary differences between carrying
amounts of assets and liabilities for financial reporting purposes and the amount used for taxation purpose. Deferred
tax is not recognized further following temporary differences for which 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 investment in subsidiaries to the extent that they probably will not reverse in the foreseeable
future. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition
of goodwill. 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 reporting date. Deferred tax
assets and liabilities are offset if there is a legal enforceable right to set off current tax liabilities and assets and they
relate to income taxes levied by the same tax authorities on the same taxable entity.
A deferred tax asset is recognized only to the extent that it is probable that future profits will be available against
which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are
reduce to the extent that is no longer probable that the related tax benefits will be realized.
2.2 CONSOLIDATION
a) Subsidiaries
Subsidiaries are all entities over which the Group has the power directly or indirectly to govern the financial and
operating policies of an entity so as to obtain benefits from its activities, which is evident when the company controls
the composition of the board of Directors of the entity or holds more than 50% of the voting right of the entity or
entitled to receive more than half of every dividend from each shares carrying unlimited right to participate in
distribution of profits or capital. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Parent.
Notes to the Financial Statements continued on Page 8
67
Introductory Document-Orient Garments Limited
Page 8
ORIENT GARMENTS (PRIVATE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2010
b) Non-Controlling Interest
The Financial Statements of subsidiaries are included in the Consolidated Financial Statements from the date that
control commences until the date control ceases. The interest of outside shareholders in Group Companies is
disclosed separately under the heading oI 'Non-Controlling Interest¨.
c) Transactions Eliminated on Consolidation
Inter-company transactions, balances and unrealized gains on transactions between Group Companies are eliminated.
Unrealized gains arising from transactions with Group Companies are eliminated against the investment to the extent
of the group`s interest in the investee. Unrealized losses are also eliminated in the same way as unrealized gains, but
only to the extent there is no evidence of impairment.
d) Reporting Date
All the subsidiaries and the parent have a common financial year ending 31 March.
2.3 ASSETS AND BASES OF THEIR VALUATION
Assets classified as current assets on the Balance Sheet are Cash and Bank balances and those which are expected to
be realized in cash during the normal operating cycle or within one year from the Balance Sheet date, whichever is
shorter.
2.3.1 Property, Plant and Equipment
Permanent Land Development Cost
Permanent land and development costs are those costs on building new access roads on leased land as part of a major
infrastructural development. The cost has been capitalized and amortized over the shorter of useful life or remaining
lease period.
The Property, plant and equipment are stated at cost or valuation less accumulated depreciation and impairment
losses if any.
The cost of property, plant and equipment is the cost of acquisition or construction together with any expenses
incurred in bringing the assets to its working condition for its intended use.
Expenditure incurred for the purpose of acquiring, extending or improving assets of a permanent nature by means of
which to carry on the business or to increase earning capacity of the business has been treated as capital expenditure.
Revaluation
A revaluation of property, plant and equipment is done when there is a substantial distinction between the fair value
(market value) and the carrying amount of the asset and is normally undertaken by a professionally qualified valuer.
When an asset is revalued, any increase in the carrying amount is credited directly to a revaluation surplus unless it
reverses a previous revaluation decrease relating to the same asset, which was previously recognized as an expense.
In these circumstances the increase is recognized as income to the extent of the previous write down. When an
asset`s carrying amount is decreased as a result of a revaluation, the decrease is recognized as an expense unless it
reverses a previous increment relating to that asset, in which case it is charged against any related revaluation
surplus, to the extent that the decrease does not exceed the amount held in the revaluation surplus in respect of that
same asset. Any balance remaining in the revaluation surplus in respect of an asset, is transferred directly to
accumulated profits on retirement or disposal of the asset.
2.3.2 Depreciation
Provision for depreciation is calculated by using straight line on the cost or valuation of all property plant and
equipment other than freehold land, in order to write off such amounts over the estimated useful lives of such assets.
Which are given below. Depreciation Method and useful lives and residual values are reassessed at every Balance
Sheet Date.
Notes to the Financial Statements continued on Page 9
Introductory Document-Orient Garments Limited
68
Page 9
ORIENT GARMENTS (PRIVATE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2010
Asset Category Depreciation Rate Useful Life
Amortization of Lease hold Land Development Cost - Koggala Factory 2% 50 Years
Amortization of Lease hold Land Development Cost - Deniyaya Factory 4% 25 Years
Buildings 5% 20 Years
Plant, Machinery 20% 05 Years
Factory Equipment and Office Equipment 10% 10 Years
Furniture & Fittings 10% 10 Years
Motor Vehicles 25% 04 Years
Depreciation of assets begins when it is available for use and ceases of the earlier of the dates on which the asset is
classified as held for sale and or is de-recognized.
2.3.3 Impairment
The carrying amounts oI the Group`s non-financial assets, other than inventories and deferred tax assets are
reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such
indication exists, the asset`s recoverable amounts are estimated.
For goodwill, recoverable amount is estimated at each balance sheet date or as and when an indication of impairment
is identified.
2.3.3.1 Impairment / Reversal of impairment
An impairment loss is recognized if the carrying amount of an asset or its cash generating unit exceeds its
recoverable amount. Impairment losses are recognized in profit and loss. A cash generating unit is the smallest
identifiable asset group that generates cash flows that are largely independent from other assets and Groups.
Impairment loss recognized in respect of subsidiaries acquired are allocated first to reduce the carrying amount of
any goodwill allocated to the entity and then to reduce the carrying amount of the other assets in the entity 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 assessment of the time value of money and risks specific to the asset
or cash generating unit.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in
prior periods are assessed at 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 assets carrying amount do not exceed the carrying amounts
that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
2.3.4 Finance Leases
Property, plant and equipment on finance leases which effectively transfer to the company substantially all the risks
and benefits incidental to ownership of the leased items are capitalized at the inception of the lease at the fair value
of the leased property or, if lower, at the present value of the minimum lease payment at inception less accumulated
depreciation.
The total interest payable is accounted as interest in suspense. The corresponding credit is recorded on lease as an
amount payable to the lessor. The installments paid are used to reduce the liability. The Interest charge of the year is
transferred from the interest suspense account to the income statement.
2.3.5 Operating Leases
Leases, where the lessor effectively retains substantially all the risks and rewards of ownership over the lease term
are classified as operating lease. Payments made under operating lease are recognized in Income Statement on
straight-line basis over the period of lease.
Notes to the Financial Statements continued on Page 10
69
Introductory Document-Orient Garments Limited
Page 10
ORIENT GARMENTS (PRIVATE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2010
2.3.6 Goodwill
Goodwill represents the excess oI the cost oI an acquisition over the Iair value oI the Group`s share oI the net
identifiable assets and liabilities of the acquired subsidiary at the date of acquisition.
Negative goodwill arising on acquisition represents the excess of the Group interest in the fair value of the assets and
liabilities acquired over the cost of acquisition. Negative goodwill is recognized immediately in the income
statement. Goodwill is not amortized; instead Goodwill is reviewed for impairment annually or more frequently in
the events or changes in circumstances indicates that the carrying value may be impaired.
2.3.7 Inventories
Inventories are measured at the lower of cost or net realizable value, after making due allowances for obsolete and
slow moving items. Net realizable value is priced at which inventories can be sold in the ordinary course of business
less the estimated cost of completion and estimated cost necessary to make the sale.
The cost incurred in bringing inventories to its present location and condition is accounted using the following cost
formula.
Raw Material - At cost determined on first-in-first-out basis
Finished Goods - At the cost of direct materials, direct labour and appropriate proportion of fixed production
overheads at normal operating capacity.
Work-in-progress - At the cost of direct materials, direct labour and appropriate proportion of fixed Production
overheads.
Packing Material - At cost determined on first-in first-out basis
Goods in Transit - At actual cost
Raw materials are valued at the lower of cost or net realizable value. Finished goods and work-in-progress are
valued at average cost and includes labour and appropriate overheads absorbed under normal level of activity.
2.3.8 Trade Debtors and Receivables
Trade receivables are carried out at anticipated realizable value. A provision for impairment of trade receivables is
established when there is reasonable evidence that the company will not be able to collect all amounts due according
to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will
enter bankruptcy or financial re-organization and default payments are considered as indicators that a trade
receivable is impaired. When the carrying amount of the asset is reduced, the loss is recognized in the Income
statement. When a trade receivable is uncollectible, it is written off against the provision for trade receivable.
Subsequent recoveries of amounts previously written off are credited against other operating expenses in the
Income Statement.
2.3.9 Cash and Cash Equivalents
Comprise of cash in hand, demand deposits and bank balance. For the purpose of the Cash Flow Statement, cash and
cash equivalents comprise cash in hand, deposits held with banks, other short term highly liquid investments with
original maturity of three months or less, and bank overdrafts.
2.4 LIABILITIES AND PROVISIONS
2.4.1 Liabilities
All known liabilities have been accounted for in preparing the Financial Statements and adequate provisions have
been made for liabilities which are known to exist.
Notes to the Financial Statements continued on Page 11
Introductory Document-Orient Garments Limited
70
Page 11
ORIENT GARMENTS (PRIVATE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2010
2.4.2 Retiring Benefit Costs
(a) Defined Benefit Plan - Retirement Gratuity Provision
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The liability
recognized in the Financial Statements in respect of defined benefit plan is the present value of the defined
obligation at the reporting date. The defined benefit obligation is calculated using the projected unit credit method as
stipulated in SLAS 16, 'Retirement BeneIits¨. The present value of the defined benefit obligation is determined by
discounting the estimated future cash outflows using interest rates that are determined in currency in which the
benefits will be paid and that have terms to maturity approximating to the terms of the related liability.
Provision has been made for retirement gratuities from the first year of service for all employees, in conformity with
SLAS 16 (Revised 2006) on retirement benefit costs. However, under the payment of gratuity Act No. 12 of 1983,
the liability to an employee arises only on completion of 5 years of continued service.
The liability is not externally funded.
The key assumption used includes the followings,
01. Rate of Interest at 9.50%
02. Rate of annual Salary increment at 10%
03. Retirement age of all employees at 55 Years
(b) Defined Contribution Plans - Employees Provident Fund & Employees Trust Fund
All employees who are eligible for Employees Provident Fund contribution and Employees Trust Fund contribution
are covered by relevant contribution funds in line with respective statutes and regulations. Employers contributions
to these defined contribution plans are recognized as an expense in the Income Statement as incurred.
2.5 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`s performance.
2.5.1 Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the
revenue and associated costs incurred or to be incurred can be reliably measured. Revenue is measured at the fair
value of the consideration received or receivable net of trade discounts and sales taxes.
2.5.2 Sale of Goods
Revenue from the sales of goods is recognized in the Income Statement when the significant risks and rewards of
ownership have been passed to the buyer with the Group retaining neither continuing marginal involvement to the
degree usually associated with ownership, nor an effective control over the goods sold.
2.5.3 Interest Income
Interest income is recognized as the interest accrued on the time basis (taking into account the effective yield on the
asset) unless collectability is in doubt.
2.5.4 Government Grants
Grants related to property, plant & equipment are initially deferred and allocated to income on a systematic basis
over the useful life of the related PPE. Grants related to income are recognized in the Income Statement in the year
in which it is received.
2.5.5 Turnover
The turnover represents the invoice value of exports.
2.5.6 Expenses
All expenditure incurred in the running of the business has been charged to income in arriving the profit for the year
on an annual basis.
2.6 CASH FLOW
The Cash Flow Statement has been prepared on the indirect method.
Notes to the Financial Statements continued on Page 12
71
Introductory Document-Orient Garments Limited
Page 12
ORIENT GARMENTS (PRIVATE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2010
2.7 EFFECT OF ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE
The following standards have been issued by the institute of chartered accountants of Sri Lanka and are effective for
the period specified below.
2.7.1 Sri Lanka Accounting Standard No. 44 - Financial Instruments; Presentation Sri Lanka Accounting
Standard No. 45 - Financial Instruments; Recognition and Measurement.
Sri Lanka Accounting Standards No 44 and No 45 becomes effective for financial years beginning on or after 1
st
January, 2012. Accordingly, Sri Lanka Accounting Standards 44 and 45 will be adopted in preparing and presenting
the Group Financial Statements for the financial years commencing 1 April, 2012
These two standards together provide comprehensive guidance on identification, classification, measurement and
presentation of financial instruments (including derivatives) into financial assets, financial liabilities and equity
instruments.
Accordingly, when financial assets or liabilities are recognized initially, the Group is required to measure such
financial assets or liabilities at its fair value plus transaction costs that are directly attributable to the acquisition or
issue of the financial assets, financial liability and subsequently measure either at fair value or amortized cost
depending on the categorization of the financial assets and financial liabilities.
In order to comply with the requirements of these accounting standards, the Group is in the process of assessing the
impact, the aforesaid two Accounting Standard will have on the Financial Statements.
Due to the complex nature of the effect of these Accounting Standards, the impact of adoption is not estimable as at
the date of publication of these Financial Statements.
2.7.2 Sri Lanka Accounting Standard No. 44 - 'Share Based Payment`
Sri Lanka Accounting Standard No.39 becomes effective for financial years beginning on or after 1 January, 2012.
Accordingly, Sri Lanka Accounting Standards No.39 will be adopted in preparing and presenting the Group
Financial Statements for the financial years commencing 1 April, 2012.
Sri Lanka Accounting Standards No.39 requires an expense to be recognized where the Group buys good or services
in exchange for share or right over shares (equity-settled transactions), or in exchange for other assets equivalent in
value to a given number of shares or rights over shares (cash-settled transactions). For equity settled share based
payments transactions, the Group is required to apply Sri Lanka Accounting Standards No.39 in issuing shares, share
option or other equity instruments that are to be issued after 1 January, 2012.
The Group is currently in the process of evaluating the impact of this Accounting Standard that will have on
Financial Statements, and the impact if the same is not currently estimate as at the date of publication of the
Financial Statements.
Notes to the Financial Statements continued on Page 13
Page 13
ORIENT GARMENTS (PRIVATE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in Sri Lankan Rupees)
Group
For the Year Ended 31 March 2010 2010 2009
3 Turnover
Income from Exports 2,801,673,323 2,782,889,411 2,853,980,805
4 Other Income
FCBU Income / Exchange Gain 435,319 92,735 -
Gain on Disposal of Property, Plant and Equipment 2,083,333 - 1,083,000
Written Back Long Term Loans 33,958,647 - -
Grant Received from Export Development Rebate Scheme 10,000,000 10,000,000 -
46,477,299 10,092,735 1,083,000
5 Finance Expenses
Interest on Long Term Loans and Borrowings 4,336,053 4,275,298 76,688,915
Interest on Short Term Loans and Borrowings 72,737,472 66,241,010 5,542,616
Interest on Finance Leases 984,218 984,218 1,119,075
78,057,743 71,500,526 83,350,606
6 Profit Before Taxation
Group
2010 2010 2009
Restated
Directors' Remuneration 2,579,000 2,579,000 2,667,973
Auditors' Remuneration 208,000 100,000 100,000
Depreciation 34,733,313 26,751,385 25,715,133
Defined Contribution Plan Cost - EPF / ETF 59,717,196 17,268,886 19,124,880
Defined Benefit Plan Cost - Retiring Gratuity 19,113,889 14,250,737 5,923,552
Other Staff Cost 144,902,780 123,113,872 138,787,696
Legal Fees 48,510 48,510 70,325
7 Income Tax Expenses
Accounting Profit Before Taxation 139,246,345 103,420,765 48,477,378
Aggregate of Disallowable Expenses 59,372,962 47,937,137 26,951,412
Aggregate of Allowable Expenses (72,480,614) (32,378,190) (60,941,792)
Total Statutory Income 126,138,694 118,979,713 14,486,998
Tax Losses Brought Forward and Utilised (2,505,643) - -
Income from Exempted Sources (10,092,735) (10,092,735) (7,243,499)
Assessable Income/Taxable Income 113,540,316 108,886,978 7,243,499
Income Tax 15% 17,031,047 16,333,047 1,086,525
SRL 1.5% 255,466 244,996 16,298
Total Tax Expense 17,286,513 16,578,042 1,102,823
Deferred Tax 1,361,574 878,233 1,885,918
Tax Expense Charged to the Income Statement 18,648,087 17,456,275 2,988,741
8 Basic Earnings Per Share
Amount used as the Numerator
Profit Attributable to the Equity Shareholders of the Year (Rs.) 125,747,787 85,964,490 45,488,637
Amount used as the Denominator
Number of Shares - before Split 6,864,582 6,864,582 6,864,582
Number of Shares - after Split Note 27.1 54,916,656 54,916,656 54,916,656
Basic Earnings Per Share before Split (Rs.) 18.32 12.52 6.63
Basic Earnings Per Share after Split (Rs.) 2.29 1.57 0.83
Figures in brackets indicate deductions
Notes to the Financial Statements Continued on Page 14
Company
The calculation of basic earnings per share has been done based on profit after tax attributable to the equity shareholders of the parent for
the year divided by the weighted average number of ordinary shares outstanding during the year.
Company Profit Before Taxation is arrived at after charging all expenses
including the following.
72 Introductory DocumentͲOrient Garments Limited
Page 14
ORIENT GARMENTS (PRIVATE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
9 Property, Plant and Equipment
9.1 Group
Balance as at
March 31, 2010
Freehold Assets
Land and Land Development 53,623,977 - - 2,178,420 55,802,397
Buildings 444,647,486 4,085,506 - (68,615,718) 380,117,274
Plant and Machinery 336,894,300 7,803,789 - (34,281,876) 310,416,213
Factory Equipment and Office Equipment 36,799,647 1,948,440 - - 38,748,087
Furniture and Fittings 29,088,492 417,269 - - 29,505,761
Motor Vehicles 16,415,667 - (1,687,908) - 14,727,759
917,469,569 14,255,004 (1,687,908) (100,719,174) 829,317,491
Leasehold Assets
Land Development Cost 27,828,291 - - - 27,828,291
Motor Vehicles 15,514,500 - - - 15,514,500
43,342,791 - - - 43,342,791
960,812,360 14,255,004 (1,687,908) (100,719,174) 872,660,282
Freehold Assets
Buildings 74,449,023 11,761,423 - (84,504,560) 1,705,885
Plant and Machinery 257,481,670 14,075,918 - (64,163,226) 207,394,362
Factory Equipment and Office Equipment 26,971,983 2,124,514 - - 29,096,498
Furniture and Fittings 27,134,538 1,444,676 - - 28,579,215
Motor Vehicles 13,987,308 1,031,750 (1,687,908) - 13,331,150
400,024,523 30,438,281 (1,687,908) (148,667,786) 280,107,110
Leasehold Assets
Land Development Cost 5,369,203 749,853 - - 6,119,056
Motor Vehicles 9,868,867 3,545,179 - - 13,414,046
15,238,070 4,295,032 - - 19,533,102
415,262,593 34,733,313 (1,687,908) (148,667,786) 299,640,211
Carrying Value 545,549,767 573,020,071
Class of Asset Cost Cumulative Net Carrying Net Carrying
Depreciation Amount Amount
if assets were 2010 2009
carried at cost
Land and Land Development 1,849,872 - 1,849,872 1,849,872
Buildings 200,111,204 124,899,534 75,211,670 78,752,048
Plant and Machinery 64,463,226 64,463,226 - -
The Gross carrying amounts of fully depreciated assets still in use as at the Balance Sheet date are as follows
Class of Assets Group Company
Plant and Machinery 142,604,969 142,604,969
Factory Equipment 25,464,208 15,162,218
Furniture Fittings/Office Equipmen 25,906,039 14,472,495
Motor Vehicles 3,878,797 8,055,745
Total 197,854,013 180,295,427
Figures in brackets indicate deductions
Notes to the Financial Statements Continued on Page 15
(Expressed in Sri Lankan Rupees)
Depreciation/Amortisation
Balance as at
April 1, 2009
Freehold Land of the Company, Buildings of the Group and Plant & Machinery of the Subsidiary (Stafford Orient (Pvt) Limited) were revalued in 31
March 2010 by Mr. A.G. Gunarathna, an independent incorporated valuer. The said assets were valued based on an open market value on existing use
basis. The results of such valuation net of deferred tax was recognised in the Financial Statements as at 31st March 2010 by transferring the surplus
arising thereon to the revaluation Reserve.
Disposals
Balance as at
March 31, 2010
Balance as at
April 1, 2009
Revaluation
Charge for
the Year
During the financial year, the Group acquired Property, Plant & Equipment to the aggregate value of Rs.14,255,004/-. Payments amounting to Rs.
14,255,004/- were made during the year for purchase of Property, Plant & Equipment.
Disposals Additions Revaluation
The carrying amounts of revalued assets that would have been included in the financial statements had the assets been carried at cost less
depreciation is as follows:
Cost / Valuation
Introductory Document-Orient Garments Limite 73
Page 15
ORIENT GARMENTS (PRIVATE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
9 Property, Plant and Equipment Contd.,
9.2 Company
Balance as at Balance as at
April 1, 2009 March 31, 2010
Restated
Freehold Assets
Land and Land Development 45,046,580 - - 2,178,420 47,225,000
Buildings 283,684,155 4,085,506 - 9,277,542 297,047,203
Plant and Machinery 259,171,934 7,803,789 - - 266,975,723
Factory Equipment and Office Equipment 25,763,712 1,540,714 - - 27,304,426
Furniture and Fittings 17,107,473 168,769 - - 17,276,242
Motor Vehicles 10,848,962 - - - 10,848,962
641,622,816 13,598,778 - 11,455,962 666,677,556
Leasehold Assets
Land Development Cost 20,910,821 - - - 20,910,821
Motor Vehicles 15,514,500 - - - 15,514,500
36,425,321 - - - 36,425,321
678,048,137 13,598,778 - 11,455,962 703,102,877
Restated
Freehold Assets
Buildings 68,561,973 6,027,287 - (74,589,260) -
Plant and Machinery 192,049,280 12,381,025 - - 204,430,305
Factory Equipment and Office Equipment 16,552,669 2,052,778 - - 18,605,447
Furniture and Fittings 15,557,852 1,240,212 - - 16,798,063
Motor Vehicles 8,420,603 1,031,750 - - 9,452,353
301,142,376 22,733,052 - (74,589,260) 249,286,168
Leasehold Assets
Land Development Cost 3,709,010 473,154 - - 4,182,164
Motor Vehicles 9,868,867 3,545,179 - - 13,414,046
13,577,877 4,018,333 - - 17,596,210
314,720,253 26,751,385 - (74,589,260) 266,882,378
Carrying Value 363,327,885 436,220,499
Class of Asset Cost Cumulative Net Carrying Net Carrying
Depreciation Amount Amount
if assets were 2010 2009
carried at cost
Land and Land Development 1,849,872 - 1,849,872 1,849,872
Buildings 135,947,978 60,736,308 75,211,670 78,752,048
Group
10 Prepaid Lease - Leasehold Land 2010 2010 2009
Restated
Balance at Beginning of the Year 2,252,437 2,252,437 2,307,375
Amortization for the Period (54,938) (54,938) (54,938)
Balance at End of the Year 2,197,499 2,197,499 2,252,437
10.1
Figures in brackets indicate deductions
Notes to the Financial Statements Continued on Page 16
Land & buildings with a carrying amount of Rs. 344,272,203/- (2009 Rs. 260,168,762/-) are subject to a primary mortgage to secure the overdraft and
import trade facilities obtained from Hatton National Bank PLC and Bank of Ceylon.
Freehold Land and Buildings of the Company were revalued in 31 March 2010 by Mr. A.G. Gunarathna, an independent incorporated valuer. The said
assets were valued based on an open market value on existing use basis. The results of such valuation net of deferred tax was recognised in the Financial
Statements as at 31st March 2010 by transferring the surplus arising thereon to the revaluation Reserve.
The carrying amounts of revalued assets that would have been included in the financial statements had the assets been carried at cost less
depreciation is as follows:
During the financial year, the Company acquired Property, Plant & Equipment to the aggregate value of Rs.13,598,778.00 (2009 Rs. 26,070,067/-).
Payments amounting to Rs. 13,598,778/- (2009 Rs.26,070,067/-) were made during the year for purchase of Property, Plant & Equipment.
Charge for
the Year
Balance as at
April 1, 2009
The Company entered into an Agreement (No. 31 dated 27/04/2000) with Board of Investment of Sri Lanka to manufacture and export of garments at
Koggala Export Processing Zone. The land was allocated to the Company for a period of 50 years commencing from27th April 2000 to 26th April 2050.
Therefore, the initial cost (Rs. 2,746,875/-) of the land is amortized over the lease period of 50 years at the rate of 2% per annum.
Company
Disposals Revaluation
Revaluation
Additions
Disposals
Balance as at
March 31, 2010
Depreciation/Amortisation
Cost / Valuation
(Expressed in Sri Lankan Rupees)
74 Introductory DocumentͲOrient Garments Limited
Page 16
ORIENT GARMENTS (PRIVATE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
As at 31 March 2010 2009
11 Intangible Assets - Goodwill
Balance As at April 01, 2009 - -
Recognized During the Year 55,098,462 -
Balance As at March 31, 2010 55,098,462 -
11.1
The composite value of Goodwill recognized as a result of acquisition of the above two companies are as follows.
Total Consideration Transferred 27,473,788 -
3,614,730 -
Fair Value of identifiable net assets Note 11.2 24,009,944 -
Goodwill 55,098,462 -
11.2 Fair Value of identifiable net assets SOPL PGPL Total
Non-Current Assets 141,995,448 40,226,436 182,221,884
Current Assets 6,009,755 7,354,989 13,364,744
Non-Current Liabilities (123,300,778) - (123,300,778)
Current Liabilities (55,140,555) (41,155,239) (96,295,794)
(30,436,130) 6,426,186 (24,009,944)
As at 31 March 2010 2009
12 Investments in Subsidiaries
Name of the Company Principal Activity % of Holding Cost Cost
Stafford Orient (Private) Limited 100% 20,473,788 17,600,000
Priority Garments (Private) Limited 43.75% 7,000,000 7,000,000
Provision for Impairment (7,000,000) -
20,473,788 24,600,000
Group
As at 31 March 2010 2010 2009
13 Other Investments
Priority Garments (Private) Limited - 12,500,000 12,500,000
Orient Design (Private) Limited - - 2,497,820
Stafford Orient (Private) Limited - 72,519,527 72,519,527
- 85,019,527 87,517,347
14 Inventories
Raw Materials 183,916,334 183,916,334 160,205,483
Work-in-Progress 112,802,085 112,802,085 99,618,628
Finished Goods 79,240,921 79,240,921 93,725,814
Goods-in-Transit 36,683,638 36,683,638 15,215,954
412,642,978 412,642,978 368,765,878
15 Trade and Other Receivables
Trade Debtors 296,916,913 292,696,083 388,104,395
Other Receivables 12,814,607 11,732,525 22,384,832
Amounts Due from Subsidiaries - 17,770,612 26,889,824
VAT Recoverable 21,466,959 19,340,978 22,231,178
331,198,479 341,540,198 459,610,228
Figures in brackets indicate deductions
Notes to the Financial Statements Continued on Page 17
Manufacture of
Apparels
Manufacture of
Apparels
Goodwill represents the difference between the purchase consideration and the fair value of assets acquired as a result of the acquisition
of 100% shares in Stafford Orient (Private) Limited (SOPL) and the acquisition of 43.75% shares in Priority Garments (Private)
Limited (PGPL) effective from April 01, 2009. Goodwill has not been amortized following the requirements of SLAS-25 as there is no
impairment as at March 31, 2010.
Non-controlling interests, based on their proportionate interest in the recognized amounts of the
assets and the liabilities of the acquiree
(Expressed in Sri Lankan Rupees)
Group
Company
Company
Introductory Document-Orient Garments Limited 75
Page 17
ORIENT GARMENTS (PRIVATE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
16 Cash and Cash Equivalents
Short Term Investments - in FCBU 14,380,803 14,380,803 9,000,000
Cash at Bank and in Hand 16,047,775 14,205,559 24,610,130
30,428,578 28,586,362 33,610,130
17 Non Current Assets - Held for Sale
Investments Held for Sale - Orient Design (Pvt) Ltd (Note 17.1) 1,333,334 1,333,334 -
1,333,334 1,333,334 -
17.1 The Company has disposed the investment in Orient Design (Pvt) Limited on 15 February 2011.
18 Stated Capital
Issued and Fully Paid
6,864,582 Ordinary Shares (Note 27.1) 90,483,320 90,483,320 90,483,320
Group
As at 31 March Note 2010 2010 2009
19 Borrowings
Term Loans 19.1 88,896,874 81,843,124 105,497,145
Finance Lease Obligations 19.2 1,408,047 1,408,047 845,717
90,304,921 83,251,171 106,342,862
Term Loans 19.1 29,749,923 27,184,923 34,121,837
Finance Lease Obligations 19.2 1,525,284 1,525,284 4,355,799
31,275,206 28,710,206 38,477,636
19.1 Term Loans
139,618,982 139,618,982 59,537,517
10,260,000 - 118,780,595
149,878,982 139,618,982 178,318,112
(31,232,185) (30,590,935) (38,699,130)
At the End of the Year 118,646,797 109,028,047 139,618,982
88,896,874 81,843,124 105,497,145
29,749,923 27,184,923 34,121,837
118,646,797 109,028,047 139,618,982
19.2
6,318,332 6,318,332 9,370,734
(3,252,403) (3,252,403) (3,052,402)
3,065,929 3,065,929 6,318,332
(132,598) (132,598) (1,116,816)
2,933,331 2,933,331 5,201,516
1,408,047 1,408,047 845,717
1,525,284 1,525,284 4,355,799
2,933,331 2,933,331 5,201,516
Lending Institution Type of Loan Facility
Purpose of the
Loan
Actual Interest
Rate Securities
Commercial Bank of Ceylon PLC Term Loan (on USD)
Conversion of
Overdraft
Facility in to a
Term Loan
3.76% p.a
Fixed Deposits of
Resources
Development
Consultants (Pvt)
Ltd.
Hatton National Bank PLC Term Loan (on USD)
To purchase
Machinery
5.5% p.a
Primary
Mortgage over
Machinery
purchased
Figures in brackets indicate deductions
Notes to the Financial Statements Continued on Page 18
Non-Current Portion of the Interest Bearing Borrowings
Finance Lease Obligations
Transferred to Non - Current Liabilities (Repayable after One Year)
Transferred to Non - Current Liabilities (Repayable After One Year)
(Expressed in Sri Lankan Rupees)
Finance Charges
Net Liability at End of the Year
Repayments During the Year
Transferred to Current Liabilities (Repayable Within One Year)
Company
Transferred to Current Liabilities (Repayable Within One Year)
At the Beginning of the Year
Loans Obtained During the Year
Current Portion of the Interest Bearing Borrowings
Repayments During the Year
Obligation at End of the Year
Gross Liability at Beginning of the Year
76 Introductory DocumentͲOrient Garments Limited
Page 18
ORIENT GARMENTS (PRIVATE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
Group
2010 2010 2009
20 Retirement Benefits Obligations
Balance at Beginning of the Year 30,853,593 24,250,737 22,798,620
Interest Cost 2,931,091 2,303,820 -
(7,671,932) (5,548,455) -
Provision for the Year 19,113,889 14,250,737 5,923,552
Payments Made During the Year (5,342,910) (4,784,885) (4,471,435)
Balance at the End of the Year 39,883,731 30,471,954 24,250,737
21 Deferred Tax Liability
Group
2010 2010 2009
Restated
At Beginning of the Year 32,066,700 21,846,952 -
Charge for the Year 8,553,866 13,785,017 21,846,952
At end of the Year 40,620,566 35,631,969 21,846,952
Deferred Tax Provision as at End of the Year is Made up as Follows:
Temporary Differences Arising from Revaluation 47,463,127 32,867,818 19,961,034
Temporary Differences Arising from Accelerating Depreciation 5,287,267 7,334,944 5,523,528
Temporary Differences Arising from Provision for Gratuity (4,819,348) (4,570,793) (3,637,610)
Temporary Differences Arising from Brought Forward Tax Losses (7,310,480) - -
40,620,566 35,631,969 21,846,952
22 Trade and Other Payables
Trade Creditors 139,547,102 135,235,258 72,132,631
Accrued Expenses 56,163,459 35,207,935 35,811,434
Amounts Due to Related Parties 244,906 244,906 529,125
Other Payables 52,716,406 33,605,042 42,832,732
248,671,873 204,293,140 151,305,922
23 Borrowings on Trade Finance
Hypothecation / Packing Credit Loan 407,416,176 407,416,176 582,850,980
407,416,176 407,416,176 582,850,980
24 Related Party Transactions
Related Party Disclosures are as follows;
24.1 Transactions with Key Management Personnel
Group
2010 2010 2009
a) Key Management Personnel Compensation
Short-term Employee Benefits - Directors' Remunerations 2,579,000 2,579,000 2,667,973
Figures in brackets indicate deductions
Notes to the Financial Statements Continued on Page 19
(Gain) / Loss arising from Changes in the Assumptions or due to (Over) / Under
Provision in the Previous Years
Company
Deferred Tax is provided using the liability method, providing for temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Temporary differences associated with the
Company for which a Deferred Tax liability arises has been recognized. Deferred Tax has been computed taking into consideration the
effective tax rate of 15% for the Company. The Deferred Tax provision as at year end made up as follows.
Company
(Expressed in Sri Lankan Rupees)
The key management personnel of the Company are the members of its Board of Directors and that of its related entities.
Company
Introductory Document-Orient Garments Limited 77
Page 19
ORIENT GARMENTS (PRIVATE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
24.2 Transactions with Other Related Entities / Parties
Name of the Company Name of the Directors Relationship
Nature of
transaction
Balance as at
March 31, 2010
24.2.1Finco (Pvt) Limited Mr. S.C. Weerasooria 343,974
Mr. R.P. Weerasooria
24.2.2Alpha Industries (Pvt) Limited Mr. S.C. Weerasooria (99,068)
Mr. Harsha De Saram
Mr. R.P. Weerasooria
24.2.3Stafford Orient (Pvt) Limited Mr. S.C. Weerasooria Subsidiary 72,519,527
Mr. Harsha De Saram
Mr. R.P. Weerasooria Working Capital 13,256,752
Note 1
24.2.4Priority Garments (Private) Limited Mr. R.P. Weerasooria Subsidiary 12,500,000
Working Capital 4,513,860
Note 2
24.2.5Orient Design (Pvt) Ltd Mr. R.P. Weerasooria Note 3 Nil
Note 1
The Company has purchased goods worth of Rs. 142,407,257/- which was the total sales of the above subsidiary.
Note 2
The Company has purchased goods worth of Rs. 58,503,689/- from the above subsidiary.
Note 3
The Company has purchased goods worth of Rs. 28,852,875/- .
25 Commitments
26 Contingent Liabilities
27 Post Balance Sheet Events
27.1
27.2
28 Prior Year Adjustments
(a)
(b)
Figures in brackets indicate deductions
(Expressed in Sri Lankan Rupees)
Related
Company with
Common
Directors
Long Term
Receivable
Related
Company with
Common
Directors
The Company carried out transactions on ordinary course of it's business on an arms length basis with its related Companies.
The company has not recognized the deferred tax liability in the financial statements of 2008/2009. In the current reporting period, the
provision was made retrospectively and the previous year figures were restated to incorporate the deferred tax liability in accordance
with the accounting policy disclosed under the Note No. 2.1.9 to the financial statements. Accordingly, Rs. 21,846,952/- was adjusted to
the opening balance of the equity statement.
Amortization of Prepaid Lease on Leasehold Land
Orient Garments (Private) Limited re registered on 10th of November 2010 as a public Company and has submitted an application to list
it's Shares on Diri Savi Board of Colombo Stock Exchange on 31 December 2010.
Long Term
Receivable
There were no material commitments, financial or other contracted or consented by the Board of Directors as at the Balance Sheet date.
Related
Company with
Common
Directors
Pursuant to the approval by the Shareholders at an extra ordinary general meeting, the Shares of the Company were split on 28th
September 2010 on the basis of 1 Ordinary Shares in to 8 Ordinary Shares. Consequent to the Share split, the number of ordinary Shares
of the Company increased from 6,864,582/- to 54,916,656/- without any change to the Stated Capital.
Subsequent to the date of Balance Sheet no circumstances have arisen which could require adjustments to, or disclosure in these
Financial Statements, except following.
There were no material contingent liabilities as at the Balance Sheet date which require adjustments to or disclosure in the Financial
Statements.
Working Capital
Working Capital
There had been overstatement of the carrying value of Prepaid Lease - Lease Hold Land during the past years due to an error in
computing amortization. In the current reporting period, this error was rectified and the previous year figures were restated to
incorporate the true carrying value of the Prepaid Lease balance. Accordingly, Rs. 1,547,428/- was adjusted against the opening retained
earnings.
78 Introductory DocumentͲOrient Garments Limited
Page 2
ORIENT GARMENTS (PRIVATE) LIMITED
STATEMENT OF INCOME FOR THE YEAR ENDED MARCH 31, 2009
Note
Turnover 3 2,853,980,805 2,492,911,057
Cost of Sales (2,512,750,670) (2,207,019,331)
Gross Profit 341,230,135 285,891,726
Other Income 4 1,083,000 244,939
Administrative Expenses (158,553,205) (110,025,341)
Selling and Distribution Expenses (50,384,517) (42,070,039)
Finance Cost (83,350,606) (79,258,570)
Profit Before Taxation 5 50,024,806 54,782,715
Income Tax Expense (1,102,823) -
Profit for the Year 48,921,983 54,782,715
Earnings Per Share (Rs.) 6 7.13 6.05
Audit Report on Page 1
Figures in brackets indicate deductions.
Notes to the Financial Statements on pages 6 to 13 form an integral part of these Financial Statements.
(Expressed in Sri Lankan Rupees)
March 31,2008
80 Introductory Document-Orient Garments Limited
81
Page 4
ORIENT GARMENTS (PRIVATE) LIMITED
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2009 - (Amended)
(Expressed in Sri Lankan Rupees)
Stated Revaluation General Retained Total
Capital Reserves Reserves Earning
Balance as at April 01, 2007 90,483,320 178,448,693 57,543,101 1,694,797 328,169,912
Net Loss recognised directly in Equity - - (17,445,000) - (17,445,000)
Profit for the Year - - - 54,782,715 54,782,715
Transfers - - 50,000,000 (50,000,000) -
Balance as at March 31, 2008 90,483,320 178,448,693 90,098,101 6,477,512 365,507,627
Repurchase of Shares - - (43,675,000) - (43,675,000)
Profit for the Year - - - 48,921,983 48,921,983
Transfers - - 48,739,399 (48,739,399) -
Balance as at March 31, 2009 90,483,320 178,448,693 95,162,500 6,660,096 370,754,609
Audit Report on Page 1
Figures in brackets indicate deductions.
Notes to the Financial Statements on pages 6 to 13 form an integral part of these Financial Statements.
Net Gain / (Loss) recognised directly in Equity
82 Introductory Document-Orient Garments Limited
Page 5
ORIENT GARMENTS (PRIVATE) LIMITED
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2009
Operating Activities
Profit Before Taxation 50,024,806 54,782,715
Adjustments for:
Depreciation 25,715,133 28,156,492
Gratuity 5,923,552 4,467,000
Profit on Sale of Motor Vehicles (1,083,000) -
Interest Income - (244,939)
Operating Profit Before Working Capital Changes 80,580,491 87,161,268
Working Capital Changes
Inventories 15,095,984 (39,642,222)
Trade and Other Receivables (73,240,190) (57,374,824)
Trade and Other Creditors (32,072,766) 68,555,809
Import / Export Loan 68,937,796 11,802,075
Cash Generated from Operations 59,301,315 70,502,106
Gratuity Paid (4,471,435) (4,642,447)
Income Tax / ESC Paid (1,102,823) (2,514,988)
Net Cash Flow from Operating Activities 53,727,057 63,344,671
Investing Activities
Purchase of Property, Plant and Equipment (24,507,535) (5,538,173)
Proceeds from Sale of Property, Plant and Equipment 1,083,000 -
Increase in Investment (19,438,199) (1,987,467)
Interest Received - 244,939
Net Cash Flow used in Investing Activities (42,862,733) (7,280,701)
Financing Activities
Proceeds From Loans 118,780,595 45,425,199
Re-payment of Loans (41,751,532) (64,683,101)
Net Cash Flow from / (used in) Financing Activities 77,029,063 (19,257,903)
Net Change in Cash and Cash Equivalents During the Year 87,893,386 36,806,068
Cash and Cash Equivalents at Beginning of the Year (121,531,842) (158,337,910)
Cash and Cash Equivalents at End of the Year (33,638,456) (121,531,842)
Cash and Cash Equivalents at End of the Year Represented by:
Cash at Bank and in Hand 33,610,130 12,619,098
Bank Overdrafts (67,248,586) (134,150,940)
(33,638,456) (121,531,842)
Audit Report on Page 1
Figures in brackets indicate deductions.
Notes to the Financial Statements on pages 6 to 13 form an integral part of these Financial Statements.
(Expressed in Sri Lankan Rupees)
March 31,2008
March 31,2008
Introductory Document-Orient Garments Limited 83
Introductory Document-Orient Garments Limited
84
Page 6
ORIENT GARMENTS (PRIVATE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2009
1. CORPORATE INFORMATION
1.1 General
Orient Garments (Private) Limited is a Limited Liability Company incorporated and domicile in Sri Lanka. The
registered office of the company is located at 49/16 Iceland Building, Galle face Courts, Colombo 03 while its
principal place of business at 78B, Polgasowita Road, Mattegoda.
The Company is a BOI Venture for the manufacture and export of Outerwear, Work-wear, Sport-wear and
Rainwear Garments. It has four fully equipped modern factory complexes located at Mattegoda, Kotte,
Weligama, and Koggala (EPZ).
The company employed 2,720 persons as at 31
st
March 2009
Company has repurchased Rs.21,837,500.00 Ordinary Shares and cancelled as at 31
st
March 2009 in accordance
with the provisions of the section 63 of the Companies act no 07 of 2007.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 GENERAL POLICIES
2.1.1 Accounting Conventions
The financial statements of the Company have been prepared in accordance with the Generally Accepted
Accounting Principles and the Accounting Standards as laid down by the Institute of Chartered Accountants of
Sri Lanka (ICASL) and Sri Lanka Accounting and Auditing Standards Act No.15 of 1995 using historic cost
convention.
These principles and standards have been applied consistently with that of the previous years.
No adjustments have been made for inflationary factors affecting the Financial Statements.
2.1.2 Investments
All investments, which are held as Long term are valued at cost.
2.1.3 Foreign Currency transaction
All transactions involving foreign exchange are converted in to Sri Lanka Rupees at the rate of exchange
prevailing at the time such transactions were affected.
Profit and Loss items are translated in to rupees at average exchange rates and assets and liabilities are translated
at the rate ruling at the Balance sheet date.
2.1.4 Taxation
The company has signed the third agreement (No. 31) with Board of Investment of Sri Lanka on 27
th
April
2000. In accordance with section (2) of the said agreement for a further additional tax exemption period of eight
(8) years shall be reckoned from the last date on which the additional tax exemption period of three (3) years
granted under the principal agreement for manufacture and export of garment.
However, the charge for taxation is based on the results of the year after adjustments for the disallowable items,
and is determined in conformity with the Inland Revenue act No. 10 of 2006 and amendments thereafter.
2.1.5 Deferred Taxation
Deferred tax provisions are made to provide for the tax incidences arising from Income tax applicable to the
excess of the net book value of assets on which depreciation allowances have been claimed over their written
down value.
However, no provision is made for deferred taxation, as there is reasonable evidence that these timing
differences will not realize in the foreseeable future due to the tax losses and tax concessions available.
Notes to the Financial Statements Continued to Page 7
85
Introductory Document-Orient Garments Limited
Page 7
ORIENT GARMENTS (PRIVATE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2009
2.2 ASSETS AND BASES OF THEIR VALUATION
Assets classified as current assets on the balance sheet are cash and bank balances and those which are expected
to be realized in cash during the normal operating cycle or within one year from the balance sheet date,
whichever is shorter.
2.2.1 Property, Plant and Equipment
The property, plant and equipment are stated at cost or valuation less accumulated depreciation. A revaluation of
property, plant and equipment is done when there is a substantial distinction between the fair value (market
value) and the book value of the asset and is normally undertaken by professionally qualified valuers.
The cost of property, plant and equipment is the cost of acquisition or construction together with any expenses
incurred in bringing the assets to its working condition for its intended use.
Expenditure incurred for the purpose of acquiring , extending or improving assets of a permanent nature by
means of which to carry on the business or to increase earning capacity of the business has been treated as
capital expenditure.
2.2.2 Depreciation
Free hold Land is not depreciated. Depreciation is charged on Property Plant and Equipment on Straight Line
basis to write off the Cost/Valuation over the estimated useful life as follows.
Depreciation Rate Useful Life
Amortization of Lease hold Land 2% 50 Years
Buildings 5% 20 Years
Plant, Machinery and Electrical Equipment 20% 05 Years
Factory Equipment and Office Equipment 10% 10 Years
Furniture & Fittings 10% 10 Years
Motor Vehicles 25% 04 Years
Depreciation is not charged in the year of acquisition/construction and useful life and residual value are
reassessed at the Balance Sheet date.
2.2.3 Inventories
Raw materials are valued at the lower of cost and net realisable value. Finished goods and work in progress are
valued at average cost and includes labour and appropriate overheads absorbed under normal level of activity.
2.2.4 Trade Debtors and Receivables
Debtors and other receivables are stated at their estimated realisable value.
2.2.5 Cash and Cash Equivalents
Comprises of cash in hand, demand deposits and bank borrowings.
2.3 LIABILITIES AND PROVISIONS
2.3.1 Liabilities
All known liabilities have been accounted for in preparing the financial statements and adequate provisions have
been made for liabilities which are known to exist.
The current portion of the Long term borrowings is included under other payables.
Notes to the Financial Statements Continued to Page 8
Introductory Document-Orient Garments Limited
86
Page 8
ORIENT GARMENTS (PRIVATE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2009
2.3.2 Retiring benefit Costs
(a) Defined Benefit Plan - Retirement Gratuity Provision
Full provision has been made on account of retiring gratuity for the first year of service of the employee, in
conIormity with the Sri Lanka Accounting standard No. 16 'Retiring BeneIit Costs¨ at halI (1/2) month`s salary
for each year of service.
However, according to the payment of Gratuity Act No. 12 of 1983, the liability for gratuity to an employee
arises only on completion of 5 years continued service with the Company.
The liability is not externally funded nor actuarially valued.
(b) Defined Contribution Plans - Employees ~Provident Fund & Employees¨ Trust Fund
All employees who are eligible Ior Employees 'Provident Iund contribution and Employees¨ Trust Fund
contribution are covered by relevant contribution funds in line with respective statutes and regulations.
2.4 INCOME STATEMENT
2.4.1 Turnover
The turnover represents the invoice value of exports.
2.4.2 Revenue and Expenses
Revenue is principally recognized on accrual basis in terms of Sri Lanka Accounting Standards No. 29
'Revenue¨
2.5 CASH FLOW
The cash flow statement has been prepared on the indirect basis.
2.6 COMPARATIVE FIGURES
Comparative figures have been reclassified and restructured to effect current classification.
Notes to the Financial Statements Continued to Page 9
Page 9
ORIENT GARMENTS (PRIVATE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2009
(Expressed in Sri Lankan Rupees)
3 Turnover
Sales - Export 2,853,980,805 2,492,911,057
4 Other Income
FCBU Interest - 244,939
Disposal Profit 1,083,000 -
1,083,000 244,939
5 Profit Before Taxation
Operating Profit / (Loss) after charging all expenses including followings.
Directors' Remuneration 2,667,973 2,165,100
Auditors Remuneration 100,000 72,000
Depreciation 25,715,133 28,156,492
Staff Expenses 138,787,696 116,322,706
Employees' Provident Fund 15,299,909 12,451,441
Employees' Trust Fund 3,824,971 3,162,857
Defined Benefit Plan Cost - Gratuity 5,923,552 4,467,000
Legal Fees 70,325 328,856
Interest Expenses 57,412,610 61,847,492
6 Earnings Per Share
Net Profit Attributable to the Shareholders (Rs.) 48,921,983 54,782,715
Weighted Average Number of Shares (Nos.) 6,864,582 9,048,332
Earnings Per Share (Rs.) 7.13 6.05
Figures in brackets indicate deductions
Notes to the Financial Statements Continued on Page 10
The total foreign exchange earnings from exports were US $ 26,120,467.49
Earnings Per Share is calculated by dividing the Net Profit attributable to the Shareholders by the weighted average
number of Shares in issue during the year.
March 31,2008
Introductory Document-Orient Garments Limited 87
Page 10
ORIENT GARMENTS (PRIVATE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2009
7 Property, Plant and Equipment
Balance as at
April 1, 2008
Land and Land Development 45,046,580 - - 45,046,580
Buildings 280,490,033 3,194,122 - 283,684,155
Plant and Machinery 239,503,497 19,668,437 - 259,171,934
Factory Equipment and Office Equipment 23,403,317 2,450,395 (90,000) 25,763,712
Furniture and Fittings 16,395,361 757,112 (45,000) 17,107,473
Motor Vehicles 12,698,962 - (1,850,000) 10,848,962
Capital WIP Water Teatment Plant 1,562,532 - - -
Lease Hold Assets
Land 23,657,696 - - 23,657,696
Motor Vehicles 15,514,500 - - 15,514,500
658,272,477 26,070,067 (1,985,000) 680,795,012
Balance as at Charge for
April 1, 2008 the Year
Buildings 61,818,633 6,743,340 - 68,561,973
Plant and Machinery 180,793,454 11,255,826 - 192,049,280
Factory Equipment and Office Equipment 14,516,956 2,125,713 (90,000) 16,552,669
Furniture and Fittings 14,364,377 1,238,475 (45,000) 15,557,852
Motor Vehicles 12,081,783 2,087,497 (1,850,000) 12,319,280
Lease Hold Assets
Land 2,182,866 473,154 - 2,656,020
Motor Vehicles 4,179,061 1,791,128 - 5,970,190
289,937,130 25,715,133 (1,985,000) 313,667,263
Written Down Value 368,335,347 367,127,750
Note : The Capital Work in Progress (Water Treatment Plant) was transferred to Plant and Machinery and re-restated.
8 Investments
Investment in Non Listed Companies (Note 8.1) 17,600,000 17,600,000
Long Term Receivable (Note 8.2) 97,852,901 122,089,702
115,452,901 139,689,702
8.1 Investment in Non Listed Companies
Stafford Orient (Pvt) Ltd 17,600,000 17,600,000
8.2 Long Term Receivable
Finco (Pvt) Ltd - 20,000,000
Alpha Industries (Pvt) Ltd - 8,000,000
ICC (Pvt) Ltd - 3,675,000
RDC (Pvt) Ltd - 9,000,000
Alpha Tours (Pvt) Ltd - 3,000,000
Priority Garments (Pvt) Limited 22,835,554 -
Orient Design (Private) Limited 2,497,820 5,895,175
Stafford Orient (Private) Ltd 72,519,527 72,519,527
97,852,901 122,089,702
9 Inventories
Raw Materials 160,205,483 129,232,082
Work-In-Progress 99,618,628 115,521,428
Finished Goods 93,725,814 95,398,079
Goods-in-Transit 15,215,954 43,710,273
368,765,878 383,861,862
Figures in brackets indicate deductions
Notes to the Financial Statements Continued on Page 11
March 31, 2009
Depreciation
Additions (Disposals)
(Disposals)
(Expressed in Sri Lankan Rupees)
Balance as at
March 31, 2009
Balance as at
Cost
88 Introductory Document-Orient Garments Limited
Page 11
ORIENT GARMENTS (PRIVATE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2009 - (Amended)
March 31,2008
10 Trade and Other Receivables
Trade Bills 388,104,395 276,852,706
Related Company Balances (Note 10.1) (14,546,882) 31,472,119
Other Receivables 22,384,832 23,432,792
Commissioner General of Inland Revenue (VAT) 22,231,178 13,175,717
418,173,522 344,933,333
10.1 Related Company Balances
Finco (Pvt) Ltd 294,354 261,567
Alpha Industries (Pvt) Ltd (716,757) (1,057,793)
RDC (Pvt) Ltd (38,572,027) (3,179,788)
Alpha Tours (Pvt) Ltd (106,722) (106,722)
Stafford Orient (Pvt) Ltd 24,554,270 35,554,855
(14,546,882) 31,472,119
11 Cash and Cash Equivalents
Short Term Investments - FCBU Deposits 9,000,000 2,599,452
Cash at Bank & in Hand 24,610,130 10,019,646
33,610,130 12,619,098
12 Stated Capital
Issued and Fully Paid
6,864,582 Ordinary Shares 90,483,320 90,483,320
13 Long Term Borrowings
Seylan Bank Term Loans - 9,666,955
BOI Koggala project Loan 9,094,671 10,396,271
Commercial Bank Term Loan 86,064,225 -
HNB Term Loan 1,731,080 9,488,139
HNB Machinery Loan 8,607,169 -
Sampath Bank Vehicle Leasing 1,277,322 7,080,390
Less : Interest in Suspense (431,605) (779,210)
106,342,862 35,852,545
14 Provision for Gratuity
Balance as at April 01, 2008 22,798,620 22,974,067
Provision for the Year 5,923,552 4,467,000
Payment made During the Year (4,471,435) (4,642,447)
Balance as at March 31, 2009 24,250,737 22,798,620
15 Trade and Other Creditors
Trade Creditors 73,132,631 106,857,408
Accrued Expenses 35,811,434 33,496,957
Other Payables 4,260,705 4,923,170
113,204,770 145,277,535
16 Import / Export Loans
Hypothecation Loan 582,850,980 513,913,184
582,850,980 513,913,184
Figures in brackets indicate deductions
Notes to the Financial Statements Continued to Page 12
(Expressed in Sri Lankan Rupees)
Introductory Document-Orient Garments Limited 89
Page 12
ORIENT GARMENTS (PRIVATE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2009
March 31,2008
17 Current Portion of Long Term Borrowings
Seylan Bank Term Loans 9,253,027 12,839,674
BOI Koggala project Loan 1,627,000 1,627,000
Commercial Bank Term Loan 9,315,810 -
HNB Term Loan 8,844,000 8,622,096
HNB Machinery Loan 5,082,000 4,594,682
Less : Interest in Suspense - (100,361)
Sampath Bank Vehicle Leasing 5,041,009 5,041,009
Less : Interest in Suspense (685,210) (685,210)
38,477,636 31,938,890
18 Commitments
19 Contingencies
20 Post Balance Sheet Events
21 Related Party Transactions
Details of significant related party disclosures are as follows;
Figures in brackets indicate deductions
Notes to the Financial Statements Continued to Page 13
Subsequent to the date of Balance Sheet no circumstances have arisen which could require adjustments to, or disclosure
in these Financial Statements.
(Expressed in Sri Lankan Rupees)
There were no material commitments, financial or other contracted or consented by the Board of Directors as at the
Balance Sheet date.
There were no material contingent liabilities as at the Balance Sheet date which require adjustments to or disclosure in
the Financial Statements.
90 Introductory Document-Orient Garments Limited
Page 13
ORIENT GARMENTS (PRIVATE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2009
21.1 Transactions with Other Related Entities / Parties
The Company carried out transactions on ordinery course course of it's business on an arms lenth basis with
the related Companies stated in notes 8 (2) and 10 (1)
Name of the Company Name of the Director Relationship
Nature of
transaction
Balance as at
March 31,
2009 (Rs)
Finco (Pvt) Limited Mr. S.C. Weerasooria 294,354
Mr. R.P. Weerasooria
Alpha Industries (Pvt) Limited Mr. S.C. Weerasooria
Mr. Harsha De Saram (716,757)
Mr. R.P. Weerasooria
Alpha Tours (Pvt) Limited Mr. S.C. Weerasooria
Mr. Harsha De Saram (106,722)
Mr. R.P. Weerasooria
Stafford Orient (Pvt) Limited Mr. S.C. Weerasooria 72,519,527
Mr. Harsha De Saram
Mr. R.P. Weerasooria
Stafford Orient (Pvt) Limited Mr. S.C. Weerasooria 24,554,270
Mr. Harsha De Saram
Mr. R.P. Weerasooria
Orient Design (Pvt) Limited Mr. R.P. Weerasooria 2,497,820
Figures in brackets indicate deductions
Working
Capital
Working
Capital
Working
capital
Long term
Receivable
Working
capital
Working
capital
(Expressed in Sri Lankan Rupees)
Related Company with
common directors'
Related Company with
common directors'
Related Company with
common directors'
Related Company with
common directors'
Related Company with
common directors'
Related Company with
common directors'
Introductory Document-Orient Garments Limited 91
Page 2
ORIENT GARMENTS LIMITED
STATEMENT OF INCOME FOR THE YEAR ENDED MARCH 31, 2008
Note
Turnover 3 2,492,911,057 2,375,028,050
Cost of Sales (2,207,019,331) (2,140,539,615)
Gross Profit 285,891,726 234,488,435
Other Operating Income 4 244,939 268,296
Administration Expenses (110,025,341) (95,159,166)
Selling & Distribution Expenses (42,070,039) (58,131,484)
Finance Cost (79,258,570) (71,087,497)
Profit Before Taxation 5 54,782,715 10,378,583
Income Tax Expense - 165,709
Profit for the Year 54,782,715 10,544,293
Earnings/ (Loss) Per Share (Rs.) 6 6.05 1.17
Audit Report on Page 1
Figures in brackets indicate deductions
Notes to the Financial Statements on pages 6 to 13 form an integral part of these Financial Statements
(Expressed in Sri Lankan Rupees)
March 31,2007
Introductory Document-Orient Garments Limited 93
94
Page 4
ORIENT GARMENTS LIMITED
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2008
(Expressed in Sri Lankan Rupees)
Stated Revaluation General Retained Total
Capital Reserves Reserves Earning
Balance as at April 01, 2006 90,483,320 - 161,899,380 (8,849,495) 243,533,205
Revaluation of Land and Factory Buildings - 178,448,693 (104,356,279) - 74,092,415
Loss for the Year - - - 10,544,293 10,544,293
Balance as at March 31,2007 90,483,320 178,448,693 57,543,101 1,694,797 328,169,912
Net Loss recognised directly in Equity - - (17,445,000) - (17,445,000)
Profit for the Year - - - 54,782,715 54,782,715
Transfers - - 50,000,000 (50,000,000) -
Balance as at March 31, 2008 90,483,320 178,448,693 90,098,101 6,477,512 365,507,627
Audit Report on Page 1
Figures in brackets indicate deductions
Notes to the Financial Statements on pages 6 to 13 form an integral part of these Financial Statements
Introductory Document-Orient Garments Limited 95
Page 5
ORIENT GARMENTS LIMITED
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2008
Operating Activities
Profit Before Taxation 54,782,715 10,378,583
Adjustments for:
Depreciation 28,156,492 30,975,017
Gratuity 4,467,000 3,500,000
Interest Income (244,939) (268,296)
Operating Profit Before working Capital Changes 87,161,268 44,585,304
Working Capital Changes
Inventories (39,642,222) (20,934,960)
Trade & Other Receivables (57,374,824) (38,882,732)
Trade & Other Creditors 68,555,809 (50,162,235)
Import / Export Loan 11,802,075 98,620,289
Cash Generated from Operations 70,502,106 33,225,666
Gratuity Paid (4,642,447) (2,491,785)
Income Tax / Economic Service Charges Paid (2,514,988) (5,942,052)
Net Cash flow from Operating Activities 63,344,671 24,791,829
Investing Activities
Purchase of Property, Plant & Equipment (5,538,173) (28,144,404)
Increase in Investment (1,987,467) (4,851,198)
Interest Received 244,939 268,296
Net Cash Flow used in Investing Activities (7,280,701) (32,727,306)
Financing Activities
Proceeds From Loans 45,425,199 36,581,425
Re-payment of Loans (64,683,101) (34,243,217)
Net Cash Flow from / (used in) Financing Activities (19,257,903) 2,338,207
Net Change in Cash & Cash Equivalents During the Year 36,806,068 (5,597,270)
Cash & Cash Equivalents at Beginning of the Year (158,337,910) (152,740,640)
Cash & Cash Equivalents at the End of the Year (121,531,842) (158,337,910)
Cash & Cash Equivalents at End of the Year Represented by ; March 31,2007
Cash & Cash Equivalents 12,619,098 7,807,065
Bank Overdrafts (134,150,940) (166,144,975)
(121,531,842) (158,337,910)
Audit Report on Page 1
Figures in brackets indicate deductions
Notes to the Financial Statements on pages 6 to 13 form an integral part of these Financial Statements
(Expressed in Sri Lankan Rupees)
March 31,2007
96 Introductory Document-Orient Garments Limited
97
Introductory Document-Orient Garments Limited
Page 6
ORIENT GARMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
1. CORPORATE INFORMATION
1.1 General
Orient Garments Limited is a Limited Liability Company incorporated and domicile in Sri Lanka. The
registered office of the company is located at 49/16 Iceland Building, Galle face Courts, Colombo 03 while its
principal place of business at 78B, Polgasowita Road, Mattegoda.
The Company is a BOI Venture for the manufacture and export of Outerwear, Work-wear, Sport-wear and
Rainwear Garments. It has four fully equipped modern factory complexes located at Mattegoda, Kotte,
Weligama, and Koggala(EPZ).
The company employed 2,326 persons as at 31
st
March 2008
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 GENERAL POLICIES
2.1.1 Accounting Conventions
The financial statements of the Company have been prepared in accordance with the Generally Accepted
Accounting Principles and the Accounting Standards as laid down by the Institute of Chartered Accountants of
Sri Lanka (ICASL) and Sri Lanka Accounting and Auditing Standards Act No.15 of 1995 using historic cost
convention.
These principles and standards have been applied consistently with that of the previous years.
No adjustments have been made for inflationary factors affecting the accounts.
2.1.2 Investments
All investments, which are held as Long term are valued at cost.
2.1.3 Foreign Currency transaction
All transactions involving foreign exchange are converted in to Sri Lanka Rupees at the rate of exchange
prevailing at the time such transactions were affected.
Profit and Loss items are translated in to rupees at average exchange rates and assets and liabilities are
translated at the rate ruling at the Balance sheet date.
2.1.4 Taxation
The company has signed the third agreement (No. 31) with Board of Investment of Sri Lanka on 27
th
April
2000. In accordance with section (2) of the said agreement for a further additional tax exemption period of
eight (8) years shall be reckoned from the last date on which the additional tax exemption period of three (3)
years granted under the principal agreement for manufacture and export of garment.
However, the charge for taxation is based on the results of the year after adjustments for the disallowable items,
and is determined in conformity with the Inland Revenue act No. 10 of 2006 and amendments thereafter.
2.1.5 Deferred Taxation
Deferred tax provisions are made to provide for the tax incidences arising from Income tax applicable to the
excess of the net book value of assets on which depreciation allowances have been claimed over their written
down value.
However, no provision is made for deferred taxation, as there is reasonable evidence that these timing
differences will not realize in the foreseeable future due to the tax losses and tax concessions available.

98 Introductory Document-Orient Garments Limited
Notes to the Financial Statements Continued to Page 7
Page 7
ORIENT GARMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
2.2 ASSETS AND BASES OF THEIR VALUATION
Assets classified as current assets on the balance sheet are cash and bank balances and those which are
expected to be realized in cash during the normal operating cycle or within one year from the balance sheet
date, whichever is shorter.
2.2.1 Property, Plant and Equipment
The property, plant and equipment are stated at cost or valuation less accumulated depreciation. A revaluation
of property, plant and equipment is done when there is a substantial distinction between the fair value (market
value) and the book value of the asset and is normally undertaken by professionally qualified valuers.
The cost of property, plant and equipment is the cost of acquisition or construction together with any expenses
incurred in bringing the assets to its working condition for its intended use.
Expenditure incurred for the purpose of acquiring , extending or improving assets of a permanent nature by
means of which to carry on the business or to increase earning capacity of the business has been treated as
capital expenditure.
2.2.2 Depreciation
Depreciation Rate Useful Life
Amortization of Lease hold Land 2% 50 Years
Buildings 5% 20 Years
Plant, Machinery and Electrical Equipment 20% 05 Years
Factory Equipment and Office Equipment 10% 10 Years
Furniture & Fittings 10% 10 Years
Motor Vehicles 25% 04 Years
Depreciation Method, useful life and residual values are reassessed at the Balance Sheet Date.
2.2.3 Inventories
Raw materials are valued at the lower of cost and net realisable value. Finished goods and work in progress are
valued at average cost and includes labour and appropriate overheads absorbed under normal level of activity.
2.2.4 Trade Debtors and Receivables
Debtors and other receivables are stated at their estimated realisable value.
2.2.5 Cash and Cash Equivalents
Comprises of cash in hand, demand deposits and bank borrowings.
2.3 LIABILITIES AND PROVISIONS
2.3.1 Liabilities
All known liabilities have been accounted for in preparing the financial statements and adequate provisions
have been made for liabilities which are known to exist.
The current portion of the Long term borrowings is included under other payables.
Notes to the Financial Statements Continued to Page 8
99
Introductory Document-Orient Garments Limited
Page 8
ORIENT GARMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
2.3.2 Retiring benefit Costs
(a) Defined Benefit Plan - Retirement Gratuity Provision
Full provision has been made on account of retiring gratuity for the first year of service of the employee, in
conIormity with the Sri Lanka Accounting standard No. 16 'Retiring BeneIit Costs¨ at halI (1/2) month`s
salary for each year of service.
However, according to the payment of Gratuity Act No. 12 of 1983, the liability for gratuity to an employee
arises only on completion of 5 years continued service with the Company.
The liability is not externally funded nor actuarially valued.
(b) Defined Contribution Plans - Employees ~Provident Fund & Employees¨ Trust Fund
All employees who are eligible Ior Employees 'Provident Iund contribution and Employees¨ Trust Fund
contribution are covered by relevant contribution funds in line with respective statutes and regulations.
2.4 INCOME STATEMENT
2.4.1 Turnover
The turnover represents the invoice value of exports.
2.4.2 Revenue and Expenses
Revenue is principally recognized on accrual basis in terms of Sri Lanka Accounting Standards No. 29
'Revenue¨
2.5 CASH FLOW
The cash flow statement has been prepared on the indirect basis.
2.6 COMPARATIVE FIGURES
Comparative figures have been reclassified and restructured to effect current classification.
Notes to the Financial Statements Continued to Page 9
Page 9
ORIENT GARMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
(Expressed in Sri Lankan Rupees)
3 Sales -Export
2,492,911,057 2,375,028,050
4 Other Income
Foreign Currency Banking Unit (FCBU) Interest 244,939 268,296
244,939 268,296
5 Profit Before Taxation
Operating Profit / (Loss) after charging all expenses including followings.
Directors Remuneration 2,165,100 2,062,000
Auditors Remuneration 72,000 72,000
Depreciation 28,156,492 30,538,903
Staff Expenses 116,322,706 104,573,057
Employees' Provident Fund 12,451,441 11,840,743
Employees' Trust Fund 3,162,857 2,960,185
Defined Benefit plan Cost -Gratuity 4,467,000 3,500,000
Legal Fees 328,856 275,700
Interest 61,847,492 53,093,408
6 Earnings / (Loss) per Share
Profit Attributable to the Shareholders (Rs.) 54,782,715 10,544,293
Weighted Average Number of Shares (Nos.) 9,048,332 9,048,332
Earnings / (Loss) per Share (Rs.) 6.05 1.17
Figures in brackets indicate deductions
Notes to the Financial Statements Continued on Page 10
The total foreign Exchange earnings from exports were US $ 23,189,870.29
Earnings per Share is calculated by dividing the net Profit attributable to the Shareholders by the weighted average
number of Shares in issue during the year.
March 31,2007
100 Introductory Document-Orient Garments Limited
Page 10
ORIENT GARMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
7 Property, Plant & Equipment
Balance as at Additions
April 1, 2007
Land & Land Development 45,046,580 - 45,046,580
Buildings 279,666,999 580,908 280,247,907
Plant & Machinery 239,465,785 560,066 240,025,851
Factory Equipment & Office Equipment 21,981,680 991,125 22,972,805
Furniture & Fittings 16,356,322 189,323 16,545,645
Motor Vehicles 9,905,745 2,793,217 12,698,962
Capital WIP - Water Treatment Plant 1,138,998 423,534 1,562,532
Lease Hold Assets
Land 23,657,696 - 23,657,696
Motor Vehicles 15,514,500 - 15,514,500
Total 652,734,305 5,538,173 658,272,477
Balance as at Charge for
April 1, 2007 the Year
Buildings 55,008,717 6,809,917 61,818,633
Plant & Machinery 168,533,903 12,259,551 180,793,454
Factory Equipment/Office Equipment 12,790,446 1,726,510 14,516,956
Furniture Fittings 10,923,147 3,441,230 14,364,377
Motor Vehicles 9,905,745 2,176,038 12,081,783
Lease Hold Assets
Land 1,709,712 473,154 2,182,866
Motor Vehicles 2,908,969 1,270,092 4,179,061
261,780,638 28,156,492 289,937,130
Written Down Value 390,953,667 368,335,347
Figures in brackets indicate deductions
Notes to the Financial Statements Continued on Page 11
(Expressed in Sri Lankan Rupees)
Cost
Depreciation
Balance as at
March 31, 2008
Balance as at
March 31, 2008
Introductory Document-Orient Garments Limited 101
Page 11
ORIENT GARMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
March 31,2007
8 Investments
Investment in non Listed Companies (Note 8 A) 17,600,000 17,600,000
Long Term Receivable (Note 8 B) 122,089,702 137,547,235
139,689,702 155,147,235
(8 A) Investment in Non Listed Companies
Stafford Orient (Pvt) Ltd 17,600,000 17,600,000
(8 B) Long Term Receivable
Finco Ltd 20,000,000 20,000,000
Alpha Industries Ltd 8,000,000 8,000,000
ICC Ltd 3,675,000 3,675,000
RDC Ltd 9,000,000 9,000,000
Alpha Tours Ltd 3,000,000 3,000,000
Orient Design (Private) Limited 5,895,175 4,851,198
Stafford Orient (Private) Ltd 72,519,527 89,021,037
122,089,702 137,547,235
9 Inventories
Raw Materials 129,232,082 99,197,571
Work-In-Progress 115,521,428 155,675,844
Finished Goods 95,398,079 48,736,478
Goods- in -Transit 43,710,273 40,218,951
Stationary Stocks - 140,819
Furnace Oil Stocks - 249,977
383,861,862 344,219,640
10 Trade & Other Receivables
Trade Bills 276,852,706 232,270,479
Related Company Balances (Note 10 A) 31,472,119 10,968,761
Other Receivables 13,747,188 10,607,892
Refundable Deposits & Advances 9,685,604 9,502,327
Commissioner General of Inland Revenue (VAT) 13,175,717 21,694,062
344,933,333 285,043,521
(10 A) Related Company Balances
Finco Ltd 261,567 466,059
Alpha Industries Ltd (1,057,793) (1,571,174)
R.D.C. Ltd (3,179,788) (2,236,288)
Alpha Tours Ltd (106,722) (106,722)
Stafford Orient (Pvt) Ltd 35,554,855 14,416,887
31,472,119 10,968,761
11 Cash & Cash Equivalents
Short Term Investments - FCBU Deposits 2,599,452 6,670,026
Cash at Bank & in Hand 10,019,646 1,137,039
12,619,098 7,807,065
12 Stated Capital
Issued & Fully Paid
9,048,332 Ordinary Shares 90,483,320 90,483,320
Figures in brackets indicate deductions
Notes to the Financial Statements Continued to Page 12
(Expressed in Sri Lankan Rupees)
102 Introductory Document-Orient Garments Limited
Page 12
ORIENT GARMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
March 31,2007
13 Long Term Borrowings
NTB Term Loan - 8,821,976
Seylan Bank Term Loans 9,666,955 7,450,488
BOI Koggala project Loan 10,396,271 12,023,271
HNB Term Loan 9,488,139 -
HNB Machinery Leasing - 4,723,960
Less : Interest in Suspense - (100,182)
Sampath Bank Vehicle Leasing 7,080,390 9,563,661
Less : Interest in Suspense (779,210) (639,169)
35,852,545 41,844,005
14 Provision for Gratuity
As at Beginning of the Year 22,974,067 21,965,852
Provision for the Year 4,467,000 3,500,000
Payment made During the Year (4,642,447) (2,491,785)
As at End of the Year 22,798,620 22,974,067
15 Trade& Other Creditors
Trade Creditors 106,857,408 40,896,837
Accrued Expenses 33,496,957 32,111,186
Other Payables 4,923,170 3,713,702
145,277,535 76,721,726
16 Import/ Export Loans
Hypothecation Loan 513,913,184 502,111,110
513,913,184 502,111,110
17 Loan Payable Within One Year
NTB Term Loan - 10,272,220
DFCC Vardhana Loan - 11,983,157
Seylan Bank Term Loans 12,839,674 5,270,156
BOI Koggala project Loan 1,627,000 1,301,600
HNB Machinery Loan 8,622,096 3,891,505
HNB Machinery Leasing 4,594,682 8,270,555
Less : Interest in Suspense (100,361) (591,169)
Sampath Bank Vehicle Leasing 5,041,009 5,517,497
Less : Interest in Suspense (685,210) (710,188)
31,938,890 45,205,333
18 Post Balance Sheet Events
19 Commitments
20 Contingencies
There are no contingent events as at the Balance Sheet date.
Figures in brackets indicate deductions
Notes to the Financial Statements Continued to Page 13
(Expressed in Sri Lankan Rupees)
Subsequent to the date of balance sheet no circumstances have arisen which could require adjustments to, or disclosure
in these Financial Statements.
There is no material capital or financial commitments approved by the Board of Directors or contracted by the company
as at March 31, 2008
Introductory Document-Orient Garments Limited 103
Page 13
ORIENT GARMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2008
21 Related Party Disclosure
Related Party Disclosure is as follows
Name of the Company Name of the Director Relationship
Nature of
transaction
Balance as at
March 31,
2008
Finco Limited Mr. S.C. Weerasooria 20,000,000
Mr. R.P. Weerasooria
Finco Limited Mr. S.C. Weerasooria 261,567
Mr. R.P. Weerasooria
Alpha Industries Limited Mr. S.C. Weerasooria
Mr. Harsha De Saram 8,000,000
Mr. R.P. Weerasooria
Alpha Industries Limited Mr. S.C. Weerasooria
Mr. Harsha De Saram (1,057,793)
Mr. R.P. Weerasooria
ICC Ltd Mr. Harsha De Saram 9,000,000
Alpha Tours Limited Mr. S.C. Weerasooria
Mr. Harsha De Saram 3,000,000
Mr. R.P. Weerasooria
Alpha Tours Limited Mr. S.C. Weerasooria
Mr. Harsha De Saram (106,722)
Mr. R.P. Weerasooria
Stafford Orient (Pvt) Limited Mr. S.C. Weerasooria 72,519,527
Mr. Harsha De Saram
Mr. R.P. Weerasooria
Stafford Orient (Pvt) Limited Mr. S.C. Weerasooria 35,554,855
Mr. Harsha De Saram
Mr. R.P. Weerasooria
Orient Design (Pvt) Limited Mr. R.P. Weerasooria 5,895,175
Figures in brackets indicate deductions
Working
Capital
Working
Capital
Working
capital
Long term
Receivable
Long term
Receivable
Long term
Receivable
Working
capital
Long term
Receivable
Working
capital
(Expressed in Sri Lankan Rupees)
Related Company with
common directors
Related Company with
common directors
Long term
Receivable
Related Company with
common directors
Related Company with
common director
Related Company with
common directors
Related Company with
common directors
Related Company with
common directors
Related Company with
common directors
Related Company with
common directors
Related Company with
common directors
104 Introductory Document-Orient Garments Limited

Introductory Document ʹ Orient Garments Limited
105
Notes