Textured Jersey Lanka Limited prospectus

8/6/2019 Textured Jersey Lanka Limited prospectus

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Oer for Subscripon of Eighty Million (80,000,000) Ordinary

Vong Shares

at LKR 15 per share

As per the Direcve of the Securies and Exchange Commission made under Circular No. 08/2010

dated November 22, 2010 and Circular No. 13/2010 issued by the Central Depository System

(Private) Limited dated November 30, 2010, all shares shall be directly uploaded to the CDS

accounts. As such all Applicants should indicate their CDS account number in the Applicaon

Form. Applicants who do not have a CDS account are advised to open a CDS account prior to

making the Applicaon, in order to facilitate the uploading of alloed Shares to the CDS.

UPON THE ALLOTMENT OF NEW SHARES UNDER THIS ISSUE, THE ALLOTTED SHARES WILL

BE CREDITED TO THE APPLICANT’S CDS ACCOUNT SO INDICATED. PLEASE NOTE THAT SHARE

CERTIFICATES SHALL NOT BE ISSUED. APPLICATIONS WHICH DO NOT CARRY THE CDS ACCOUNTNUMBER, WHICH IS NOT OPENED AT THE TIME OF THE CLOSURE OF THE SUBSCRIPTION LIST OR

WHICH INDICATE AN INACCURATE/INCORRECT CDS ACCOUNT NUMBER, SHALL BE REJECTED AND

NO ALLOTMENT WILL BE MADE.

You can open a CDS account through any Member/Trading Member of the CSE as set out in Annex

C or through any Custodian Bank set out in Annex D.

The delivery of this Prospectus shall not under any circumstance constute a representaon or

create any implicaon or suggeson that there has been no material change in the aairs of the

Company since the date of this Prospectus.

If you are in doubt regarding the contents of this Prospectus or if you require any advice in this

regard, you should consult your stock broker, bank manager, lawyer or any other professional

advisor.

This Prospectus is dated 27 June 2011



1Textured Jersey Lanka Limited – Initial Public Ofering

The Colombo Stock Exchange (“CSE”) has taken reasonable care to ensure full and fair disclosure

of informaon in this Prospectus. However, the CSE assumes no responsibility for the accuracy of the statements made, opinions expressed or reports included in the Prospectus. Moreover, the

CSE does not regulate the pricing of the shares which is decided solely by the Company/Issuer.

This Prospectus has been prepared from informaon provided by Textured Jersey Lanka Limited

(hereinaer referred to as “TJL” or “Company”) and its Directors and/or which is publicly available.

The Company and its Directors having made all reasonable inquiries, conrm that to the best of their

knowledge and belief, the informaon 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.

Where representaons regarding the future performance of TJL have been given in this Prospectus,

such representaons have been made aer due and careful enquiry of the informaon available to TJL

and making assumpons that are considered to be reasonable at the present point in me in their best

judgment. The Company accepts responsibility for the informaon contained in this Prospectus. While

the Company has taken reasonable care to ensure full and fair disclosure of informaon, prospecve

investors are advised to carefully read this Prospectus and rely on their own examinaon and assessment

of the Company including the risks involved prior to making any investment decision.

No person is authorized to give any informaon or make any representaon not contained in this

Prospectus and if given or made, any such informaon or representaon must not be relied upon as

having been authorized by the Company.



2 Textured Jersey Lanka Limited – Initial Public Ofering

REGISTRATION OF THE PROSPECTUS

A copy of this Prospectus has been delivered to the Registrar General of Companies of Sri Lanka for registraon.

The following documents were aached to the copy of the Prospectus delivered to the Registrar General of

Companies.

• The wrien consent of the Joint Managers to the Issue

The Joint Managers to the Issue have given and have not before the delivery of a copy of theProspectus for registraon withdrawn their wrien consent for the inclusion of their name as Joint

Managers to the Issue and for the inclusion of their statements/declaraons in the form in which it

is included in the Prospectus.

• The wrien consent of the Registrars to the Issue

The Registrars to the Issue have given and have not before the delivery of a copy of the Prospectus

for registraon withdrawn their wrien consent for the inclusion of their name as Registrars to the

Issue in the Prospectus.

• The wrien consent of the Auditors & Reporng Accountants to the Company

The Auditors & Reporng Accountants to the Company have given and have not before the delivery

of a copy of the Prospectus for registraon withdrawn their wrien consent for the inclusion of

their name as Auditors & Reporng Accountants to the Company and for the inclusion of their

report/statements in the form and context in which it is included in the Prospectus.

• The wrien consent of the Lawyers to the Company/Issue

The Lawyers to the Company/Issue have given and have not before the delivery of a copy of the

Prospectus for registraon withdrawn their wrien consent for the inclusion of their name as

Lawyers to the Company/Issue in the Prospectus.

• The wrien consent of the Bankers to the Company/Issue

The Bankers to the Company/Issue have given and have not before the delivery of a copy of the

Prospectus for registraon withdrawn their wrien consent for the inclusion of their names as

Bankers to the Company/Issue in the Prospectus.

A declaraon made by each of the Directors of the Company conrming that each of them have read the

provisions of the Companies Act relang to the issue of the Prospectus and that those provisions have been

complied with.

REPRESENTATION

No Person is authorized to give any informaon or make any representaon not contained in this Prospectus and

if given or made, any such informaon or representaon must not be relied upon as having been authorized bythe Company.

REGISTRATION OF THE PROSPECTUS IN JURISDICTIONS OUTSIDE SRI LANKA

This Prospectus has not been registered with any authority outside of Sri Lanka. This Prospectus does not

constute an oer to sell or a solicitaon of an oer to buy, nor there be any sale of any shares oered herein,

to any person in any circumstance or in any jurisdicon in which it is unlawful to make such an oer, solicitaon

or sale.

Forward Looking StatementsAny statements included in this Prospectus that are not statements of historical fact constute “Forward

Looking Statements”. These can be idened by the use of forward looking terms such as “expect”, “ancipate”,

“intend”, “may”, “plan to”, “believe”, “could” and similar terms or variaons of such terms. However, these




words are not the exclusive means of idenfying Forward Looking Statements. As such, all statements pertaining

to expected nancial posion, business strategy, plans and prospects of the Company are classied as Forward

Looking Statements.

Such Forward Looking Statements involve known and unknown risks, uncertaines and other factors including

but not limited to regulatory changes in the sectors in which the Company operates and its ability to respond to

them, the Company’s ability to successfully adapt to technological changes, exposure to market risks, general

economic and scal policies of Sri Lanka, inaonary pressures, the performance of nancial markets bothglobally and locally, changes in domesc and foreign laws, regulaon of taxes and changes in compeon in the

industry and further uncertaines that may or may not be in the control of the Company.

Such factors may cause actual results, performance and achievements to materially dier from any future results,

performance or achievements expressed or implied by Forward Looking Statements herein. Forward Looking

Statements are also based on numerous assumpons regarding the Company’s present and future business

strategies and the environment in which the Company will operate in the future.

Given the risks and uncertaines that may cause the Company’s actual future results, performance or

achievements to materially dier from that expected, expressed or implied by Forward Looking Statements in

this Prospectus, investors are advised not to place sole reliance on such statements.

Investment Consideraons

It is important that this Prospectus is read carefully prior to making an investment decision. For informaon

concerning certain risk factors, which should be considered by prospecve investors, see “Investment

Consideraons and Associated Risk Factors” in Secon 7.0 of this Prospectus.

Presentaon of Currency Informaon and Other Numerical Data

The nancial statements of the Company and currency values of economic data or industry data in a local context

will be expressed in Sri Lanka Rupees. References in the Prospectus to “LKR”, “Rupees”, and “Rs.” are references

to the lawful currency of Sri Lanka. Reference to “USD” is with reference to United States Dollars, the ocialcurrency of the United States of America. The reference to “Renminbi” is reference to the lawful currency of

People’s Republic of China and reference to “HK $” is reference to the lawful currency of Hong Kong.

Certain numerical gures in the Prospectus have been subject to rounding adjustments; accordingly, numerical

gures shown as totals in certain tables may not be an arithmec aggregaon of the gures that precede them.

Presentaon of Macroeconomic and Industry Data

Economic and industry data used throughout this Prospectus are derived from the Central Bank of Sri Lanka

and various other industry data sources, which the Company believes to be reliable, but the accuracy and

completeness of that informaon is not guaranteed. Similarly, industry surveys and other publicaons, while

believed to be reliable, have not been independently veried and neither the Company nor the Joint Managersto the Issue make any representaon as to the accuracy of that informaon.




Contents

1.0 CORPORATE INFORMATION 12

2.0 RELEVANT PARTIES TO THE OFFERING 13

3.0 DETAILS OF THE ISSUE 14

3.1 The Issue 14

3.2 Objecves of the Issue 14

3.3 Nature of the New Shares 14

3.4 Size of the Issue 14

3.5 Share Issue Price 14

3.6 Cost of the Issue 14

3.7 Lisng 15

3.10 Subscripon List – Issue Opening and Closing Dates 15

3.11 The Basis of Allotment 15

3.12 Inspecon of Documents 16

3.13 Eligible Applicants 16

3.14 The Procedure for Applicaon 17

3.15 The Prospectus and Applicaon Form 17

3.15.1 Number of Shares Applied 18

3.15.2 Responsibility of a Non-Resident Investor 18

3.15.3 Margin Trading 18

3.15.4 Applicaons made under Power of Aorney 19

3.15.5 Joint Applicaons 19

3.15.6 Mulple Applicaons 19

3.15.7 Rejecon of Applicaons 19

3.15.8 Submission of Applicaons 203.16 Payment of Applicaon Monies 20

3.16.1 Mode of Remiance 20

3.16.2 Cheques or Bank Dras – Resident Sri Lankan Investors 21

3.16.3 Bank Guarantees – Resident Sri Lankan Investors 21

3.16.4 Foreign Currency Remiance 21

3.16.5 Restricons Applicable to Foreign Cizens Resident in Sri Lanka 22

3.17 Banking of Payments 23

3.18 Returning of Monies of Rejected Applicaons 23




3.19 Refunds on Applicaons 23

3.20 Successful Applicants and CDS Lodgement 24

3.21 Transferability of New Shares 25

3.22 Declaraon to the Colombo Stock Exchange and Secondary Market Trading 25

4.0 GLOBAL FABRIC MANUFACTURING INDUSTRY 26

4.1 Overview 26

4.2 Development Trends in the Global Fabric Manufacturing Industry 26

4.3 Global Coon Producon 27

4.4 Primary Strengths of Sri Lanka Fabric Manufacturing Industry 29

5.0 SRI LANKA TEXTILE & APPAREL INDUSTRY 32

5.1 Overview – Development of Texle & Clothing Industry of Sri Lanka 32

5.2 Markets in the Sri Lanka Texle & Clothing Industry 33

5.3 Shi of Product Porolio of the Sri Lanka Texle & Clothing Industry 36

5.4 Imports of the Sri Lanka Texle & Clothing Industry 37

5.5 Strengths and Opportunies for the Sri Lankan Garment Industry 37

5.6 Challenges Faced by the Sri Lankan Garment Industry 39

6.0 BUSINESS OPERATIONS OF THE COMPANY 41

6.1 History and Corporate Structure 41

6.2 Products and Services 44

6.3 Markeng and Sales 45

6.4 Producon Process and Facilies 46

6.5 Raw Materials, Electricity and Water Supply 47

6.6 Compeon 48

6.7 Compeve Strengths of the Company 49

6.8 Degree of Dependence on Key Customers and Suppliers 49

6.9 Future Direcon and Prospects 49

6.10 Details of Material Indebtedness 50

6.11 Working Capital 50

6.12 Dividend Policy 50

6.13 Ligaon, Disputes and Conngent Liabilies 50

6.14 Details of Material Contracts 50

7.0 INVESTMENT CONSIDERATIONS AND ASSOCIATED RISK FACTORS 52

7.1 Risk Factors 52

7.2 Risks Related to the Business Operaons 52




7.3 Risks Related to the Oering 56

8.0 CORPORATE STRUCTURE 57

8.1 The Board of Directors 57

8.2 Proles of the Board of Directors 57

8.3 Directors’ Interest in Shares 59

8.3.1 Directors’ Shareholdings in the Company 59

8.3.2 Sale or Purchase of Shares by Directors 59

8.3.3 Directors’ Emoluments 59

8.3.4 Other Directorships Held by the Board 59

8.3.5 Director’s Interest in Assets 61

8.3.6 Directors’ Interest in any Material Contracts 61

8.3.7 Statement – Board of Directors 61

8.4 Corporate Governance Pracces 61

8.5 Remuneraon Commiee 62

8.6 Audit Commiee 62

8.7 Senior Management 62

8.8 Senior Managements’ Emoluments 64

8.9 Statement - Chairman 64

8.10 Details of Management Agreements 64

8.11 Human Resources 64

9.0 CAPITAL STRUCTURE 65

9.1 An Overview of the Capital Structure 65

9.2 Free Transferability of Shares 65

9.3 Other Securies 65

9.4 Takeover Oers 65

9.5 Share Re-Purchases or Redempons 65

9.6 Ten Largest Shareholders as at 27 June 2011 66

9.7 Post IPO Shareholding Structure 66

9.8 Transfer of Shares by the Major Shareholders in the

One Year Preceding the Date of the Prospectus 66

9.9 Raos 68

10.0 MANAGEMENT DISCUSSION AND ANALYSIS 69

10.1 Operang Results 69

10.2 Performance of Operaons for the Five Years Ended 31 March 2011 69




11.0 STATUTORY AND OTHER GENERAL INFORMATION 71

11.1 Hosng of Prospectus, Applicaon Form and the Arcles of Associaon on the Web 71

11.2 Inspecon of Documents 71

11.3 Brokerage 71

12.0 TAXATION 72

12.1 Corporate Taxaon 72

12.2 Economic Service Charge 72

12.3 Value Added Tax 72

12.4 Withholding Tax for Dividends 72

12.5 Naon Building Tax 72

13.0 STATUTORY DECLARATIONS 73

ACCOUNTANT’S REPORT AND FIVE YEAR SUMMARY 75

AUDITOR’S REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011 89

ANNEXURE A – INDEX ON TABLES ILLUSTRATED IN THE PROSPECTUS 154

ANNEXURE B – INDEX ON CHARTS AND FIGURES ILLUSTRATED IN THE PROSPECTUS 155

ANNEXURE C – COLLECTION POINTS 156

ANNEXURE D – CUSTODIAN BANKS 162

ANNEXURE E – DETAILS OF THE PRIVATE SELL DOWN OF SHARES 163




SALIENT FEATURES AT A GLANCE

Issuer Textured Jersey Lanka Limited

Number and Type of Securies to be Issued 80,000,000 new Ordinary Vong Shares of the Company

Share Oer Price LKR 15 per Share

Minimum Subscripon per Applicaon Minimum subscripon per Applicaon is 100 New Shares

(LKR 1,500). Applicaons exceeding the minimum

subscripon should be in mulples of 100 New Shares

Issue Opening Date 07 July 2011

Issue Closing Date 27 July 2011 or on the date on which the Oer is

oversubscribed, whichever date earlier

Amount to be Raised LKR 1,200,000,000

Basis of Allotment As described in Secon 3.11 of this Prospectus

As per the Direcve of the Securies and Exchange Commission made under Circular No. 08/2010 dated

November 22, 2010 and Circular No. 13/2010 issued by the Central Depository System (Private) Limited

dated November 30, 2010, all shares shall be directly uploaded to the CDS. As such all Applicants should

indicate their CDS account number in the Applicaon Form. Applicants who do not have a CDS account

are advised to open a CDS account prior to making the Applicaon, in order to facilitate the uploading of

alloed Shares to the CDS.

UPON THE ALLOTMENT OF NEW SHARES UNDER THIS ISSUE, THE ALLOTTED SHARES WILL BE CREDITED

TO THE APPLICANT’S CDS ACCOUNT SO INDICATED. PLEASE NOTE THAT SHARE CERTIFICATES SHALL NOT

BE ISSUED. APPLICATIONS WHICH DO NOT CARRY THE CDS ACCOUNT NUMBER, WHICH IS NOT OPENED

AT THE TIME OF THE CLOSURE OF THE SUBSCRIPTION LIST OR WHICH INDICATE AN INACCURATE/

INCORRECT CDS ACCOUNT NUMBER, SHALL BE REJECTED AND NO ALLOTMENT WILL BE MADE.

You can open a CDS account through any Member/Trading Member of the CSE as set out in Annex C or

through any Custodian Bank set out in Annex D.




DEFINITIONS / INTERPRETATIONS

The following denions/interpretaons apply throughout this Prospectus, unless the context otherwise

requires:

“Applicaon Form”, “Applicaon” The Applicaon Form issued with this Prospectus and/or

photocopies of such Applicaon Form through which the

investors may apply for the Shares in issue“Applicant/s” Any investor who submits an Applicaon Form under this

Prospectus

“Arcles of Associaon” Arcles of Associaon of Textured Jersey Lanka Limited

“Auditors & Reporng PricewaterhouseCoopers

Accountants to the Company”

“AWPLR” Last quoted Average Weighted Prime Lending Rate

published by the Central Bank of Sri Lanka

“BOI” Board of Investment of Sri Lanka

“Bn” Billion

“Brandix” Brandix Lanka Limited

“CDS” Central Depository Systems (Private) Limited

“Companies Act” Companies Act No. 07 of 2007

“CSE” Colombo Stock Exchange

“Directors” The Directors for the me being of the Company, unless

otherwise stated

“ESC” Economic Service Charge

“ESOP” Employee Share Opon Plan“FY” Financial Year

“HSBC” Hongkong and Shanghai Banking Corporaon Limited

“HK$” Lawful currency of Hong Kong

“ICAC” Internaonal Coon Advisory Commiee

“IMF” Internaonal Monetary Fund

“IPO” Inial Public Oering

“Issue Closing Date” The date of closure of the subscripon list as set out in

Secon 3.10 of this Prospectus“Issue”, “Oering”, “Oer” An invitaon to the public by the Company to subscribe

to the New Shares (as dened hereunder) via an oer for

subscripon as detailed in this Prospectus

“Issuer” Textured Jersey Lanka Limited

“Joint Managers to the Issue, Oer” Acuity Partners (Private) Limited

&

CT Capital (Private) Limited

“Joint Applicaon”, “Joint Applicants” Refer Secon 3.15.5

“Lawyers to the Issue” FJ&G de Saram

“LKR”, “Rs.”, “Rupees” Sri Lankan Rupees




“Local Time” Sri Lanka Time

“Market Day” Any day on which the CSE is open for trading

“Mn” Million

“NBT” Naon Building Tax

“New Shares”, “Oered Shares” Eighty Million (80,000,000) new Ordinary Vong Shares tobe issued by the Company to the public at the Share Issue

Price

“NIC” Naonal Identy Card

“Opening Date” The date of opening of the subscripon list as set out in

Secon 3.10 of this Prospectus

“Ordinary Shares”, “Shares”, “Issued and Shares in the Company, conferring on the holder thereof

Paid up Ordinary Shares”, “Ordinary Vong Shares” the right with regard to each Share to one vote on a poll at

a meeng of the Company on any resoluon, the right to

an equal share in dividends paid by the Company and the

right to an equal share in the distribuon of the surplus

assets of the Company in liquidaon.

“OTEXA” Oce of Texles and Apparel

“POA” Power of Aorney

“Prospectus” This Prospectus dated 27 June 2011 issued by the

Company

“PTHL” Pacic Texles Holdings Limited

“Registrars to the Issue” SSP Corporate Services (Private) Limited

“Renminbi” Lawful currency of the People’s Republic of China

“SEC” Securies and Exchange Commission of Sri Lanka

“Share Issue Price” The price at which the New Shares will be oered to the

Public, as detailed in this Prospectus

“SLAS” Sri Lanka Accounng Standards

“Stated Capital” The Stated Capital of Textured Jersey Lanka Limited

“The Board”, “The Board of Directors” The Board of Directors of Textured Jersey Lanka Limited

“TJL”, “the Company”,

“Textured Jersey Lanka Limited” Textured Jersey Lanka Limited

“TJUK” Textured Jersey United Kingdom

“USD” United States Dollars

“USDA” United States Department of Agriculture

“VAT” Value Added Tax

“WHT” Withholding Tax

“YoY” Year over Year




1.0 CORPORATE INFORMATION

Issuer Textured Jersey Lanka Limited

Registered Oce Textured Jersey Lanka Limited

Block D8 – D14

Seethawaka Internaonal Industrial Park

Avissawella, Sri Lanka Tel: +94 36 4279500, Fax: +94 36 4279595

Date, Place and Authority of Incorporaon Incorporated as a Private Limited Liability

Company on 12 July 2000 under the Companies

Act, No. 17 of 1982 and re-registered under the

Companies Act No. 7 of 2007 on 19 September

2008. Converted to a Public Company on 12 April

2011

Company Registraon Number

(as a Public Company) PV 7617 PB

Company Secretary

Secretarius (Private) LimitedNo. 40, Galle Face Court 2, Colombo 03, Sri Lanka

Tel: +94 11 239 9090/233 3431

Fax: +94 11 238 1907

Auditors to the Company PricewaterhouseCoopers

P O Box 918, No. 100, Braybrooke Place

Colombo 02, Sri Lanka

Tel: +94 11 7719838, +94 11 4719838

Fax: +94 11 2303197

Bankers to the Company Bank of Ceylon

Head Oce,

No. 4, Bank of Ceylon Mawatha,Colombo 01, Sri Lanka

Commercial Bank of Ceylon PLC

No. 21, Bristol Street, Colombo 01, Sri Lanka

The Hongkong and Shanghai Banking

Corporaon Limited

N0. 24, Sir Baron Jayalake Mawatha,


Standard Chartered BankNo. 37, York Street, Colombo 01, Sri Lanka

Naonal Development Bank PLC

40, Navam Mawatha, Colombo 02, Sri Lanka

Board of Directors

Mr. Mohamed Ashro Omar Chairman and Non-Execuve Director

Mr. Wing Tak Bill Lam Non-Execuve Director

Dr. King Man Clement Lam Non-Execuve Director

Mr. Kam Chuen Mau Execuve Director

Mr. Dave Ranasinghe Non-Execuve DirectorMr. Amitha Gooneratne Independent Non-Execuve Director

Prof. Malik Ranasinghe Independent Non-Execuve Director




2.0 RELEVANT PARTIES TO THE OFFERING

Joint Managers to the Issue Acuity Partners (Private) Limited

No. 53, Dharmapala Mawatha,


Tel: +94 11 2206206

Fax: +94 11 2437149

CT Capital (Private) Limited

No. 4-03, Majesc City


Tel: +94 11 2584843

+94 11 2503523

Fax: +94 11 2580181

Legal Advisor/Lawyer to the Company/Issue FJ&G de Saram

No. 216, de Saram Place,


Tel: +94 11 4718200

Fax: +94 11 4718220, +94 11 2669769

Auditors and Reporng Accountants to the Issue PricewaterhouseCoopers

P O Box 918

No. 100, Braybrooke Place


Tel: +94 11 7719838

+94 11 4719838

Fax: +94 11 2303197

Registrars to the Issue SSP Corporate Services (Private) Limited

No. 101, Inner Flower Road Colombo 03, Sri Lanka

Tel: +94 11 2573894

Fax: +94 11 2573069

Co-Bankers to the Issue Haon Naonal Bank PLC

HNB Towers, No. 479, T.B. Jayah Mawatha,


Tel: +94 11 2661745/46

Fax: +94 11 2662802

The Hongkong and Shanghai Banking

Corporaon Limited

No. 24, Sir Baron Jayalake Mawatha,





3.0 DETAILS OF THE ISSUE

3.1 The Issue

The Issue contemplated herein shall constute an invitaon made to the general public to purchase

Eighty Million (80,000,000) new Ordinary Vong Shares of the Company at the Share Issue Price.

3.2 Objecves of the IssueThe Company intends to raise funds through the Issue for the purposes set out below, in the following

order of priority.

I. The Company expects to construct a modern producon facility which will house and facilitate

the proposed expansion at a cost of approximately LKR 344 million (USD 3.2 million). This facility

will be in line with all modern producon requirements and be built according to internaonally

accepted quality standards. The land with an extent of 12 acres is leased by Textured Jersey

Lanka Limited from the Board of Investment of Sri Lanka. The lease agreement is with eect

from 16 March 2007 to 15 March 2037 and the Company expects to renew the lease agreement

aer the end of this 30 year period. The amount to be paid as rental on said land is USD 46,700

per annum (USD 3,850 per acre)II. Approximately LKR 1 billion (USD 9.2 million) will be ulized to purchase kning machines,

preparaon machines, dyeing and nishing machines and infrastructure facilies to house the

expansion including buildings. This state of the art machinery will enable the Company to increase

its producon eciency and to further facilitate the Company’s future growth prospects.

III. The Company intends to connue its policy of being an “environmentally friendly manufacturing

facility” and will have in place the required infrastructure to ensure the same. In this regard

approximately LKR 82 million (USD 0.75 million) will be ulized for a water treatment plant of the

new producon facility.

Further, the price of the assets to be acquired is a market determined and publicly disclosed

price by the seller, which does not include any payment for goodwill. The seller maintains an

arms length relaonship with the Company and is not related to the Company in anyway.The total cost of the expansion will be approximately LKR 1.4 billion (USD 13 million), which will

be partly funded through the IPO proceeds and partly through internally generated funds.

3.3 Nature of the New Shares

From the date of allotment, the New Shares shall rank equal and pari passu in all respects with the

exisng Ordinary Vong Shares of the Company and confers to the holder the right to one vote on a

poll at a meeng of the Company on any resoluon, the right to an equal share in dividends paid by

the Company and the right to an equal share in the distribuon of the surplus assets of the Company

in liquidaon.

3.4 Size of the Issue

If fully subscribed, the Issue would raise Sri Lankan Rupees One Billion Two Hundred Million (LKR

1,200,000,000).

3.5 Share Issue Price

The Share Issue Price will be Sri Lankan Rupees Fieen (LKR 15) per New Share. The Board of Directors

of TJL is of the opinion that the Share Issue Price is fair and reasonable to the Company and to all

exisng shareholders of the Company.

3.6 Cost of the Issue

The total esmated costs associated with the Issue including the Managers’ fees, Registrars’ fees, feespayable in respect of services rendered by any lawyers, accountants, postage, prinng and markeng

costs, brokerage, stamp duty payable on the Issue etc. will be approximately LKR 50 million. Such costs

will be recovered from the proceeds of the Issue.




3.7 Lisng

The Issue herein contemplated comprises of Eighty Million (80,000,000) new Ordinary Vong Shares.

If fully subscribed, the New Shares will amount to 12.21% of the Issued and Paid up Ordinary Shares of

the Company subsequent to the Issue.

An Applicaon has been made to the CSE for permission to deal in and for a lisng of up to Six Hundred

and Fiy Five Million Two Thousand Four Hundred and Forty Ordinary (655,002,440) Vong Shares

being the enre Issued and Paid up Ordinary Shares of the Company subsequent to the Issue.

Upon the successful compleon of the Issue, the Company will be listed on the Main Board of the CSE,

subject to compliance with Rule 2.1.2 of the CSE Lisng Rules.

3.8 Brokerage

Brokerage at the rate of Zero decimal Five per centum (0.5%) of the Share Issue Price will be paid in

respect of the number of New Shares alloed/allocated on Applicaons bearing the original seal of a

member/trading member of the CSE or any of the Joint Managers to the Issue.

3.9 Minimum Subscripon and Underwring

Applicaons should be made for a minimum of One Hundred (100) Shares. Applicaons for Shares

exceeding the minimum should be in mulples of 100 Shares. Applicaons for less than 100 Shares

or for a number which is more than 100 but not in mulples of 100 will be rejected. Furthermore, the

Board of Directors of TJL will ensure that the minimum subscripon of 100 Shares would be alloed to

all successful Applicants.

The Company has not entered into any underwring arrangement with regard to the Issue. The

Company shall however seek a lisng irrespecve of whether the oering is fully subscribed or not,

whilst acknowledging that lisng would be granted only upon the Company sasfying the requirements

as per the CSE Lisng Rules.

The Company is condent that it can meet any shorall in the event of an under subscripon through

internally generated funds and borrowings.

3.10 Subscripon List – Issue Opening and Closing Dates

The subscripon list for the New Shares in issue will open at 9.00 a.m. on 07 July 2011 and shall

remain open for fourteen (14) Market Days (including the date of Opening) unl closure at 4.30 p.m. on

27 July 2011.

In the event of an over subscripon of the New Shares prior to the Issue Closing Date, the Company will

inform the CSE in wring immediately of such fact and the Subscripon List will be closed at 4.30 p.m.

on the same day.

The Board of Directors reserves the right to close the Subscripon List on any Market Day within theperiod of fourteen (14) Market Days irrespecve of the number of Shares subscribed under the Issue

by providing one (1) Market Day’s prior noce to the CSE.

3.11 The Basis of Allotment

The New Shares would be distributed among four broad investor categories, namely:

Employees * 10% of the New Shares

Unit Trust investor category ** 10% of the New Shares

Retail Individual investor category 40% of the New Shares

Non-Retail investor category 40% of the New Shares

* All employees of TJL and employees of Brandix Group.

** Unit Trust investors should be growth or balanced unit trusts operated by managing companies

licensed by the SEC, where such unit trusts comprise of not less than 500 unit holders resident in Sri




Lanka who together hold at least 50% of that fund as per the Direcon issued by the SEC (Ref: SEC/

LEG/11/03/36 of 10 March 2011. Only one Applicaon should be made under the Unit Trust Investor

category. However a Unit Trust Investor can make a further Applicaon (one only) under the Non-

Retail category.

Investor/s who apply for up to a maximum of 6,600 Shares (including 6,600 Shares) will be deemed

as Retail Individual investors for Share allotment purposes.

Unit Trust investors who do not fall under the Retail Individual investor denion stated above will

be deemed as Non Retail investors for Share allotment purposes. (All corporate bodies incorporated

or established in Sri Lanka or outside Sri Lanka, global, regional or country funds approved by the

SEC, shall fall under the Non-Retail category irrespecve of the quantum of Shares applied for)

The investor categories have been selected to ensure the broadest possible spread of shareholders

while treang all Applicants in a fair manner.

In the event of an under-subscripon in the Employees category, the Retail Individual investor category

shall be given rst priority followed by Unit Trust investor category in the allotment of the under

subscribed Shares.

In the event of an under-subscripon in the Unit Trust investor category, the Retail Individual investorcategory shall be given rst priority in allotment of the under subscribed Shares.

In the event of an under-subscripon in the Retail Individual investor category, the Unit Trust investor

category shall be given rst priority in the allotment of the under-subscribed Shares.

In the event of an under-subscripon in the Non-Retail investor category, Retail Individual investor

category will be given rst priority followed by Unit Trust investor category in the allotment of the

under-subscribed Shares.

Redistribuon will not apply in the event of over subscripon of all four categories stated above.

In the event of an over subscripon in any one or more of the four categories menoned above, the

basis of allotment will be decided by the Board of Directors of the Company in a fair and equitable

manner.

3.12 Inspecon of Documents

The following documents of TJL will be made available for inspecon by the public during normal

working hours at the Registered Oce of the Company from the date hereof, unl the subscripon list

closes or up to fourteen (14) Market Days:

I. Arcles of Associaon;

II. Material contracts referred to in this Prospectus;

III. Reports, leers, valuaons and statements by any expert, any part of which is referred to or is

extracted in this Prospectus;

IV. The audited accounts of the Company for ve (05) nancial years immediately preceding the

publicaon of this Prospectus as applicable.

The Prospectus, Applicaon Form and Arcles of Associaon of the Company will be available on the

website of the CSE, www.cse.lk and on the Company website (www.texturedjersey.com) from the date

hereof for a period of not less than fourteen (14) Market Days.

3.13 Eligible Applicants

Applicaons are invited from the following categories of investors: having a Valid Account in the CentralDepository System (Pvt) Ltd (CDS Account).

I. Cizens of Sri Lanka who are resident in or outside Sri Lanka and above 18 years of age; or




II. Companies, corporaons or instuons incorporated or established within Sri Lanka; or

III. Corporate bodies incorporated or established outside Sri Lanka; or

IV. Approved provident funds and contributory pension schemes registered/incorporated/

established in Sri Lanka (in this case Applicaons should be in the name of the Trustee/Board of

Management in order to facilitate the opening of the CDS account); or

V. Foreign cizens above 18 years of age (irrespecve of whether they are resident in Sri Lanka oroverseas); or

VI. Global, regional and country funds approved by the SEC.

Please note that Applicaons made by individuals less than 18 years of age or those in the names of

sole proprietorships, partnerships, unincorporated trusts and non-corporate bodies will be rejected

at the outset.

Applicaon by growth or balanced unit trusts under the Unit Trust Investor category should conform

to the criteria dened by the SEC direcve dated 10 March 2011.

3.14 The Procedure for ApplicaonApplicaons must be made in the manner set out below. Applicaons duly completed should be

submied in the manner set out in Secon 3.15.8 hereunder.

3.15 The Prospectus and Applicaon Form

The Prospectus and Applicaon Form will be available free of charge from the collecon points listed

in Annexure C. Investors must apply for Shares on the Applicaon Form, which constutes part of this

Prospectus. The Applicaon Form should be legibly completed and be received by the Registrars to the

Issue. The Applicaon Form and the Prospectus can also be downloaded from www.cse.lk and www.

texturedjersey.com. Exact size photocopies of the original Applicaon Form will also be permissible.

Applicants applying under the Employee category must apply for Shares only using the separate BLUEcoloured Applicaon Form printed for this purpose, which constutes part of this Prospectus. The

completed Applicaon Forms should be submied to the designated ocer of the Company who is

responsible to collect same and forward to the Registrars to the Issue. Employees shall not submit

Applicaons directly to the Registrars to the Issue.

Applicants applying under the Unit Trust category must apply for Shares using the separate CREAM

coloured Applicaon Form printed for this purpose, which constutes part of this Prospectus. The

completed Applicaon Forms could be submied either directly to the Registrars to the Issue or to the

Joint Managers to the Issue who will forward the same to the Registrars to the Issue.

Care must be taken to follow the instrucons on the reverse of the Applicaon Form. Applicaons

that do not strictly conform to such instrucons or as set out herein or which are illegible may berejected.

Please note that Applicant informaon such as full name, address, NIC number/passport number/

residency will be downloaded from the CDS, based on the CDS account number indicated in

the Applicaon Form. Such informaon shall take precedence over informaon supplied in the

Applicaon Form.


dated November 22, 2010 and Circular No. 13/2010 issued by the Central Depository System (Private)

Limited dated November 30, 2010, all Shares shall be directly uploaded to the CDS. As such all

Applicants should indicate their CDS account number in the Applicaon Form. Applicants who do

not have a CDS account are advised to open a CDS account prior to making the Applicaon, in orderto facilitate the uploading of alloed Shares to the CDS.




UPON THE ALLOTMENT OF NEW SHARES UNDER THIS ISSUE, THE ALLOTTED SHARES WILL BE CREDITED

TO THE APPLICANT’S CDS ACCOUNT SO INDICATED. PLEASE NOTE THAT SHARE CERTIFICATES SHALL

NOT BE ISSUED. APPLICATIONS WHICH DO NOT CARRY THE CDS ACCOUNT NUMBER, WHICH IS NOT

OPENED AT THE TIME OF THE CLOSURE OF THE SUBSCRIPTION LIST OR WHICH INDICATE AN

INACCURATE/INCORRECT CDS ACCOUNT NUMBER, SHALL BE REJECTED AND NO ALLOTMENT WILL

BE MADE.

You can open a CDS account through any Member/Trading Member of the CSE as set out in Annex Cor through any Custodian Bank set out in Annex D of this Prospectus.

Applicants have the opon of having their Shares ‘locked’* in the CDS. Shares that are ‘locked’* would

not be available for trading purposes and would not be visible to the parcipant. Such Applicants

would have to ll in a separate secon in the IPO Applicaon Form for this purpose. If the Applicant

has not specied that his/her Shares need to be deposited to his/her ‘locked’* balance, please note

that the said Shares would be deposited to Applicant’s ‘trading’ balance.

*Denion and operaon of a ‘locked’ balance in the CDS

In order to preserve the condenality of shareholder informaon and to ensure that securies are

not made available for trading for those shareholders who do not want to trade the securies the CDS

would provide a mechanism where securies can be ‘locked’ in the CDS account.

The CDS would maintain two balances for each CDS account, namely a trading balance and a locked

balance. The trading balance would be visible to the CDS parcipant and all dealings and trading would

be permied on the said trading balance, as done presently.

As opposed to the trading balance, the locked balance will not be visible to the CDS parcipant and all

dealings on such locked balance would be suspended thereby maintaining the condenality of the

informaon and also safeguarding the account holder from an unauthorized sale by a broker.

At the opon and request of an account holder the CDS would transfer a named quanty of Shares from

the locked balance to the trading balance of a CDS account and /or from the trading balance to the

locked balance.

3.15.1 Number of Shares Applied

Applicaon should be made for a minimum of One Hundred (100) Shares or in mulples of Hundred

(100) Shares thereof.

Applicaons made for less than One Hundred (100) Shares or for a number which is not in mulples of

Hundred (100) Shares will be rejected and the accompanying cheques or bank dras or bank guarantees

will not be sent for clearing but be returned via ordinary post at the risk of the Applicant, or in the case

of Joint Applicants, the rst named Applicant. The cheque or bank dra or bank guarantee should be

issued to the exact value of the number of New Shares applied for mulplied by the Share Issue Price.

Cheques, bank dras or bank guarantees not conforming to the above requirement will be rejected at

the outset.

Please refer Secon 3.16.1 for details with respect to the mode of remiance.

3.15.2 Responsibility of a Non-Resident Investor

Non-resident investors may be aected by the laws of the jurisdicon of their residence. If non-resident

investors wish to apply for the New Shares at the IPO, it is their responsibility to comply with the laws

relevant to the jurisdicon of their residence and of Sri Lanka.

3.15.3 Margin Trading

Applicants who wish to apply through their margin trading account, should submit the Applicaons inthe name of the “margin provider/Applicant’s name” signed by the margin provider. The Applicants

should state the relevant CDS account number relang to the margin trading account in the space

provided for the CDS account number in the Applicaon Form.




A photocopy of the margin trading agreement must be submied along with the Applicaon.

Please note that the margin provider can apply under its own name and such Applicaons will not be

construed as mulple Applicaons (details of mulple Applicaons are available under Secon 3.15.6).

3.15.4 Applicaons made under Power of Aorney

In the case of Applicaons made under Power of Aorney (POA), a copy of the said POA, cered by a

Notary Public to be a true copy of the original, should be lodged with the Registrars to the Issue along

with the Applicaon Form. The original POA should not be aached.

3.15.5 Joint Applicaons

Joint Applicaon Forms should not exceed three Applicants (except in the case of executors,

administrators or heirs of a deceased member). Joint Applicants should note that all pares should

either be residents of Sri Lanka or non-residents. An Applicant of a Joint Applicaon shall not apply

through a separate Applicaon Form either individually or jointly. Only one Applicaon will be

accepted on behalf of a natural person.

3.15.6 Mulple ApplicaonsAn Applicant can apply under only one Applicaon Form when Applicants are applying under the same

category. If an Applicant has applied under more than one Applicaon Form under the same category,

it will be construed as mulple Applicaons. An Applicant of a Joint Applicaon, applying through

another Applicaon Form is also deemed to have made mulple Applicaons.

An Applicant who has made an Applicaon under a margin trading account should not apply individually

or jointly on a separate Applicaon Form. Such Applicaons will also be construed as mulple

Applicaons.

Only one Applicaon should be made by an Applicant under the Employee Category. Addionally an

Applicant may make a further Applicaon (One [01] Only) either under Retail Individual Category or

Non Retail Category which will not be construed as mulple Applicaons.

Only one Applicaon should be made by an Applicant under the Unit Trust Category. Addionally an

Applicant may make a further Applicaon (One [01] Only) under Non-Retail Category which will not be

construed as mulple Applicaons.

The Company/Joint Managers/Registrars to the Issue reserve the right to reject all mulple Applicaons

and suspected mulple Applicaons or to accept only one Applicaon Form at their discreon.

3.15.7 Rejecon of Applicaons

• Applicaon Forms which are incomplete in any way and/or are not in accordance with the

terms and condions set out in this Prospectus will be rejected at the absolute discreon of theCompany/Joint Managers/Registrars to the Issue.

• Applicaons which do not carry the CDS account number, or which indicate an inaccurate/

incorrect CDS account number, shall be rejected and no allotment will be made.

• Applicaons delivered by hand aer 4.30 p.m. local me on the Issue Closing Date of the Oer will

be rejected. Applicaons received by courier/post aer 4.30 p.m. local me on the succeeding

Market Day immediately following the Issue Closing Date of the Oer, will also be rejected even

if they carry a courier acceptance date/postmark date earlier than the Issue Closing Date.

• Applicaons made for less than One Hundred (100) Shares or for a number which is not in

mulple of Hundred (100) Shares will be rejected.

• In the case of mulple Applicaons and suspected mulple Applicaons, the Company/JointManagers/Registrars to the Issue reserve the right to reject all or to accept one Applicaon Form

at their discreon.




• An Applicaon Form accompanied by two or more cheques or bank dras or bank guarantees

will be rejected at the outset.

• Applicaons made by individuals below 18 years of age or those in the names of sole

proprietorships, partnerships, unincorporated trusts and non-corporate bodies will be rejected.

Notwithstanding any provision contained herein, the Board of Directors shall reserve the right

to refuse any Applicaon or to accept any Applicaon in full or part, for whatsoever reason.

UPON THE ALLOTMENT OF NEW SHARES UNDER THIS ISSUE, THE ALLOTTED SHARES WILL BE

CREDITED TO THE APPLICANT’S CDS ACCOUNT SO INDICATED. PLEASE NOTE THAT SHARE

CERTIFICATES SHALL NOT BE ISSUED. APPLICATIONS WHICH DO NOT CARRY THE CDS ACCOUNT

NUMBER, WHICH IS NOT OPENED AT THE TIME OF THE CLOSURE OF THE SUBSCRIPTION

LIST OR WHICH INDICATE AN INACCURATE/INCORRECT CDS ACCOUNT NUMBER, SHALL BE

REJECTED AND NO ALLOTMENT WILL BE MADE.

3.15.8 Submission of Applicaons

Applicaon Forms properly and legibly lled in accordance with the instrucons thereof, along with the

applicable remiance (cheque or bank dra or bank guarantee only) for the full amount payable on

Applicaon should be enclosed in a sealed envelope marked “Textured Jersey Lanka Limited – InialPublic Oering” on the top le-hand corner and be addressed and dispatched by post or courier or

delivered by hand to the Registrars to the Issue at the following address prior to 4.30 p.m. Local Time

on the Issue Closing Date.

SSP Corporate Services (Private) Limited

No. 101, Inner Flower Road, Colombo 03

Sri Lanka

Applicaons may also be handed over to the Joint Managers to the Issue, Bankers to the Issue and its

designated branches, members and trading members of the CSE as set out in Annexure C prior to 4.30

p.m. Local Time on the Issue Closing Date.

In the case of Applicaons dispatched by courier or post, such Applicaons should reach the Registrars

to the Issue prior to 4.30 p.m. Local Time on the Market Day immediately following the Issue Closing

Date. Any Applicaons received aer the above deadline shall be rejected even though the courier or

post mark is dated prior to the Issue Closing Date.

Applicants applying under the Employee category should submit their Applicaon Forms to the

designated ocer of the Company who is responsible to collect same and forward to the Registrars to

the Issue. Employees shall not submit Applicaons directly to the Registrars to the Issue.

Applicants applying under the Unit Trust category should submit their Applicaon Forms either directly

to the Registrars to the Issue or to the Joint Managers to the Issue who will forward the same to the

Registrars to the Issue.

3.16 Payment of Applicaon Monies

3.16.1 Mode of Remiance

Payment should be made separately in respect of each Applicaon by way of a cheque or bank dra

or bank guarantee. Remiances on Applicaons will be deposited in a separate bank account in the

name of “Textured Jersey Lanka Limited – Inial Public Oering”. Each Applicaon Form should

be accompanied by only one cheque or bank dra or bank guarantee and should be issued for the

full amount indicated in the Applicaon Form. An Applicaon Form accompanied by two or more

cheques, bank dras or bank guarantees will be rejected at the outset.

Applicants making Applicaons for Shares of a value of above LKR 99,999,999 will be permied tosubmit mulple bank dras (not cheques) or mulple bank guarantees. Such Applicants are required

to aach a list to the Applicaon Form giving details of such payment, such as; (1) Name of Bank, (2)

Name of Branch, (3) Bank Dra No. / Bank Guarantee No.




Cash will not be accepted. Anyone wishing to pay cash should obtain a bank dra from any commercial

bank in Sri Lanka.

3.16.2 Cheques or Bank Dras – Resident Sri Lankan Investors

Cheques or bank dras should be drawn on any licensed commercial bank in Sri Lanka and crossed

“Account Payee Only” and made payable to “Textured Jersey Lanka Limited – Inial Public Oering”.

Cheques or bank dras accompanying Applicaon Forms made for less than One Hundred (100) Shares

or for a number which is not in mulples of Hundred (100) Shares will not be sent for clearing and shall

be returned via ordinary post at the risk of the Applicant, or in the case of Joint Applicants, to the rst

named Applicant.

In the event that cheques are not realized within Two (02) Market Days from the day of presenng the

same to the bank for clearing, the cheques will be returned and no allocaon of Shares will be made to

the Applicant.

Applicants residing in outstaon areas from which cheque clearance may take over Two (02) Market

Days are advised to make payment via bank dras to avoid any delays.

Cheques must be honoured on rst presentaon to the bank for the Applicaon to be valid. Applicaonssupported by cheques which are not honoured on the rst presentaon will be rejected.

3.16.3 Bank Guarantees – Resident Sri Lankan Investors

Applicaons made by resident Sri Lankan investors backed by bank guarantees issued by a licensed

commercial bank presented in line with the requirements set out in Secon 3.16.1 will be accepted.

Bank guarantees will be presented to the respecve banks only aer the New Shares have been

alloed/allocated. Bank guarantees could be issued by any commercial bank in Sri Lanka in favour of

“Textured Jersey Lanka Limited – Inial Public Oering” in a manner acceptable to the Company and

be payable on demand.

Bank guarantees should be valid up to One (01) month from the date of issue.

Applicants are advised to ensure that sucient funds are made available in order to honour the bank

guarantee, inclusive of charges, when called upon to do so by the Registrars to the Issue. Applicants

are encouraged to discuss with their relevant bankers with regard to the issuance of bank guarantees

and all related charges that would be incurred by the Applicants.

Foreign investors and non-resident Sri Lankan investors should refer Secon 3.16.4 for informaon

regarding procedures for foreign currency remiance.

3.16.4 Foreign Currency Remiance

This secon is applicable to cizens of Sri Lanka who are above 18 years of age and resident overseas,

corporate bodies incorporated or established outside Sri Lanka, global, regional or country funds

approved by the SEC and foreign cizens (irrespecve of whether they are resident in Sri Lanka or

overseas) who are above 18 years of age.

The above menoned Applicants should make their payments using one of the following methods as

the case may be:

• A foreign investor may invest through a Securies Investment Account (SIA) maintained with any

commercial bank in Sri Lanka. The procedure for arranging payments through a SIA is presented

below:

• A foreign investor may use the services of a custodian bank as an intermediary when

invesng in the Sri Lankan securies market.

• The intermediary may open a SIA, on the investor’s behalf. In conjuncon with the SIA, an

account with the CDS must be opened.




• In respect of global, regional or country funds invesng for the rst me in Sri Lanka, the

intermediary will facilitate the approval process regulated by the SEC.

• Payment for New Shares should be made through a cheque or bank dra or bank guarantee

issued by a licensed commercial bank against the funds through the SIA and made payable

to “Textured Jersey Lanka Limited – Inial Public Oering”.

• A foreign investor may invest through inward remiances of foreign currency held in a Foreign

Currency Banking Unit (FCBU) account of the Applicant maintained with any commercial bank

in Sri Lanka. The Applicant should forward the Applicaon Form supported by a bank guarantee

drawn on the Applicant’s FCBU account pending allotment of New Shares.

• Upon allotment of New Shares, foreign currency to the extent of the Sri Lankan Rupee

equivalent value of New Shares alloed would be called on the bank guarantee drawn on

the Applicant’s FCBU account. The requisite funds would then be credited to a SIA opened

in favour of the Applicant via the aforemenoned FCBU account.

• This procedure would protect a prospecve investor from any potenal losses accruing due

to uctuang exchange rates.

• In addion to the payments made through SIA and FCBU menoned above, a foreign cizenresident in Sri Lanka under the Resident Guest Scheme may invest through the Resident Guest

Foreign Currency Account (RGFCA) maintained with any licensed commercial bank in Sri Lanka.

An Applicant who wishes to avail him/herself of this facility should make the payment for New

Shares through a bank dra or a bank guarantee issued by a licensed commercial bank against

the funds in the RGFCA and made payable to “Textured Jersey Lanka Limited – Inial Public

Oering”.

• Non-resident Sri Lankans can remit money for investment purposes in Sri Lankan companies

through a Rupee Account for Non-Resident Sri Lankan Investment (RANSI) maintained with

authorized dealers.

• Sri Lankan cizens who have le the country to take up employment, business or aprofession and connue to reside abroad and those cizens of Sri Lanka who have made

their permanent place of abode outside Sri Lanka are eligible to operate a RANSI with

authorized dealers. Joint accounts are not permied under this scheme.

• Remiances by non-resident Sri Lankans in connecon with this Applicaon Form must be

made via bank dras purchased out of funds in the RANSI. There are no exchange control

restricons on remiance of funds that may be available in a RANSI.

• Where a RANSI holder is also the holder of a Non-Resident Foreign Currency (NRFC) account,

movement of funds between a RANSI and a NRFC account of the account holder is freely

permied, so long as the account holder connues to reside abroad and does not cease

to be a cizen of Sri Lanka. Therefore, funds in the NRFC account could be transferred to a

RANSI through which investment in New Shares could be made.

Cheques or bank dras or bank guarantees should be endorsed by the issuing custodian bank, to

the eect that such payment has been made against funds available in the individual’s SIA/FCBU/

RGFCA account. The endorsement must be clearly indicated on the cheque or bank dra or the bank

guarantee. Alternavely, a document detailing the endorsement could be submied along with the

payment and Applicaon.

Bank dras drawn on a RANSI account should also be endorsed in line with the above.

3.16.5 Restricons Applicable to Foreign Cizens Resident in Sri Lanka

Foreign cizens resident in Sri Lanka may make payments through Sri Lankan Rupee accounts onlyif they possess dual cizenship where one such cizenship is Sri Lankan. Foreign cizens having Sri

Lankan cizenship should aach a cered copy of the cizenship cercate with the Applicaon

Form.




Foreign cizens residing in Sri Lanka having valid residency visas should note that they cannot make

remiances via cheques or bank dras or bank guarantees drawn on Sri Lanka Rupee accounts held in

Sri Lanka but may do so via SIA/FCBU/RGFCA account as detailed in Secon 3.16.4 above. Applicaons

made by foreign cizens not in accordance to the foregoing shall be rejected.

3.17 Banking of Payments

All cheques or bank dras or bank guarantees received in respect of Applicaons will not be banked orcalled on unl the Market Day aer the Issue Closing Date of the subscripon list, in terms of the CSE

Lisng Rules.

3.18 Returning of Monies of Rejected Applicaons

Where an Applicaon Form is rejected, the cheque or bank dra or bank guarantee received in respect

of the Applicaon will be returned via ordinary post at the risk of the Applicant. In the case of joint

Applicants, Applicaon monies will be returned to the rst named Applicant.

Where the Applicaon Form is accepted and the cheque or bank dra or bank guarantee is not

honoured at the rst presentaon, the Applicaon will also be rejected and the cheque or bank dra

or bank guarantee will be returned via ordinary post at the risk of the Applicant. In the case of joint

Applicants, Applicaon monies will be returned to the rst named Applicant.

3.19 Refunds on Applicaons

Where an Applicaon is accepted only in part, the balance of the monies received on Applicaon

will be refunded. Refunds on New Shares that have not been alloed will be refunded on or before

the expiry of Ten (10) Market Days from the Issue Closing Date (excluding the Issue Closing Date) as

required by the CSE Lisng Rules. Applicants would be entled to receive interest at the last quoted

AWPLR published by the Central Bank of Sri Lanka plus 5% on any refunds not made before the expiry

of the above menoned period.

Refunds via Sri Lanka Inter-bank Payment Systems:

• The refund payment will be made to the bank account specied by the Applicant through the Sri

Lanka Inter-bank Payment System (SLIPS) which is subject to a maximum limit of LKR 5 million,

on or before the expiry of Ten (10) Market Days from the Issue Closing Date (excluding the Issue

Closing Date) as required by the CSE Lisng Rules and a payment advice shall be issued to the

Applicant provided that the Applicant has submied accurate and complete details of his bank

account in the Applicaon Form. In the event the refund payment is eected via SLIPS based

on the bank account details provided by the Applicant in the Applicaon Form, but is rejected

by the Applicant’s bank due to inaccurate or incomplete informaon, such refund payments

would be made via a crossed cheque in favour of the Applicant and sent by ordinary post at the

risk of the Applicant to the address registered with the CDS Account indicated in the Applicaon

Form. In such instances, the Company together with the Registrars to the Issue will send therefund cheques to such Applicants at the earliest possible and the Applicant should not hold the

Company or the Registrars to the Issue accountable for such delays. CDS informaon will take

precedence over informaon in the Applicaon Form in the event of a discrepancy between the

CDS informaon and informaon stated in the Applicaon Form.

Further, the following web link, hp://lankaclear.com/products_and_services/sl_interbank_

payment_system_overview.php could also be accessed to locate bank and branch codes.

Refunds via crossed cheque:

• If the Applicant has not provided details of the bank account in the Applicaon Form or has

provided inaccurate or incomplete details of the bank account, the refund payment will be made

by a crossed cheque in favour of the Applicant and sent by ordinary post to the address given

to the CDS by the Applicant as referred to in the Applicaon Form at the risk of the Applicant.

In the case of a Joint Applicaon, a crossed cheque will be drawn in favour of the Applicant




whose name appears rst in the Applicaon Form. Further, even if the Applicant has requested

for SLIPS transfer for refund amounts and submied accurate and complete details of the bank

account in the Applicaon Form, refund amounts exceeding LKR 5 million will also be made by a

crossed cheque in favour of the Applicant and sent by ordinary post at the risk of the Applicant

to the address given to the CDS by the Applicant as referred to in the Applicaon Form.

A request for cancellaon of crossing on the refund cheque, in instances where the Applicant

does not maintain a current account, should be addressed to the Registrars to the Issue inwring, stang the cheque number and the fact that the Applicant does not maintain a current

account. The refund cheque and a clear photocopy of the Applicant’s NIC should accompany the

leer.

In the event of a cheque being delivered by hand by a third party to the Registrars to the Issue for

cancellaon of crossing, a leer of authorizaon signed by the Applicant stang the NIC number

of such third party should also be presented with the refund cheque.

Refund cheques on which the crossing has been cancelled by the Registrars to the Issue should

preferably be collected in person or by a third party authorized by the Applicant. Where an

Applicant has requested the delivery of the cheque on which the crossing has been cancelled via

post, such cheque will be sent at the risk of the Applicant.

3.20 Successful Applicants and CDS Lodgement

The Company will dispatch a leer informing successful Applicants on their allotment of Shares not later

than Ten (10) Market Days from the Issue Closing Date of the Issue. Further, a wrien conrmaon,

upon the compleon of creding the respecve CDS account will be sent to the shareholder within Two

(02) Market Days of creding the CDS accounts by ordinary post to the address given to the CDS by the

Applicant as referred to in the Applicaon Form.


dated November 22, 2010 and Circular No. 13/2010 issued by the Central Depository System

(Private) Limited dated November 30, 2010, all shares shall be directly uploaded to the CDS. Assuch all Applicants should indicate their CDS account number in the Applicaon Form. Applicants

who do not have a CDS account are advised to open a CDS account prior to making the Applicaon,

in order to facilitate the uploading of alloed Shares to the CDS.

UPON THE ALLOTMENT OF NEW SHARES UNDER THIS ISSUE, THE ALLOTTED SHARES WILL

BE CREDITED TO THE APPLICANT’S CDS ACCOUNT SO INDICATED. PLEASE NOTE THAT SHARE

CERTIFICATES SHALL NOT BE ISSUED. APPLICATIONS WHICH DO NOT CARRY THE CDS ACCOUNT

NUMBER, WHICH IS NOT OPENED AT THE TIME OF THE CLOSURE OF THE SUBSCRIPTION LIST OR

WHICH INDICATE AN INACCURATE/INCORRECT CDS ACCOUNT NUMBER, SHALL BE REJECTED AND

NO ALLOTMENT WILL BE MADE.

You can open a CDS account through any Member/Trading Member of the CSE as set out in AnnexC or through any Custodian Bank set out in Annex D.

Applicants have the opon of having their Shares ‘locked’* in the CDS. Shares that are ‘locked’* would

not be available for trading purposes and would not be visible to the parcipant. Such Applicants

would have to ll in a separate secon in the IPO Applicaon Form for this purpose. If the Applicant

has not specied that his/her Shares need to be deposited to his/her ‘locked’* balance, please note

that the said Shares would be deposited to Applicant’s ‘trading’ balance.

(*denion of ‘locked’ - Secon 3.15)

The New Shares alloed in terms of this Issue will be directly uploaded to the respecve CDS account

given in the Applicaon Form before the expiry of Eighteen (18) Market Days from the Issue Closing

Date of the Oer as required by the CSE Lisng Rules.

Applicaon Forms stang third party CDS account numbers instead of their own CDS account numbers,

except in the case of margin trading accounts, will be rejected.




3.21 Transferability of New Shares

The New Shares to be issued under this Prospectus shall not be transferable by the shareholders

during the period commencing from the date of allotment of the New Shares and up to the date of

lisng (excluding the date of lisng) of the Ordinary Vong Shares (inclusive of the New Shares) of the

Company on the CSE.

Upon the Ordinary Vong Shares being listed on the CSE, such Shares shall be freely transferable.

3.22 Declaraon to the Colombo Stock Exchange and Secondary Market Trading

The Company will submit to the CSE a declaraon on the Market Day immediately following the day on

which Applicants’ CDS accounts are credited with the New Shares. Trading of Ordinary Vong Shares

of the Company on the secondary market will commence on or before the Third (3rd) Market Day from

the receipt of the declaraon by the CSE as per the CSE Lisng Rules.




4.0 GLOBAL FABRIC MANUFACTURING INDUSTRY

4.1 Overview

Fabric products are primarily mass-produced commodies, with cost of producon being the crical

compeve factor in the industry. As a result, economies of scale, availability of raw materials and

low cost producon inputs (such as labour) have created a shi in key fabric producon centres away

from developed countries such as the United Kingdom, the United States, other European countries or

Japan to locaons such as China, India and Pakistan. China in parcular, has increasingly become the

focal point for industry concentraon due to its access to a large supply of the world’s coon, abundant

supply of low cost and skilled labor and eciencies gained from the co-locaon of the various parts of

the texle industry value chain. Fabric manufacturing begins with bre, which is primarily composed of

coon and other natural and synthec sources. Fibre is the main raw material used in the producon

of commodity yarn, which is in turn sold to fabric manufacturers that knit or weave the yarn into fabrics

for apparel, household products and other texle-related goods. Fabric manufacturers receive orders

from apparel manufacturers who process the fabric materials into nished clothing. For some fabric

manufacturers, such as the Company, orders from the garment manufacturers may be given as a specic

direcve of the ulmate apparel brand owners or retailers. In these instances, fabric manufacturers

will work in partnership with brand owners or retailers to jointly formulate design details, coloraon,prinng styles and other fashion specicaons prior to the fabricaon and subsequent sale to garment

manufacturers.

The diagram below illustrates the various steps in the texle and apparel industry producon chain:

FIGURE 4-1: TEXTILE INDUSTRY PRODUCTION CHAIN

There are two main types of fabric manufacturing, characterized by their dierent producon

techniques: kning and weaving. Knied fabric is stretchable and mainly used in sports and casual

wear. Knied fabric can be categorized into we and warp knied, depending on the direcon in which

the bres or yarns are knied (we is horizontal and warp is vercal). Warp knied fabric is oen used

in swimwear and inner-wear while we knied fabric is oen used in T-shirts. Woven fabric is non-

stretchable and typically used in formal apparel. Depending on the raw materials used, fabric, whether

knied or woven, can be further categorized into coon fabric, silk fabric, synthec fabric, mixed fabric

and so forth.

4.2 Development Trends in the Global Fabric Manufacturing Industry

Shi of fabric supply chain to the East

Cost of producon is considered to be one of the most signicant factors that aect players in the

global fabric manufacturing industry. As a result, economies of scale, availability of raw materials and

Fibre Supply

Yarn

manufacturing

Fabric

manufacturing

Garment

manufacturing

Brand

owner/retailer

DOWN STREAM

UPSTREAM




low cost of labour have contributed in shiing key fabric producon centers away from developed

countries to locaons such as China, India and Pakistan. Of these countries China has emerged as the

largest player due to its access to a large supply of the world’s coon, supply of low cost and skilled

labour and competency gained due to its strategic posioning in the texle industry value chain with

close proximity to key apparel manufacturing centres, both internaonally and in regional markets.

However, a record increase in the price of coon and the recently experienced rise in labour costs

may limit the further expansion of China’s texle industry and reduce export compeveness. In 2010

the price of coon surged to USD 4,551 per metric ton from USD 2,123 at the beginning of the year,while labour costs increased by as much as 20%. A slower rate of recovery of the global economy

and world consumer demand as well as a stronger Renminbi are ancipated to further reduce the

compeveness of China’s fabric manufacturing industry.

China, India and Pakistan’s total share of the global coon fabric market has increased over the past

several years. Producon and market share of developed regions such as the United States and Europe

has declined while those of developing countries, especially Asian countries have increased due to cost

compeveness and other advantages.

Rising costs raising barriers to entry

Another aspect that has had an impact on the global fabric manufacturing industry is rising costs,making the entrance of new players more dicult. Global environmental and other regulaons have

become increasingly stringent over me, thereby making smaller, less capitalized fabric manufacturers

less compeve. This places fabric manufacturers with scale and a stronger capital base in a beer

posion as they can benet from strict regulaon as compliance costs are more easily absorbed. Over

me it is expected that cost pressures will encourage the smaller and less protable businesses to exit

and facilitate consolidaon in the sector.

Higher eciency through improvement in producon technologies and management systems

Improvement in producon technologies and management systems is another developing trend

driving higher eciency. Fabric manufacturers, mainly in developed countries have improved kning,

dyeing and prinng techniques which have resulted in the development of fabric with specializedfeatures and funconalies. Moreover, technological advances in the areas of computer automaon,

sensors, data management and networks, as well as fabric manufacturing techniques have resulted

in shorter lead mes, higher quality, lower unit costs, improved eciency and increased speed and

scale of operaons. Some fabric manufacturers in the emerging markets have generally lagged in

adopng these more advanced producon methods due to high inial investment costs. However,

well capitalized producers in low cost countries employ such advances in technology thereby enjoying

a compeve advantage.

4.3 Global Coon Producon

Given below is a table showing the producon of the seven largest coon producing countries in the

world:

TABLE 4-1: WORLD’S LARGEST COTTON PRODUCERS IN METRIC TONS

Country 2006 2007 2008 2009 2010

China 7,729 8,056 7,991 6,967 6,532

India 4,746 5,225 4,921 5,051 5,661

United States 4,700 4,182 2,790 2,654 3,977

Pakistan 2,090 1,872 1,894 2,090 1,916

Brazil 1,524 1,602 1,193 1,187 1,764

Uzbekistan 1,165 1,165 1,002 849 1,045

Australia 294 139 327 386 871Other 4,273 3,816 3,202 2,924 3,388

Total 26,522 26,058 23,319 22,109 25,154

Source: IMF




Coon Producon - China

China is the world’s largest coon producer and accounts for 25% of the world’s total coon producon.

Given below is a chart depicng the growth in coon producon in China from 1970/71 to 2007/08:

CHART 4-1: COTTON PRODUCTION IN CHINA – 1970/71-2007/08

Source: IMF

China has connuously maintained healthy growth rates in terms of coon producon. However, less

than 5% of China’s total coon producon is exported. Almost all of its producon is used within the

country for the booming Chinese texle industry.

Coon Producon - India

India is the second largest coon producer and has seen 10%-12% growth in its annual producon.

Coon is one of the principal crops of the country and is the major raw material for the domesc

texle industry which is the second largest producer of texles and garments. Unlike China, India is a

major exporter of coon. Major export desnaons are Bangladesh, Pakistan, China and other far-east

countries. India has the largest area devoted to coon culvaon with an esmated 4 million farms.

The Indian government acvely parcipates in the industry and serves as an umbrella for governmentagencies and state markeng federaons. Issues that generally aect the coon industry are those

related to the lag in technological advancements and associated modernizaon of the industry.

Coon Producon – USA

USA is the third largest producer of coon and the h largest consumer of coon. More importantly,

the US is the largest exporter of coon. The US coon industry accounts for more than USD 25 billion

in products and services annually. However, in recent years coon has been losing acreage to other

commodies such as wheat, soybeans and corn. The United States is the largest exporter of coon

accounng for approximately 40% of the world exports. Generally, the US coon industry is highly

privazed and consequently market oriented, with government intervenon in the form of the work

done through USDA’s work and parcipang agencies. The industry is characterized by a high degreeof organizaon and aggressive promoon of the coon crop. The main issue aecng the US coon

industry is the high cost of producon.

Coon Producon - Pakistan

Pakistan is the fourth largest coon producer and consumer. Pakistan has been a net importer of

coon since the mid-1990s. This is due to an increased domesc demand for coon. The Pakistan

economy is highly reliant on both the coon and texle sectors. Furthermore, the coon and texle

industries dominate exports, accounng for 55% of export value. In Pakistan, there are a number of

government agencies and private iniaves that regulate and support the coon sector. Although

Pakistan is the fourth largest producer of raw coon it is sll far behind in producvity per unit of area

when compared with the yields being realized in some other major coon producing countries.

1 0 0 0 4 8 0 - l b b a l e s

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

-

1 9 7 0

1 9 7 2

1 9 7 4

1 9 7 6

1 9 7 8

1 9 8 0

1 9 8 2

1 9 8 4

1 9 8 6

1 9 8 8

1 9 9 0

1 9 9 2

1 9 9 4

1 9 9 6

1 9 9 8

2 0 0 0

2 0 0 2

2 0 0 4

2 0 0 6

2 0 0 8




4.4 Primary Strengths of Sri Lanka Fabric Manufacturing Industry

Proximity to major raw material producers and garment producers

According to the Internaonal Coon Advisory Commiee (ICAC), China, India and Pakistan’s total

share of the global coon fabric producon has increased from 38.3% in 1980 to 68.5% in 2010. The

following chart illustrates producon of coon by major producers.

CHART 4-2: LEADING PRODUCERS OF CHART 4-3: WORLD’S LARGEST COTTON PRODUCERS

COTTON YARN AS A % OF GLOBAL PRODUCTION

Source: ICAC

India’s and Pakistan’s importance as major coon producing countries has grown over the past few

years. Sri Lanka mainly sources its coon yarn from India and Pakistan. Hence the Sri Lankan fabric

manufacturing industry enjoys advantages in terms of its proximity to three of the major coon and

coon yarn producing countries.

Furthermore, the proximity of major garment producers gives Sri Lankan fabric manufacturers eciency

benets in sourcing, logiscs, transportaon and storage. Some of the largest garment manufacturersare located in India, Bangladesh, Pakistan and other South Asian countries.

The European Region and the US are the two largest importers of texle & clothing, accounng for

38.3% of world texle imports and 69.3% of clothing imports in 2009.

TABLE 4-2: WORLD’S TOP FIVE TEXTILE IMPORTERS AS A % SHARE IN WORLD TEXTILE IMPORTS

Country 2008 2009

European Union 31.9 29.7

United States 8.8 8.6

China 6.2 6.7

Japan 2.6 3.0

Canada 1.7 1.6

TABLE 4-3: WORLD’S TOP FIVE CLOTHING IMPORTERS AS A % SHARE IN WORLD CLOTHING IMPORTS

Country 2008 2009

European Union 39.8 47.3

United States 32.1 22.0

Japan 9.4 6.9

Russian Federaon 1.3 5.7Canada 1.8 2.3

Source: OTEXA, Eurostat

60.0%

50.0%

40.0%

30.0%

20.0%

10.0%

0.0%China India Pakistan Turkey USA Brazil

48.6% 9.8% 9.0% 5.2% 4.5% 3.6%

25,250

20,250

15,250

10,250

5,250

2502006 2007 2008 2009 2010

Others 4,273 3,816 3,202 2,924 3,388

Australia 294 139 327 386 871

Uzbekistan 1,524 1,602 1,193 1,187 1,764Brazi; 1,524 1,602 1,193 1,187 1,764

Pakistan 2,090 1,872 1,894 2,090 1,916

United States 4,700 4,182 2,790 2,654 3,977

India 4,746 5,225 4,921 5,051 5,661

China 7,729 8,056 7,991 6,967 6,532




The United States imports more coon apparel from China and Southeast Asian countries collecvely

than all other parts of the world. According to the shipper’s report compiled by OTEXA, around 55%

of total coon apparel exports to the United States were from this region in 2010.

TABLE 4-4: COTTON APPAREL EXPORTS TO THE UNITED STATES BY COUNTRY

Country 2008 (%) 2009 (%) 2010 (%)

China 35.06 39.21 41.24

Hong Kong & Macau 2.60 0.60 0.33

ASEAN (The Assocaon of Southeast Asian Naons) 17.54 17.73 17.55

Indian Sub-connent 12.50 13.42 13.40

EU (European Union) 4.13 3.19 3.05

CAFTA (Central America Free Trade Agreement countries) 8.25 7.68 7.60

CBI (Carribean Basin Iniave countries) 8.72 8.32 8.16

Others 11.20 9.85 8.67

Source: OTEXA

Proximity to some of the largest integrated manufacturers of knied apparel

With increased interest in the global market for knied garments as opposed to woven products,

Sri Lankan fabric manufacturers have a relave advantage through proximity to some of the largest

manufacturers of knied apparel. In the past, the biggest players in the knied segment were Lan

American and Middle Eastern countries. However, with the shi of the supply base to the eastern

countries, the South Asian region now ranks amongst one of the fastest growing regions for knied

products.

CHART 4-4: EXPORT OF KNITTED APPAREL BY KEY COMPETING COUNTRIES

Source: Textured Jersey Lanka Limited

Hence, Sri Lankan fabric manufacturers are strategically posioned to benet from access to direct

fabric exports to some of the large texle manufacturers countries. In addion, Sri Lankan texle

manufacturers have an opportunity to operate as a hub in the supply chain in order to fuel the growth

witnessed in the knied garments sector.

Increased internaonal demand for garments

Due to the recessionary condions experienced by the US and European markets, demand for export

of texle & clothing products saw a decline in the recent years. However according to OTEXA and

Eurostat, given the essenal nature of the product, it is expected that the texle & clothing imports willincrease at a CAGR of 3.9% from 2010 to 2015 in the US and at a CAGR of 6.3% in the EU region.

100%

90%

80%

70%

69%

50%

40%

30%

20%

10%

0%2005 2006 2007 2008 2009

Pakistan 1,655 1,902 1,851 1,888 1,681

Bangladesh 3,347 4,072 4,735 6,420 6,480

India 3,125 3,577 4,129 4,381 5,186

Sri Lanka 1,120 1,353 1,553 1,679 1,581

U S D M i l l i o n




CHART 4-5: GLOBAL APPAREL RETAIL INDUSTRY VALUES


This expected growth in internaonal demand will have a direct impact on the Sri Lankan and regional

apparel industries. The fabric manufacturing industry, being a key link in the local texle and clothing

industry in Sri Lanka, will also benet from this ancipated increase in global demand.

Availability of low-cost labour pool

The compeve strength of Sri Lanka’s fabric manufacturing industry and related apparel industry is

heavily dependent on its relavely cheap labour, a literate labour force and high labour standards.

Given below is a comparison of the labour costs of other competors.

TABLE 4-5: LABOUR COST (USD/HOUR)

India China Bangladesh Sri Lanka Turkey Vietnam

USD/hour 0.51 0.55 0.22 0.43 2.44 0.38

Source: Bureau of Labour Stascs, www.en. wikipedia.org

Sri Lanka is amongst the countries oering the cheapest labour thereby creang a compeve advantage

to its apparel makers. However, Sri Lanka will be unable to depend only on the availability of low cost

labour. It will have to look into other avenues such as increasing labour producvity in order to retain

its compeve posion in the global export market. There are a number of issues pertaining to low

labour producvity in the garment industry and substanal room for improvement is also available.

For example, one area that requires upgrading is the development of human skills to deal with the

technological changes taking place in the industry. Apparel manufacturers and exporters need toestablish strong links and partnerships not only with the major retail buyers but also with leading

educaonal establishments. Fashion design, innovaon and modern manufacturing techniques have

to be in conjuncon with other skills and strengths developed by the industry over the years.

980

960

940

920

900

880

860

840

820

800

780

7602005 2006 2007 2008 2009 2010

827 850.2 873.8 899.2 925.6 953.1

U S D b i l l i o n




5.0 SRI LANKA TEXTILE & APPAREL INDUSTRY

5.1 Overview – Development of Texle & Clothing Industry of Sri Lanka

Following the liberalizaon of Sri Lanka’s economy in 1977, the country’s garment industry developed

rapidly, in large part due to East Asian apparel exporters who capitalized on the opportunity to relocate

their operaons. At the me, Sri Lanka had an under-developed export-quality texle industry base

and did not have a base for garment industry accessories. By the mid-1980’s the garment exports of

the country accounted for the largest share of all exports (27%) whereas the dependency on imported

raw material inputs kept the industry value addion at around 30%.

In 1992, the Board of Investment of Sri Lanka (BOI) was established which oered aracve incenve

packages with the aim of encing garment producers to move into rural areas as well as encourage

investors in backward linkage industries. By 2009, the country’s apparel exports rose to USD 4.6 billion

with the industry consisng of approximately 270 factories employing about 1 million people directly

and indirectly and contribung nearly 10% to GDP. In approximate terms the industry value addion

now stands at 60%.

Largest contributor to export earnings and foreign exchange earnings

During 2005 to 2009, the industry has accounted for approximately 45% of Sri Lanka’s total export

earnings.

TABLE 5-1: CONTRIBUTION OF THE TEXTILE & APPAREL INDUSTRY TO EXPORT EARNINGS

Year Share (%)

2005 45.6

2006 44.8

2007 43.2

2008 42.8

2009 46.2

Source: Central Bank Annual Report - 2009

It is also the country’s largest net foreign exchange earner since 1992.

CHART 5-1: MAJOR SOURCES OF FOREIGN EXCHANGE EARNINGS

Source: Central Bank Annual Report – 2009

4,000

3,5003,000

2,500

2,000

1,500

1,000

500

02005 2006 2007 2008 2009

Garments & Texles 2800 3100 3400 3500 3350

Workers; Remiances 1980 2050 2600 3000 3400

Tea 700 1000 1050 1400 1350

Tourism 350 380 400 350 360

U S D m i l l i o n




Product porolio

Out of the texle & clothing sector, garments & made-up texles constutes 97%, woven fabrics 1%,

knied fabrics 0.5% with the balance made up of yarn and other texles.

CHART 5-2: YEAR WISE BEAK UP OF SRI LANKA’S TEXTILE INDUSTRY BY PRODUCT


5.2 Markets in the Sri Lanka Texle & Clothing Industry

Given below is a list of the main export desnaons of Sri Lankan texle & clothing products.

TABLE 5-3: COUNTRY CLASSIFICATION OF GARMENT EXPORTS

Country 2007 (Rs. million) 2008 (Rs. Million) 2009 (Rs. Million)

European Union 157,671 173,753 187,226

Austria 356 650 636

Belgium 6,857 8,158 7,974

Denmark 359 663 509

Finland 284 258 268

France 6,480 5,955 6,487

Germany 15,521 17,543 20,463

Greece 62 99 165

Ireland 568 360 350

Italy 10,609 35,092 40,102

Netherlands 5,469 5,086 6,828

Portugal 188 176 124

Spain 2,337 2,665 1,493Sweden 944 1,207 1,306

U.K. 86,510 93,955 96,948

Other 1,127 1,886 3,574

U.S.A. 173,658 160,928 147,667

Other Countries 16,341 21,314 23,481

Australia 759 858 1,062

Canada 4,556 5,100 4,798

Israel 38 37 30

Japan 1,352 1,257 1,426

South Korea 326 538 923

Switzerland 469 407 485Other 8,841 13,117 14,757

Total 347,670 355,995 358,374


100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%Woven Fabric Knied Fabric Yarn Made up Garments Others

Texle

2009 3,835 2,045 3,089 6,634 358,374 2,169

2008 3,789 2,795 2,959 8,181 355,955 2,306

2007 4,278 2,058 3,992 8,681 347,670 2,784

2006 4,956 1,244 2,435 4,530 303,263 4,401

2005 3,632 1,308 2,320 3,842 276,144 3,843

L K R m i l l i o n




High concentraon in the US and EU region

The main export desnaons for Sri Lanka are the United States and the UK which constuted

approximately 75% of total exports during 2007 to 2009, demonstrang a high concentraon rao

amongst a few countries. The US and the EU are the major import markets for texle & clothing

products in the world accounng for 59% of world texle imports in 2009 according to the WTO

Internaonal Trade Stascs.

Impact of the recessionary condions on the Sri Lankan texle & clothing industry

Even though total texle & clothing imports by the EU has been declining on a YoY basis since 2007, it

has recorded a 5-year CAGR of 3% in value terms from 2005 to 2008. Year 2008 recorded the highest

decline of a negave 5% due to the recessionary condions experienced by these countries. The UK

recorded the largest decline of negave 31% amongst all countries in the EU.

CHART 5-3: TOTAL TEXTILE & CLOTHING IMPORTS OF EU CHART 5-4: TOTAL TEXTILE & CLOTHING IMPORTS OF UK


Total texle & clothing imports by the US also declined during the recessionary period, recording a

negave 3% and negave 13% growth respecvely during 2008 and 2009. However, 2010 witnessed a

posive growth of 15% compared to 2009 due to the recovery of the US economy.

CHART 5-5: TOTAL TEXTILE & CLOTHING IMPORTS OF US

Source: OTEXA

The recent economic slowdown of these two large importers has impacted the texle & apparel market

in Sri Lanka as well.

68,000

66,000

64,000

62,000

60,000

58,000

56,000

54,000

52,000

50,000

3,000

2,500

2,000

1,500

1,000

500

-

14%

12%

10%

8%

6%

4%

2%

0%

-2%

-4%

-6%

5%

0%

-5%

-10%

-15%

-20%

-25%

-30%

-35%2005 2006 2007 2008 2009

Value Euro 55,533 62,163 64,637 66,045 62,702

Growth 8% 12% 4% 2% -5%

2005 2006 2007 2008 2009 2010

Value USD 89,205 93,278 96,409 93,186 81,005 93,278

Growth 7% 5% 3% -3% -13% 15%

2005 2006 2007 2008 2009

Value Euro 2,755 2,791 2,793 2,525 1,736

Growth 0.50% 1.31% 0.07% -9.60% -31.25%

E u r o m i l l i o n

E u r o B i l l i o n

U S D m i l l i o n

100,000

95,000

90,000

85,000

80,000

75,000

70,000

20%

15%

10%

5%

0%

-5%

-10%

-15%




CHART 5-6: ANNUAL GROWTH OF SRI LANKA TEXTILE & APPAREL EXPORTS – 2008 & 2009


2009 experienced a decline in exports of texle & clothing products due to the recessionary condions

in the US and European regions. However, it is worthwhile to note that this sector was aected to

a lesser extent compared to Sri Lanka’s other industrial exports. This indicates the texle & apparel

industry to be compevely posioned in an internaonal context compared to Sri Lanka’s other

exports demonstrang the industry’s resilient nature.

The larger players in the Sri Lankan industry have maintained long term relaonships with leading global

brands by developing high quality products and thereby migang the risk to these manufacturers

from possible cyclical demand deterioraons. Sri Lanka holds the 14th posion among all apparel

exporng countries to the US.

TABLE 5-4: TOP 15 COUNTRIES OF U.S. TEXTILE IMPORTS

Country USD Million

China 38,226

Vietnam 6,241

India 5,358

Indonesia 4,636

Mexico 4,427

Bangladesh 4,006

Pakistan 3,058

Honduras 2,380

Cambodia 2,208

Salvador 1,654

Thailand 1,532

Italy 1,415

Canada 1,395

Sri Lanka 1,227

Guatemala 1,171

Source: OTEXA

During the recessionary periods of 2008 and 2009, value wise garment imports from Sri Lanka to both

the US and the EU increased as compared to other countries. This further demonstrates the compeve

advantage Sri Lanka has against its competors in the internaonal texle & clothing markets.

4%

2%

0

-2%

-4%

-6%

-8%

-10%-12%

Export of texles Exports of garments Export of Total

texle & garments

2008 --8% 2% 2%

2009 -11% 1% 0.03%




Woven Knit OtherWoven Knit Other

CHART 5-7: VALUE WISE ANNUAL CHANGE IN CHART 5-8: VALUE WISE ANNUAL CHANGE IN

TEXTILE & CLOTHING IMPORTS TO US BY GARMENT IMPORTS TO UK BY KEY

KEY COMPETING COUNTRIES COMPETING COUNTRIES


5.3 Shi of Product Porolio of the Sri Lanka Texle & Clothing Industry

Increased interest in the knied segment compared to woven apparel products

Sri Lanka exports both knied as well as woven apparels. Although in the past Sri Lanka used to export

more woven products than knied, the knied segment has seen a CAGR of almost 10% over 2005-

2009 compared to just a 1% growth in the woven segment indicang a shi in the product composion

of the industry.

CHART 5-9: TEXTILE EXPORTS OF SRI LANKA – KNITTED & WOVEN


The increased interest in the knied segment could also be observed through the increased growth in

the knied apparel as a percentage of total apparel exports of Sri Lanka.

CHART 5-10: COMPOSITION OF APPAREL EXPORTS (2002 VERSUS 2010)


Sri Lanka Vietnam Turkey China Bangladesh

2009 18% -2% -45% -3% 0%

2008 -31% 16% -23% 1% 10%

2007 -7% 25% -14% 16% 6%

India Bangladesh China Sri Lanka Turkey Vietnam

2009 -6.29% 8.01% 0.32% 2.98% -4.19% -4.19%

2008 -6% -1.10% 17% 6% -27% 10%

2007 14% -2.70% 12% 0.30% 9% 9%

-50% -40% -30% -20% -10% 0% 10% 20% 30%-30% -20% -10% 0% 10% 20%

Sri Lanka

Sri Lanka

Vietnam

Vietnam

Turkey

TurkeyChina

China

Bangladesh

Bangladesh

India

2005 2006 2007 2008 2009

Knied fabrics 1,308 1,244 2,058 2,795 2,045

Woven fabrics 3,632 4,956 4,278 3,789 3,835

L K R m i l l i o n

U S D m i l l i o n

7,000

6,000

5,000

4,000

3,000

2,000

1,000

-

4000

3500

3000

2500

2000

1500

1000

500

0

2002 2003 2004 2005 2006 2007 2008 2009 2010

Total

Knit

2%

34%

64%

1%

51%

48%

Texle Exports of Sri Lanka – Knied & Woven Growth in Knit Apparel

Composion of Apparel Exports -2002 Composion of Apparel Exports -2010




Success of the woven category is highly dependent on the access to the supply chain, access to a good

fabric manufacturing base and ability to oer products with compeve prices. However, Sri Lanka

lacks these essenals as compared to countries with beer facilies to succeed in the woven sector.

Hence, many texle & clothing manufacturers have shied towards producon of knied fabrics and

apparel products as Sri Lanka has created a comparave advantage in this sector over the years. The

shi towards knied apparel producon also reects a shi in the industry towards higher end value

added products such as lingerie which are largely manufactured using knied fabrics.

5.4 Imports of the Sri Lanka Texle & Clothing Industry

Ample scope for domesc fabric manufacturers due to high dependency on imports

On average, texle import expenditure accounted for 15% of total imports since 1990. In 2009,

industry’s exports were USD 3,274 million while the expenditure on imported inputs was USD 1,442

million reecng a high import dependency by the industry.

CHART 5-11: TEXTILE & CLOTHING IMPORTS OF SRI LANKA


Due to the industry’s high dependency on imports, increase in producon volume of the apparel sector

is correlated with increase in import expenditure. It is esmated that imported fabrics account fornearly 85-90 percent of the fabric used by apparel exports. Hence, there is sll sucient scope for

domesc fabric manufacturers to increase their producon to accommodate what is currently being

met through imports.

5.5 Strengths and Opportunies for the Sri Lankan Garment Industry

Certain cost drivers could be considered as some of the major strengths of the Sri Lanka texle industry.

Given below is a gure showing the key drivers of cost compeveness.

FIGURE 5-12: MAJOR COST DRIVERS IN THE SRI LANKA TEXTILE & CLOTHING INDUSTRY

2005 2006 2007 2008 2009

Total Imports 8,863 10,253 11,300 14,091 10,206

Texle Imports 1,531 1,546 1,632 1,702 1,442

U S D m i l l i o n

16,000

14,000

12,00010,000

8,000

6,000

4,000

2,000

-

* Labour costs

* Labour producvity

* Power cost and availability of power

* Finance costs

* Infrastructure issues (delays in port

clearance high freight rates, etc.)

Labour

Other Costs

Infrastructure

Cost




Labour cost – The compeve strength of the Sri Lanka garment industry is based on relavely cheap

labour, a literate labour force and high labour standards. Given below is a comparison of the labour

costs in major countries of texles exports.

TABLE 5-5: LABOUR COST (USD/HOUR)


USD/hour 0.51 0.55 0.22 0.43 2.44 0.38

Source: Bureau of Labour Stascs, www.en. wikipedia.org

Sri Lanka is amongst the countries oering the cheapest labour thereby creang a compeve

advantage to its apparel makers. However, Sri Lanka will be unable to depend only on the availability of

low cost labour. Going forward the industry will have to venture into other avenues such as increasing

labour producvity in order to retain its compeve posion in the global export market.

Power cost and availability of power – Sri Lanka has a compeve advantage by having a low cost

power supply compared to other key apparel manufacturing markets. Compared to countries like

India, which suers from both non-availability of power and poor quality of power, Sri Lanka has the

advantage of a more reliable power supply.

CHART 5-13: POWER COSTS IN KEY COMPETING COUNTRIES IN USD/KWH

Source: US Energy Informaon Administraon

Interest cost – Interest rates in Sri Lanka are relavely low compared to prevailing rates in other

compeng countries.

CHART 5-14: PRIME LENDING RATES IN KEY COMPETING COUNTRIES

Source: Central Bank websites of corresponding countries

Corporate tax – Compared to some of the other key apparel manufacturing countries, the Sri Lankan

corporate tax rate is relavely low thereby enhancing the ease of access to the foreign investors.


USD/Kwh 0.11 0.09 0.08 0.09 0.11 0.05

U S D / K w h

0.12

0.1

0.08

0.06

0.04

0.02

0

China Bangladesh Vietnam Sri Lanka Turkey India

Prime Lending Rates 5,31% 16.38% 12.00% 9.59% 13.00% 12.19%

India

Turkey

Sri Lanka

Vietnam

Bangladesh

China

0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00%




CHART 5-15: CORPORATE TAX RATES IN KEY COMPETING COUNTRIES

Source: Central Bank websites of corresponding countries

Conducive investment condions including ease of doing business, infrastructure and tax relief –

Free Trade Zones and Export Processing Zones were set up oering many concessions to foreign and

local investors. The Board of Investment of Sri Lanka was set up as a “one-stop-shop” to assist foreign

investors. The granng of licenses to organizaons situated outside the BOI Zones, but with all BOI

facilies and concessions further enhanced the investor-friendly environment.

According to the Doing Business – 2009 South Asia report, Sri Lanka ranks in the 102nd place which is

comparavely higher compared to some of its other South Asian competors. Given below is a table

demonstrang the ease of doing business in Sri Lanka compared to some of its competors.

TABLE 5-6: INDICATORS ON EASE OF DOING BUSINESS IN SOUTH ASIA

Country Time to start Time to pay taxes Time to exports Cost to export

business (days) (hours per year) (days) (USD per

container)

Bangladesh 73 302 28 970India 30 271 17 945

Pakistan 24 560 24 611

Sri Lanka 38 256 21 865

Source: Doing Business - 2009

As shown above, Sri Lanka is ahead of its main competors in South Asia with regard to many indicators

viewed as vital for investor success.

5.6 Challenges Faced by the Sri Lankan Garment Industry

Development of preferenal arrangements – The global development of trade blocks and regionalpreferenal arrangements are a threat to the industry as Sri Lanka is not included in any such

arrangement except the GSP Scheme which oers very limited benets due to the stringent rules of

origin.

Price compeveness – Price connues to be an important factor in the global apparel industry.

Sri Lanka’s compeveness is aected due to poor labour producvity, insucient technology

advancement, heavy dependence on imported inputs, etc.

Fast lead mes – Manufacturing lead mes in countries geographically closer to the US and EU are

mostly shorter than for Sri Lanka. This is mostly on account of an underdeveloped fabric and accessory

base. The turnaround me of Sri Lanka’s garment industry remains close to 90 days compared with

the ideal internaonal lead me of around 60 days. This prolonged turnaround me is an issue inthe context of compeveness, parcularly when Eastern European countries have become major

suppliers of garments to the European Union, whereas, Mexico and Central American countries have

become major suppliers to the US under preferenal tari agreements. Moreover, this problem is

China Bangladesh Vietnam Sri Lanka Turkey India

Corporate Tax Rates 33.00% 30.00% 28.0% 28.00% 20.00% 34.00%

India

Turkey

Sri Lanka

Vietnam

Bangladesh

China

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00%




of parcular concern at a me when “just-in-me” delivery has become an accepted principle and

requirement in the global market.

Weak raw material base – The apparel industry currently imports over 40% of its raw material

requirements. The development of apparel zones with fabric mills, washing plants, prinng facilies

and other backward and forward linkages is vital to sustain the industry.

Full service oering – Many global players are equipped to deliver the basic customer expectaons of

price, quality and speed. Therefore, Sri Lanka needs to dierenate from the compeon through the

provision of enhanced services. A total service comprises of having the raw material base, superior

product development, ecient manufacturing capability, logiscal eciency and providing the buyer

with assistance in the way of markeng, design or legal know-how. A recent report published by the US

Internaonal Trade Commission has concluded that sourcing in Sri Lanka will decline if local producers

are unable to provide full service packaging and local inputs such as fabric and trim.

Cost reducon measures – Reducon of cost of ulies and the port services by eliminang ineciencies

and introducing regulatory mechanism will be vital for improving Sri Lanka’s export compeveness,

parcularly reducon of port charges which have a direct impact on the cost being borne on import

and export transacons.

Loss of GSP+ - Sri Lanka’s export sector has successfully overcome a range of external shocks in the

recent past including the abolion of the Mul-Fibre Arrangement, the unprecedentedly high oil prices

and other commodity price. The more recent challenge the country’s apparel industry had to face was

the terminaon of GSP+ scheme. The benets availed by GSP+ facility helped Sri Lankan producers to

compete with producers of other countries in the European market, parcularly during dicult mes.

However, the future of the country’s external trade would depend on the comparave advantage of its

goods and services and not on preferenal tari concessions.

Sri Lankan exporters have proven their resilience amidst dicules on earlier occasions. The apparel

sector, in parcular, resisted strong compeon from low cost garment producers of other countries

during the phasing-out of the Mul-Fibre Arrangement. At that me, not only did they adjust to the

new and challenging circumstances, but emerged stronger to appropriately deal with the various risksand expand their share in the world market. Accordingly, it is likely that the disconnuaon of the

GSP+ concessions would prompt industrialists and exporters to be more producve by increasing

the eciency of the producon processes to retain their compeve advantages, as well as compel

them to diversify their range of products, and seek new markets, thus making Sri Lanka’s exports more

compeve in the long run.

Sri Lanka lost its preferenal access of GSP+ in August 2010. However, Sri Lanka’s exports have been

minimally aected as depicted in the chart below. The country’s total exports have grown at a CAGR

of 2.01% during June 2009 to November 2010 as compared to a CAGR of negave 0.02% during June

2008 to November 2009.

CHART 5-16: SRI LANKA TEXTILE & CLOTHING EXPORTS FROM JUN 2009-NOV 2010


Sri Lanka Texle and Clothing Exports from Jun. 2009 - Nov. 2010

400

350

300

250

200

150

100

50

0

60%

40%

20%

0%

-20%

-40%

-60%

U S D

M i l l i o n

J u n - 0 9

J u l - 0 9

A u g - 0 9

S e p - 0 9

O c t - 0 9

N o v - 0 9

D e c - 0 9

J a n - 1 0

F e b - 1 0

M a r - 1 0

A p r - 1 0

M a y - 1 0

J u n - 1 0

J u l - 1 0

A u g - 1 0

S e p - 1 0

O c t - 1 0

N o v - 1 0

Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10

Value USD 237.8 290.5 311.3 233.1 251.8 252.5 331.3 166.8 238.6 269.5 219.2 251.2 291.7 257.5 294.8 256.8 327.8 340.2

Growth 4% 22% 7% -25% 8% 0% 31% -50% 43% 13% -19% 15% 16% -12% 14% -13% 28% 4%




6.0 BUSINESS OPERATIONS OF THE COMPANY

6.1 History and Corporate Structure

The Company was established in order to oer a fully integrated vercal soluon to top global brands.

Experse in the manufacturing of fabric was scarce and a strong technical partner was required. As a

result, MAS Holdings partnered with the United Kingdom based fabric manufacturer Textured Jersey

United Kingdom to form Textured Jersey Lanka, in order to provide speedy soluons to Marks & Spencer

in the United Kingdom. The joint venture was formed between MAS Holdings, Brandix Lanka Limited

and TJUK.

The factory was located in the Seethawaka Internaonal Industrial Estate in Avissawella and commercial

operaons began in August 2001. The Board of Directors of the Company had representaves from

MAS Holdings, Brandix Lanka and Textured Jersey United Kingdom. In 2004, TJUK moved to liquidate

its holding resulng in the major ownership lying with MAS Holdings.

In order to further strengthen their technical knowhow MAS Holdings approached Pacic Texles

Holdings Limited, one of the largest and most protable fabric mills in the world to partner with them.

The shareholding structure was between Pacic Texles Holdings Limited, Brandix and MAS Holdings.A new management team was also appointed from MAS Holdings and Pacic Texles Holdings Limited.

The new management team was able to report a prot in 2004 for the rst me. The markeng strategy

of the Company also changed from being dependent on Marks & Spencer to catering to other brands

such as Victoria’s Secret, Inmissimi, Next and other reputed global brands.

The shareholding subsequently changed when Brandix acquired MAS Holdings’ stake of 40% with the

balance 60% owned by Pacic Texles Holdings Limited through its wholly owned subsidiary, Pacic

Textured Jersey Holdings Limited. Both Pacic Textured Jersey Holdings Limited and Brandix Lanka

Limited placed a total of 116,000,000 shares to certain instuonal and non-instuonal investors

before the IPO, thus reducing the shareholding of Pacic Textured Jersey Holdings Limited and Brandix

Lanka Limited to 45.6% and 34.3% respecvely. Please refer Annex E for details of the private sell downof shares

FIGURE 6-1: GROUP STRUCTURE

MAS Holdings

66% 33%

50%

41,691,700

shares

50%

41,691,700

shares

Brandix Lanka Limited

Textured Jersey UK Limited

Textured Jersey Lanka Limited

Linea Clothing (Private) Limited

Textured Jersey Lanka Limited

Brandix Lanka Limited Other Shareholders

Pacic Texles Holdings Limited

Pacic Textured Jersey Holdings Limited

100%

45.6% 34.3% 20.1%




Pacic Texles Holdings Limited – Incorporated on 12 October 2004, the Hong Kong listed Pacic

Texles Holdings Limited is a leading manufacturer of customized knied fabric in the global texle

industry, with a focus on complex, value-added fabrics. It has one of the largest texle manufacturing

facilies in China, and provides integrated services comprising of kning, dyeing, prinng and nishing.

For their nancial year ended 31 March 2010, their producon was 195.8 million pounds. They have

established relaonships with premium apparel brand owners such as Marks & Spencer, VF Inmates,

Maidenform, Triumph, UNIQLO and Victoria’s Secret. PTHL is currently one of the largest and most

protable knied fabric manufacturers and traders globally. PTHL reported a 21% YoY increase inrevenue for the six months ended 30 September 2010 to HK$ 3.7 billion (USD 474 million), with net

prot aributable to shareholders rising by 17% YoY during the same period to HK$ 453 million (USD

58 million).

The following table sets forth their annual revenue, operang prot, prot aributable to equity

shareholders, operang margin, prot margin and sales volume by year for the two years ended

31 March 2010.

TABLE 6-1: SELECTED FINANCIAL DATA FOR PACIFIC TEXTILES HOLDINGS LIMITED

Year ended 31 March

Selected income statement data: 2009 (HK $ ‘000) 2010 (HK $ ‘000)

Revenue 4,734,816 5,883,413

EBITDA 688,572 1,269,692

Prot aributable to equity holders of the Company 376,515 803,186

Selected operang data:

EBITDA margin 14.5% 21.6%

Prot margin 8.0% 13.7%


Details of the ten largest shareholders of Pacic Texles Holdings Limited as at 31 March 2011, per the

record of Computershare Hong Kong Investor Services Limited, the Hong Kong Branch Share Registrar

are as follows:

TABLE 6-2: TEN LARGEST SHAREHOLDERS OF PACIFIC TEXTILES HOLDINGS LIMITED

Name Ownership (%)

Hkscc Nominees Limited 47.43

Far East Asia Limited 27.91

Silver Bay Internaonal Holdings Limited 11.94

Top Strong Holdings Limited 6.98

Lau Yiu Tong 3.49

Eecve Approach Technology Limited 2.09

Yan Tsz Tsung Johnny 0.02

Lam Hing Chau Leon 0.01

Leung Yan Sang 0.01

Mak Kam Ming 0.01




Details of the Board of Directors of Pacic Texles Holdings Limited are as follows:

TABLE 6-3: BOARD OF DIRECTORS OF PACIFIC TEXTILES HOLDINGS LIMITED

Name Age Address Designaon

Mr. Wai Loi Wan 61 Block 1, 13/F, Unit B, Peridot Court, Chairman and Execuve

Tai Lam, Tuen Mun, New Territories, Director Hong Kong

Mr. Kang Po Tsang 60 No. 53, Hong Lok Road West, Vice Chairman and Hong Lok Yuen, Tai Po, New Territories, Execuve Director Hong Kong

Mr. Wing Tak Bill Lam 60 1B, Block 7, Emerald Palace, Execuve Director 4188 Tai Po Road, Tai Po Kau, Hong Kong

Dr. King Man Clement Lam 55 29/F, Apartment No. 9, Celesal Heights, Execuve Director 80 Sheung Shing Street, Kowloon, Hong Kong

Mr. Hing Chau Leon Lam 53 Flat B, 10/F, Block 6, Woodland Crest, Execuve Director 33 Tin Ping Road, Sheung Shui,

New Territories, Hong Kong

Mr. Kin Chung Choi 75 House D7, Marina Cove, Non-Execuve Director 380 Hiram’s Highway, Sai Kung,


Mr. Ping Im Ip 74 Flat E, 3/F., Everwell Garden, Non-Execuve Director No. 1 Sheung Hong Street, Kowloon,

Hong Kong

Mr. Yiu Tong Lau 63 7C & 8C, Tower 1, One Beacon Hill, Non-Execuve Director 1 Beacon Hill Road, Kowloon, Hong Kong

Mr. Yue Kwong Michael Chan 59 House B6, Flamingo Garden, Independent Fei Ngo Shan Road, Kowloon, Hong Kong Non-Execuve Director

Mr. Ching Wah Ng 62 21B, Tower 5, Dynasty Court, Independent 23 Old Peak Road, Hong Kong Non-Execuve Director

Mr. Kwok Wing Nigel Sze 53 House 9, Latour Ave., The Vineyard, Independent 23 Ngau Tam Mei Road, New Territories, Non-Execuve Director Hong Kong

Pacic Textured Jersey Holdings Limited – Incorporated on 13 October 2004, Pacic Textured Jersey

Holdings Limited is a wholly owned subsidiary of Pacic Texles Holdings Limited. Details of the Board

of Directors of Pacic Textured Jersey Holdings Limited are as follows:

TABLE 6-4: BOARD OF DIRECTORS OF PACIFIC TEXTURED JERSEY HOLDINGS LIMITED


Mr. Wing Tak Bill Lam 60 1B, Block 7, Emerald Palace, Director

4188 Tai Po Road, Tai Po Kau,


Dr. King Man Clement Lam 55 29/F, Apartment No. 9, Director Celesal Heights, 80 Sheung Shing Street, Kowloon, Hong Kong

Mr. Kang Po Tsang 60 No. 53, Hong Lok Road West, Director Hong Lok Yuen, Tai Po, New Territories, Hong Kong

Brandix Lanka Limited – Incorporated on 17 September 2002, Brandix has been accredited as SriLanka’s largest apparel exporter. Being the pioneer of the ‘total soluons’ concept in Sri Lanka’s apparel

sector, Brandix is the preferred provider for some of the world’s leading apparel brands, including

Victoria’s Secret, PINK, Gap, Banana Republic, Marks & Spencer, Lands’ End, Tommy Hilger, Hanes,




Express, H&M, Inmissimi and Tesco. The Group specialises in casual booms, underwear, lounge

and sleepwear, bras, texles, knied and woven fabrics, sewing and embroidery thread, accessories

and hangers, and also oers wet processing and nishing and fabric prinng. The Brandix Group is

supported by 32 manufacturing locaons island-wide, in addion to other facilies in the South Asian

region, and strategically located internaonal sourcing oces. Brandix directly employs over 30,000

associates in Sri Lanka.

Details of the Board of Directors of Brandix Lanka Limited are as follows:

TABLE 6-5: BOARD OF DIRECTORS OF BRANDIX LANKA LIMITED


Mr. Kandiah Balendra 70 47/1, Ward Place, Colombo 07, Sri Lanka Chairman

Mr. Mohamed Aslam Omar 57 19, Greenlands Lane, Colombo 05, Sri Lanka Director

Mr. Mohamed Ashrof Omar 56 119/4, Kynsey Road, Colombo 08, Sri Lanka Director

Mr. Feroz Omar 47 161/3, Duwa Road, Beddegana, Director Piakoe, Sri Lanka

Mr. Trevine Lalith Francis 58 82B, Ward Place, Colombo 07, Sri Lanka Director Waas Jayasekera

Mr. Ajit Joseph Johnpillai 57 Expo Victoria Towers Director 8/1 66, Park Street, Colombo 02, Sri Lanka

Mr. Udena Wickremesooriya 47 No.5, Sea View Avenue, Colombo 03, Sri Lanka Director

Mr. Priyan Fernando 57 29, Kassapa Road, Colombo 05, Sri Lanka Director

Phoenix Ventures Limited owns 100% of Brandix Lanka Limited.

Further, Textured Jersey Lanka Limited has no subsidiaries or associate companies.

6.2 Products and Services

The Company manufactures and supplies a variety of designs and specicaons of we knied

fabrics exclusively to garment manufacturers worldwide. The Company works closely with apparelbrand owners to design fabric needs that meet individualized order parculars. Many of these orders

require highly customized, complex design and producon specicaons. The garment manufacturer

customers in turn convert the knied fabrics into nished garments for sale to the apparel brand

owners.

Main Fabric Specicaons

The table below sets forth a few of the many types of fabric that are commonly produced by the

Company:

TABLE 6-6: TYPES OF FABRIC PRODUCED BY TJL

Name Descripon Typical End Use

Jersey A plain light-weight single-knit fabric T-shirt, inner-wear

Fleece fabric Fabric with raised backside for comfort Hooded jacket, pullover

Jacquard Fabric with special texture or design paern Inner-wear ladies fashion

Piquel Knied fabric with a raised pearl-look surface Polo shirt, golf shirt

Rib Plain double-knit fabric with good horizontal

stretch and recovery T-shirt, polo shirt

Striped Fabric of horizontal strip-paern made by a

series of coloured yarn T-shirt, polo shirt

Velour Plain knied terry fabric with a sheared

surface on one side and a smooth surfaceon the reverse Pullover, jacket, pants

Polar-eece Plain knied fabric with both sides brushed

and single side an-pilling Hooded jacket kid’s wear




6.3 Markeng and Sales

Markeng and customer relaonships – The Company has two sets of sales and markeng relaonships;

with apparel brand owners, who are the end-users of the fabrics, and with garment manufacturers, who

are the direct customers and purchasers of the fabrics manufactured by the Company. The Company

has dedicated sales teams assigned to each brand owner account to provide frequent, personalized

one-on-one contact. This enhances the Company’s knowledge of and responsiveness to their specic

needs and ensures full accountability for sales-related acvies and customer service. As at the date

of this Prospectus, the sales team consisted of approximately 27 personnel. The sales teams visit the

North America or Europe based oces of the brand owners periodically.

Accordingly, sales eorts primarily target leading brands with strong brand image and a high volume

of business. The Company has developed and maintained long-term relaonships with owners of

internaonally renowned labels such as Victoria’s Secret, Marks & Spencer, and Inimissimi. Although

these brand owners are not the Company’s direct customers, they generally play a key role in selecng

the fabric suppliers. Accordingly, strong relaonships with apparel brand owners are a crical factor for

success in the industry.

Sales are driven by relaonships with apparel brand owners and garment manufacturers. Brand

owners usually drive the fabric procurement process. While the brand owners have no contractual

arrangements with the Company nor do they impose any condions on the Company, they generally

work directly with the Company to determine the desired fabric specicaons for their apparel

collecons to be used in the upcoming fashion season and to negoate target fabric prices. In some

cases, the Company discusses with brand owners the approximate volume of business that they expect

to provide the Company during a year. Garment manufacturers also purchase fabrics directly from the

Company without any involvement of brand owners. These purchases generally involve fabrics with a

more basic paern or design, for which the Company competes primarily on price, lead me and on-

me delivery.

For the nancial years ended 31 March 2008, 2009 and 2010 the top ve customers accounted for

94.1%, 94.3% and 91.0% respecvely of overall sales revenues. Sales to the largest customer accounted

for 37.9%, 36.4%, and 39.1% respecvely of the Company’s overall sales revenue. The Company hashad long term relaonships with these brand owners.

Sales – The sales team evaluates the producon capacity before accepng a sales order. The Company

does not have long-term wrien sales contracts with most of its customers. From me to me the

Company enters into formal wrien contracts or order forms with garment manufacturers, but orders

are also frequently accepted upon oral agreement or via email or fax which is consistent with the

industry pracce. The Company generally provides the customers with trade credit of 30 days. The

Company recognizes revenue on the sale of goods when products have been delivered to and accepted

by the customer. This method of revenue recognion reasonably assures the collectability of the

related receivables is reasonably assured.

Pricing – Although price is an important factor to the customer, quality and service are equally important.Since brand owners specify fabric manufacturers, the sales teams oen assist the brand owners in their

pricing negoaons. Generally, this assistance takes the form of pricing guidance in relaon to fabric

specicaons desired by the brand owners. Once brand owners decide on specicaon, they will

typically contact their preferred garment manufacturers and direct the use of the fabric in the garment

producon process. The garment manufacturers then send the Company the sales orders reecng

the specicaons discussed by the brand owners and the Company. While no explicit agreements

exist binding garment manufacturers to the pricing guidance the Company provided to brand owners,

all pares are aware that the pricing guidance is acceptable to the brand owners and the garment

manufacturers who have been directed to the Company. Typically the pricing guidance is accepted by

the garment manufacturers, although at mes the Company may engage in further pricing negoaons

with selected garment manufacturers.The prices of the fabrics are determined as cost plus a markup based on the best rate to win the

business by taking into account factors such as prevailing market condions, the level of the orders

in hand, inventory levels and prices of raw material. This enables the Company to respond rapidly to




changes in market condions and allows the Company a degree of exibility to pass on increased costs

of raw material to the customers.

6.4 Producon Process and Facilies

Producon process

The producon process is capital intensive as it is highly mechanized. The Company processes coon

and synthec yarn into we knied fabrics. The fabric producon cycle undertaken by the Companycan be divided into three main processes: kning, dyeing and nishing which are illustrated in the

following diagram:

FIGURE 6-2: PRODUCTION PROCESS

Kning

Dyeing

Finishing

Kning – Samples of raw materials including yarns are checked by the quality assurance sta againstinternaonal benchmark quality standards before producon. In the producon of we knied fabrics,

cones of yarn, aer winding, are put on creels to feed into circular kning machines to knit the fabric.

Aer kning, the greige fabrics are inspected before being transported to the dyeing process.

Dyeing – In preparaon for the dyeing process, fabrics are rst treated in a scouring process to remove

dirt and impuries. Chemicals and dyes are then added onto the scoured fabric for the dyeing or

bleaching process. The duraon of the bleaching and dyeing processes depends on the colour shade

and the raw materials being used. Dyed fabrics are then inspected by the quality assurance sta.

Fabric that does not require prinng will then be processed through the nishing step.

Finishing – The dyed fabrics may have pre-designed paerns added by pressing and calendaring under

high temperature. The fabrics are then nished by treatment at high temperature to meet customers’requirements regarding the width, weight and shrinkage allowance of each order. Fabrics are then

inspected and packaged prior to shipping.




Producon facility

The facility manufactures we knied fabrics exclusively with total annual producon of approximately

32 million meters. The facility obtains electricity from Sri Lanka’s public power supply network

supported by two back-up diesel powered generators. The Company obtains water from facilies

operated by the Board of Investment of Sri Lanka. Wastewater produced from the manufacturing

process undergoes chemical treatment at the wastewater treatment plant prior to being transferred

back to the BOI facilies for addional treatment and subsequent discharge into waterways.

Producon volume

The following table sets forth certain annual producon and related informaon for the facility:

TABLE 6-7: ANNUAL PRODUCTION AND RELATED INFORMATION FOR TJL

31 March 2008 31 March 2009 31 March 2010

Approximate output (lb/million) 12.30 16.78 19.15

Approximate annualized peak

producon capacity (lb/million) 15.28 19.68 21.60

Percentage approximate output

represents of approximate annualized

peak producon (%) 80.00% 85.00% 89.00%


6.5 Raw Materials, Electricity and Water Supply

Raw Materials - The principal raw materials used in the producon of fabrics are yarn, dyes and

chemicals with yarn being the major raw material and accounng for about 55% of the total cost of

sales.

TABLE 6-8: YARN COSTS FOR TJL

2008 2009 2010

Amount % of Cost of Amount % of Cost of Amount % of Cost of

(USD) Sales (USD) Sales (USD) Sales

Yarn 22,823,161 55.36% 32,360,764 54.25% 35,818,987 56.30%


Coon, synthec and blended yarns – The Company uses substanal quanes of both grey and

dyed coon yarns. They also use synthec and blended yarns, including spandex, core-spun yarn,

viscose blends, wool blends and synthec blends such as nylon/coon and polyester/coon. TheCompany purchases coon yarns from China, India, Pakistan, Indonesia, Thailand and Europe. They

purchase synthec yarns from China, Japan, Taiwan, Korea, US and Europe. Generally, the Company

seeks to maintain sucient amounts of yarn to cover approximately 30 to 60 days of exisng order

commitments.

Chemical dyes – The chemicals the Company uses in the dyeing process fall into the following

categories: pre-treatment, dyeing and post-treatment. The following table sets out the main types of

dyeing chemicals the Company uses in each category:




Category Chemical

Pre-treatment Detergent/weng agent

Causc soda

Acec acid

Hydrogen peroxide

Dyeing Reacve dyes Disperse dyes

Acid dyes

Basic dyes

Aer-treatment Caonic xing agent

Nonionic/caonic soeners

Electricity – The producon facility obtains electricity for its producon process from the public power

supply network. The cost of fuel was 3.3% of the cost of sales for the nancial year ended 31 March

2010.

TABLE 6-9: ELECTRICITY COSTS FOR TJL

FY 2009/10 FY 2008/09 FY 2007/08

Amount As a % of Amount As a % of Amount As a % of

(USD) cost of sales (USD) cost of sales (USD) cost of sales

Electricity 2,114,755 3.31% 2,487,137 4.17% 1,268,163 3.08%


Water supply – Water is required for the dyeing of fabrics and is obtained from the BOI and from the

rivers in the surrounding areas. Currently, the BOI provides up to about 2,000 cubic meters of water

per day for which the Company is required to pay LKR 63 per cubic meter of water while the Company

had to pay LKR 28 per cubic meter of river water.

Suppliers – The Company maintains good relaonships with suppliers and have, where possible,

diversied the supplier base so as to avoid disrupon in raw materials supply. Coon, synthec yarn

and most other raw materials are stable goods that are readily available. However certain branded

yarns are available only from sole suppliers. To the extent brand owners direct the use of such branded

yarns, they are aware of the risk that the Company may be unable to secure an adequate supply on

favourable terms or in a mely manner and that in such cases the Company may increase the price

charged to ll orders or decline to ll addional orders if substutes are not acceptable.

6.6 Compeon

The Company operates in a highly compeve industry with a number of fabric manufacturers includingOcean Lanka (Pvt.) Limited, South Asia Texles Industries (Pvt.) Limited, Ocean India (Pvt.) Limited

and Hayleys MGT Kning Mills PLC. Although the Company may face compeon from new entrants

in the future, high capital requirements, increasing technology requirements and the importance of

customer relaonships may pose signicant barriers to entry for new competors.

The key areas of compeon in the industry are service, product quality and product pricing. Since

the Company competes on the basis of the quality and reliability of its customer service, it is of high

importance for the Company to provide a high level of quality service to its customers by meeng

delivery deadlines and meeng customer requirements in a mely manner. The quality of the fabrics

is also an important compeve factor which the Company connuously seeks to meet or exceed by

fullling requirements of the customers and the brand owners. The ecient producon model driven

by modern facilies translates into compeve pricing terms for the Company which is an importantcompeve factor for the majority of the fabrics.




6.7 Compeve Strengths of the Company

• Experienced and technically competent management team with proven track record.

• Fully integrated SAP ERP system and FAST REACT producon planning.

• Ecient producon model driven by a state of the art manufacturing facility and advanced

technologies.

• Established relaonships with premium apparel brand owners.• Focus on value-added high quality fabrics with higher margins.

• Internaonal accreditaons/cercaons.

• Technical strengths of Pacic Texles Holdings Limited.

• Backing of strong shareholders.

• Supply chain integraon of Brandix Lanka Limited to oer superior and speedy soluons.

• Ability to capitalize on migraon of the garment and texle industry to Asia.

6.8 Degree of Dependence on Key Customers and Suppliers

The Company depends on a few key garment manufacturers and apparel brand owners for a substanal

poron of their sales. For each of the nancial years ended 31 March 2008, 2009 and 2010 the Company’s

top three customers accounted for 86.25%, 89.59% and 85.37% respecvely of the Company’s overall

sales revenues. Some of the key customers include Marks & Spencer, Victoria’s Secret, Inimissimi,

H&M, Express etc. These customers, who are the owners of apparel brands, are the principal drivers

of the Company’s fabric sales even though they are not the Company’s direct customers.

The Company has maintained signicant long term relaonships with these brand owners and therefore,

it is highly unlikely for the Company to experience any signicant losses in revenue due to a loss of its

customers. The Company prefers to deal with only a few customers and to become an integral part

of the customer’s supply chain through the successful relaonships formed over the past. Hence, the

Company’s operang results in the foreseeable future will also likely connue to depend on a relavelysmall number of garment manufacturers and brand owners. Therefore, the Company’s growth will

depend on its ability to successfully manage their relaonships with these key customers and brand

owners.

In addion, the Company maintains good relaonships with suppliers and have, where possible,

diversied the supplier base so as to avoid disrupon in raw materials supply by being highly dependent

on a selected number of suppliers.

6.9 Future Direcon and Prospects

The Company expects to expand its current Sri Lankan business operaons to a USD 150 million

turnover capacity from its current capacity of USD 83 million. In order to achieve this, the Company isexpecng to construct a modern producon facility built according to internaonally accepted quality

standards. It is also expecng to purchase state of the art machinery to enable the Company to beer

achieve these targets through increased eciency. TJL also expects to explore expansion opportunies

in the South Asian sub connent region in the long term.

However, it is of importance to note that the above menoned future plans will only hold provided

the following factors: current market demand prevails or connues to improve, the Company is able to

successfully procure necessary water supplies, the price volality in plant and machinery and building

materials remains to be minimum etc.

The risks associated with the Company, its business acvies and future strategies are menoned in

Secon 7.0.




6.10 Details of Material Indebtedness

The details of loans, overdras, other borrowings and material indebtedness of the Company as at 31

March 2011 are as follows.

Name of Bank Facility Value of Outstanding Amount Amount

Facility as st repayable repayable 31/03/2011 within aer

1 year 1 year

Long Term Borrowings

Standard Chartered Bank USD 8,000,000 8,000,000 8,000,000 -

Naonal Development Bank LKR 903,424 112,927 100,380 12,547

Short Term Borrowings

HSBC Overdra – LKR 316,198

HSBC Overdra – USD 1,750,000 1,600,000 1,600,000

Standard Chartered Bank Overdra – USD 500,000 410,000 410,000Bank of Ceylon Overdra – USD 1,750,000 1,700,000 1,700,000

Bank of Ceylon Overdra – LKR 1,000,000

Import Term Loans

HSBC USD 6,000,000 6,000,000 6,000,000

Standard Chartered Bank USD 3,000,000 1,500,000 1,500,000

Bank of Ceylon USD 1,500,000

6.11 Working CapitalThe Board is of the opinion that the working capital is sucient for the purpose of carrying out day to

day operaons of the Company.

6.12 Dividend Policy

The Company has not paid any dividends to its shareholders in the past. However, it intends to pay out

thirty three per centum (33%) of its prots as dividends going forward subject to, but not limited to,

the Company’s earnings, investment requirements and overall nancial condions.

6.13 Ligaon, Disputes and Conngent Liabilies

There are no material legal, arbitraon or mediaon proceedings pending against the Company thatwould materially aect the current nancial posion or future operaons or prots of the Company.

The Company was not involved in any legal, arbitraon or mediaon proceedings in the recent past

which had any signicant eects on the Company’s nancial posion or protability. Further there are

no penales imposed by any regulatory or state authority against the Company.

6.14 Details of Material Contracts

The details of the material contracts entered into by the Company, other than that which are in the

ordinary course of business, are as follows:

• Agreements entered into with the Board of Investment of Sri Lanka:

The Company has entered into an agreement with the Board of Investment of Sri Lanka (BOI) on 24th

July 2000 and several supplementary agreements thereaer. The above agreement was entered into

by TJL to set up, conduct and operate a business for the manufacture of fabric and related products




for export along with Textured Jersey UK Limited. Tax concessions received under BOI Agreement is

detailed in Secon 12.1.of this Prospectus.

In the supplementary agreement dated 23rd December 2004, the BOI has approved the applicaon

made by TJL to expand its business.

The Company entered into its latest supplementary agreement with the BOI on 31st January 2007

whereby the tax exempon period of 12 years which had been granted to TJL, was extended to 15

years since the Company had invested in xed assets worth Rupees Two decimal Five Billion (Rs. 2.5

Bn).

• The Company has entered into a Joint Venture Agreement with Pacic Textured Jersey Holdings

Limited and Brandix Lanka Limited dated 30th January 2008 to provide for the governance of the

Company between the two said companies which are shareholders of TJL.




7.0 INVESTMENT CONSIDERATIONS AND ASSOCIATED RISK FACTORS

7.1 Risk Factors

Prior to invesng in the New Shares, prospecve investors should pay parcular aenon to the fact

that the Company and its business acvies are subject to a number of risk factors which may be within

or outside the control of the Company.

The risk factors that follow may be considered material to investors in making an informed judgment

on the Company. If any of the consideraons and uncertaines given below develop into actual events,

the Company’s business, nancial condions or results of operaons and prospects could be adversely

aected. However, given the importance of the industry in which the Company operates and due to

strategic iniaves employed by the Company, the business operaons of the Company is expected to

be sustainable in the foreseeable future.

7.2 Risks Related to the Business Operaons

Loss of market share due to high compeon – The fabric manufacturing business is highly compeve.

The Company competes with both domesc as well as foreign competors. Foreign competors

include large companies that are vercally integrated texle manufacturers and have greater nancialresources.

The principal compeve factors that inuence the customer’s purchasing choices include service,

product quality and price. The importance of these factors is determined by the needs of parcular

customers and the characteriscs of the product. However, competors may price their products

aggressively in order to gain market share which would result in more compeon thereby resulng in

reduced margins and loss of market share.

The Company has already taken steps towards developing and implemenng superior markeng and

sales strategies together with a superior service delivery of quality fabric in order to migate the

risks that could arise due to peer compeon. The Company has also been able to maintain strong

relaonships with its customers, most of which are names that are synonymous with high qualitygarments and fashion wear. The exacng standards in quality coupled with reliability, innovaon and

service have reinforced their condence, and acts as a strong shield against compeon. Moreover, an

important point to make note of is that total demand for knied fabrics sll exceeds domesc capacity.

Hence, the Company can comfortably expect to have signicant demand on a connuous basis for their

products.

Increase in global raw material prices – Operang results may be adversely aected by increases in

prices of yarn and other raw materials like dyes and chemicals used in the producon processes. The

cost of raw material represents approximately 65%-70% of the total cost of sales and prices for these

can be very volale.

Yarn costs represent a majority of the Company’s total raw material costs comprising of 80%-85% on

average for the past four nancial years. Cost of yarn is highly dependent on the cost of coon which

is vulnerable to poor weather, infestaons and other forces of nature which could result in increases

of prices. Current global coon prices are at record levels, as supplies are at their lowest levels since

1993. The price of coon has gone up by almost 100% in the last six months and up 150% over the past

18 months. Supply concerns have been prominent around the world as oods in Pakistan, heavy rains

in China, and India capping exports of coon have led global inventories to decline to roughly 44 million

bales. Robust demand from emerging markets such as China and India is also pung upward pressure

on prices. China is the world’s largest consumer of coon and in 2010 consumed 40% of global coon

producon. Despite record prices, China doubled its coon imports in 2010 to the highest level since

2006 due to strong demand at mills. Wet weather in China has led to producon downgrades and as a

result Chinese coon producon in 2010 was down 5.5% from a year earlier to 6.4 million tons.




CHART 7-1: MONTHLY GLOBAL COTTON PRICE (2005-2010)

Source: www.unctad.org

It is expected that coon prices will connue to appreciate in the rst quarter of 2011 and supply

constraints and the resulng decit will connue to widen as per current esmates. However, it is

expected that supply side factors will soon be seled and high coon prices would encourage farmers,

especially in the U.S., to shi acreage toward coon. The U.S. is the world’s largest exporter of coon

and exports 80% of its producon. Esmates for coon planng acres are roughly 12.5 million acres, a14% increase from the 10.97 million acres planted in 2010. Posive eects of increased coon planng

in 2011 will loosen up supplies and is projected to be reected in the very near future.

As a result the cost of yarn for the Company increased by 115%, 11% and 6% in FY 2010, 2009 and 2008

respecvely. Fabric that was sold during the rst quarter of 2010 was made from coon averaging

around USD 1.65 a pound compared to fabric sold during the last quarter of 2010 which was made from

coon averaging around USD 2.75. Clothing constutes a signicant proporon of Private Consumpon

Expenditure of most countries next to food & beverage, and housing. Hence, the increase in clothing

prices is relavely inelasc from the perspecve of the customer.

Even though raw material prices will connue to be volale in the near future, this is an industry

wide problem faced by all fabric manufacturers both globally as well as locally. Hence the compeveposion of the Company will remain unchanged. Moreover, this would place larger and stronger

players at a beer compeve advantage over the smaller players due to the availability of a larger

working capital base.

However, the Company may not be in a posion to increase the prices by as much as the increases in

commodity prices.

Moreover, all raw materials are sourced from external suppliers and therefore sucient quanes of

raw material purchased in a mely manner is of paramount importance to the Company. The Company

could be vulnerable to changes in supply and prices of these suppliers.

Increases in cost of labour and high turnover of technical and producon sta – The Company’soperaons, compeveness and protability could be adversely aected if it were to experience high

labour turnover or increase in costs. The Company has been able to maintain low producon costs

partly due to the compeve labour costs that the Company has been able to maintain. During the

past two to three years labour costs have been approximately 5%-6% of total costs of sales of the

Company.

Labour costs are primarily a funcon of the demand for and supply of labour and other economic

factors and the standard of living. Currently it costs about USD 150 a month to employ a trained Sri

Lankan apparel worker. This is expected to increase to about USD 200 a month in a couple of years and

a statutory minimum wage requirement might be enacted. However, since the labour costs in China

are comparavely higher than that of Sri Lanka, a sizeable increase in demand from European and US

retailers could be expected in the future. For example, it currently costs approximately USD 400 toemploy a trained worker in China and it is expected to increase up to about USD 600 in a couple of

years. This expected increase in costs would dilute the negave eect of possible increases in labour

costs in Sri Lanka.

U S D c e n

t s p e r p o u n d

180

160

140

120

100

80

60

40

20

0

D e c - 0 5

A p r - 0 6

A u g - 0 6

D e c - 0 6

A p r - 0 7

A u g - 0 7

D e c - 0 7

A p r - 0 8

D e c - 0 8

A p r - 0 9

A u g - 0 9

D e c - 0 9

A p r - 1 0

A u g - 1 0

D e c - 1 0




The Company is connuing with its employee recognion and rewarding programmes as well, to ensure

a minimum labour turnover.

Dependence on a few key customers – The Company depends on a few key garment manufacturers

and apparel brand owners for a substanal poron of their sales and loss of or a signicant reducon

in sales to any of them could signicantly reduce the Company’s revenues. For each of the nancial

years ended 31 March 2008, 2009 and 2010 the Company’s top three customers accounted for 86.25%,

89.59% and 85.37% respecvely of the Company’s overall sales revenues. Some of the key customersinclude Marks & Spencer, Victoria’s Secret, Inimissimi, H&M, Express etc. These customers, who are

the owners of apparel brands, are the principal drivers of the Company’s fabric sales even though they

are not the Company’s direct customers.

The Company has maintained signicant long term relaonships with these brand owners and therefore,

it is highly unlikely for the Company to experience any signicant losses in revenue due to a loss of its

customers. The Company prefers to deal with only a few customers and to become an integral part

of the customer’s supply chain through the successful relaonships formed over the past. Hence, the

Company’s operang results in the foreseeable future will also likely connue to depend on a relavely

small number of garment manufacturers and brand owners. Therefore, the Company’s growth will

depend on its ability to successfully manage their relaonships with these key customers and brand

owners. Failure to do so would have a signicant impact on the Company’s revenues.

Compliance to environmental laws and regulaons – The Company’s operaons generate pollutants and

wastes in various stages of the manufacturing process including the fabric dyeing process. Operaons

are subject to periodic inspecons and the discharge, storage and disposal of such pollutants and waste

are subject to environmental laws and regulaons in Sri Lanka, including laws and regulaons requiring

clean up of contaminaon and reclamaon. Historically, environmental legislaon in Sri Lanka has

been less stringently enforced than in some other countries such as the United States. However,

more stringent standards may be introduced, stricter interpretaons of exisng laws may occur or

enforcement may become more stringent. Nonetheless, since polluon risks and other related clean

up costs are oen impossible to assess, the extent of liability under environmental laws is not clearly

determinable.Insucient energy supply or increase in the energy and ulity prices – The producon processes

require a connuous supply of electricity. Interrupons to the power supply or increases in energy

costs could disrupt operaons and have an adverse impact. At the Company’s producon facility, the

energy needs are primarily sased from the public power supply network and are subject to potenal

unscheduled power disrupons and price increases. The Company has experienced an increase in

energy prices in from LKR 7.66 to LKR 9.60 per unit cost, an increase of approximately 7.8% over the

prior year in 2006. However, in more recent years, electricity costs have come down. For example, the

average cost of electricity has come down to LKR 12.55 per unit in 2009 from LKR 15.37 per unit in 2008

in Sri Lanka. The average tari per unit in Sri Lanka also declined to LKR 13.11 in 2009 from LKR 13.22

from 2008. The Company’s average cost as of January 2011 was LKR 10.25 per Kwh.

CHART 7-2: AVERAGE TARIFF AND COST OF ELECTRICITY IN SRI LANKA (2005-2009)


L K R / u n i t

16.00

14.00

12.00

10.00

8.00

6.00

4.00

2.00

-

2005 2006 2007 2008 2009

Domesc Traf

Industry Trai

Commercial Trai

Average Cost

Average Trai




The Company is iniang energy saving projects in order to migate this risk, and also maintains back

up diesel generators at the facility. However, these cannot supply the energy requirements over long

periods of me. Therefore, any signicant power disrupons or a signicant increase in energy costs

could have an adverse eect on the operaons of the Company.

Seasonality of the business operaons – The ming of the business is determined in part by the major

annual fashion seasons. As a result, the Company generally experiences increased producon in the

winter months and decreased producon in the spring months. Due to these seasonal uctuaons inproducon, comparisons of sales and results of operaons between dierent periods within a nancial

year are not necessarily meaningful and cannot be relied on as accurate indicators of the Company’s

performance. Any seasonal uctuaons experienced in the future may have a negave eect on the

Company’s operaons.

High dependence on the fashion industry – The supply and demand for parcular fabric products

change from season to season and on a yearly basis based principally on evolving fashion trends as well

as other factors. The Company’s success depends upon its ability to react quickly to changes in fashion

trends that dictate customer demands and consumer preferences. In addion to fashion trends,

customer demands may also be aected by increases in supply from competors in the industry or

deteriorang economic condions. Hence, if the Company fails to respond rapidly and eecvely to

changes in fashion trends and customer demands, the Company’s operang results may be adverselyaected.

Foreign exchange risks – The value of the Sri Lankan Rupee is subject to changes in the Sri Lankan

government policies and depends to a large extent on economic and polical developments in the

country and around the world. The exchange rate policy in 2009 was focused on maintaining the

stability in the domesc foreign exchange market. During this period, the Rupee exchange rate

against the US dollar moved with greater exibility. However, to migate excessive volality in the

foreign exchange market and to ensure that the compeveness of the export sector is unaected

by an undue appreciaon of the Rupee, CBSL absorbed foreign exchange from the domesc foreign

exchange market, thereby strengthening its reserves posion. By end 2009, the Rupee appreciated to

LKR 114.38 resulng in an overall depreciaon of 1.09 per cent against the US dollar when comparedto a depreciaon of 3.91 per cent in 2008. Meanwhile, the annual average exchange rate in 2009 was

LKR 114.94 against the US dollar when compared with LKR 108.33 recorded in 2008.

The Company receives a signicant proporon of its revenue in US dollars and the appreciaon of the

Rupee would have an adverse eect on the Company. As shown below, the Sri Lankan Rupee has been

highly volale over the past several years stabilizing close to LKR 115 against the USD.

CHART 7-3: MOVEMENT OF LKR AGAINST USD (2006 – OCT. 2010)

Source: Central Bank of Sri Lanka

The Company has made arrangements to hedge against this risk with forward and futures contracts

which will guarantee a xed exchange rate at some future date to compensate from an adverse move

in currency exchange rates.

L K R t o 1 U S D

120

115

110

105

100

95

90

J a n - 0 6

A p r - 0 6

J u l - 0 6

O c t - 0 6

J a n - 0 7

A p r - 0 7

J u l - 0 7

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A p r - 0 9

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O c t - 0 9

J a n - 1 0

A p r - 1 0

J u ; - 1 0

O c t - 1 0




Transfer pricing – The Company’s dealings with its main shareholders are relavely low and the risk of

transfer pricing is very minimal due to arms length agreements that are in place between Brandix and

the Company for the purchase of goods.

Loss of GSP+ concession - The resilience of the export sector to various external and internal shocks

has been advantageous to the industry. However, Sri Lanka’s export sector has successfully overcome

a range of shocks in the recent past including the abolion of the Mul-Fibre Arrangement, the

unprecedentedly high oil prices and other commodity prices, etc. The more recent dilemma thecountry’s apparel industry had to face was the terminaon of GSP+ scheme. The benets availed

by GSP+ facility helped Sri Lankan producers to compete with producers of other countries in the

European market, parcularly during dicult mes. However, the future of the country’s external

trade would depend on the comparave advantage of its goods and services and not on preferenal

tari concessions.

Sri Lankan exporters have proven their resilience amidst dicules on earlier occasions. The apparel

sector, in parcular, resisted strong compeon from low cost garment producers of other countries

during the phasing-out of the Mul-Fibre Arrangement. At that me, not only did they adjust to the

new and challenging circumstances, but emerged stronger to appropriately deal with the various risks

and expand their share in the world market. Accordingly, it is likely that the disconnuaon of the

GSP+ concessions would prompt industrialists and exporters to be more producve by increasingthe eciency of the producon processes to retain their compeve advantages, as well as compel

them to diversify their range of products, and seek new markets, thus making Sri Lanka’s exports more

compeve in the long run.

7.3 Risks Related to the Oering

Nonexistence of prior market for the Shares – Prior to the Oering there has been no public market

for the Company’s Shares. There can be no assurance that an acve trading market for the Shares

will develop or if developed, will be sustained, or that the market price of the Shares shall not decline

below the Share Issue Price. The Share Issue Price may not be indicave of the market price for the

Company’s Shares aer compleon of the Oering.

Price volality in the secondary market – The price of the Shares may uctuate due to and not limited

to the following: variaons in operang results, changes in operang environment, transions in the

regulatory front, strategic alliances or acquisions, industrial or environmental laws, uctuaons in

the market prices for products or raw materials, macroeconomic factors and external events. Price of

Shares may follow general investor senment prevalent in the market at a given me. In addion, the

price of the Shares in the market will uctuate as a result of share trading volumes.




8.0 CORPORATE STRUCTURE

8.1 The Board of Directors

The Board of Directors guides and supervises the business and operaons of the Company. The

Board consists of Two (02) Independent Non-Execuve Directors, and Five (05) Directors including the

Chairman. As at the date of this Prospectus, the composion of the Board is as follows:

TABLE 8-1: DETAILS OF TEXTURED JERSEY LANKA LIMITED BOARD OF DIRECTORS


Mr. Mohamed Ashro Omar 56 119/4, Kynsey Road, Chairman

Colombo 03, Sri Lanka & Non-Execuve Director

Mr. Wing Tak Bill Lam 60 1B, Block 7, Emerald Palace, Non-Execuve Director

4188 Tai Po Road, Tai Po Kau,


Dr. King Man Clement Lam 55 29/F, Apartment No. 9, Non-Execuve Director

Celesal Heights,

80 Sheung Shing Street,

Kowloon, Hong Kong

Mr. Kam Chuen Mau 57 Flat D, 16/F, Tower 1, Execuve Director

Goodrich Garden, No.9,

Leung Tak Street, Tuen Mun,


Mr. Dave Ranasinghe 48 Trillium Residencies, 153, Non-Execuve Director

Golf Wing 6- 5/3,

Elvigala Mawatha, Colombo 08,

Sri Lanka

Mr. Amitha Gooneratne 59 27, Queens Road, Colombo 03, Independent

Sri Lanka Non-Execuve Director

Prof. Malik Ranasinghe 53 18, Layards Road, Colombo 05, Independent

Sri Lanka Non-Execuve Director

8.2 Proles of the Board of Directors

Mr. Mohamed Ashro Omar – Mr. Omar is the Chairman of the Company and is also the Chief Execuve

Ocer of Brandix Lanka Limited and is a leading industrialist and a prominent gure in the apparel

industry. Mr. Omar was instrumental in the establishment of The Joint Apparel Associaon Forum(JAAF), the apex body of the apparel industry primarily involved in driving strategy for the industry,

which he chaired at its incepon. He was also the former Chairman of The Sri Lanka Apparel Exporters

Associaon . In addion, he serves as a Non-Execuve Director for the Colombo Stock Exchange. He is a

Director of NANCO (Private) Limited which is the pioneering nanotech park in Sri Lanka for iniang and

researching nanotechnology, Chairman of the Export Development Board (EDB), Advisory Commiee

on garments and a member of the EDB Advisoty Commiee on Export Market Promoon. He is also

the Hon. Consul General for the Republic of Finland since March 2007. Mr. Omar is a Chartered Member

of The Texle Instute Internaonal, United Kingdom and a Senior Member of the Society of Plascs

Engineers, Conneccut, USA.

Mr. Wing Tak Bill Lam – Mr. Lam has over 36 years of experience in the texle industry. He obtained a

MBA degree from The University of Macau and a Bachelor of Business Administraon from The Chinese

University of Hong Kong. He is also an Execuve Director and the Chief Execuve Ocer of Pacic

Texles Holdings Limited.




Dr. King Man Clement Lam - Dr. Lam has over 29 years of experience in the texle, garment, dyeing and

nishing industry. Dr. Lam obtained a PhD degree from the Postgraduate School of Colour Chemistry

and Colour Technology at the University of Bradford, United Kingdom and a Higher Diploma in Texle

Chemistry from Hong Kong Polytechnic. He is a Chartered Colourist and a Fellow member of The

Society of Dyers and Colourists, United Kingdom. Dr. Lam is also an Execuve Director of Pacic Texles

Holdings Limited.

Mr. Kam Chuen Mau - Mr. Mau has over 35 years of experience in the texle industry. He obtaineda Higher Cercate in Texle Technology from the Hong Kong Polytechnic. Mr. Mau joined Pacic

Texles Limited, Hong Kong in April 2002 and was transferred to the Company in April 2004. He was

appointed as a Director of the Company in April 2011. Prior to joining Pacic Texles Limited and the

Company, Mr. Mau was a Producon Manager of Esquel Group in Malaysia and China.

Mr. Dave Ranasinghe – Mr. Ranasinghe is the Director of Brandix Apparel Limited and Brandix

Lingerie (Private) Limited. He is also the Director of Seeds Inmate Apparel India Private Limited,

which is a joint venture between Clover Group Internaonal Limited, MAST Inc. and Brandix Lanka

Limited. He has over 20 years of rich experience in the apparel industry and brings with him a wealth

of knowledge and experse to the board of Textured Jersey Lanka Limited.

He has led Bodyline and Inmate Fashions since their incepon to become two of the most successfulbra manufacturers in the world. He has been closely involved in Informaon Technology (IT) iniaves,

making signicant contribuons to the development of IT infrastructure and services in the MAS Group.

He was also responsible for MAS Investments, MAS Research & Innovaon and Commercial & Logiscs.

Mr. Ranasinghe has held Board level posions at MAS Holdings, MAS Apparel, Bodyline, Inmate

Fashions, MAS Research & Innovaons, MAS Inmates and MAS Investments. He was adjudged the CEO

of the Best Employee Involvement Organizaon at the Naonal Convenon on Quality & Producvity

in 2002 by the Sri Lanka Associaon for the Advancement of Quality & Producvity and also awarded

the Most Outstanding Cizen Award 2003 by the Lions Club Internaonal, District 306A, Sri Lanka

in recognion of his superlave contribuon in the eld of Industry & Business Management. He

was also a former vising lecturer for the MSc Programme in Texle, Clothing & Management of the

University of Moratuwa on Strategic Management. He is a Fellow member of the Chartered Instuteof Management Accountants, United Kingdom and has also received extensive execuve educaon at

Ashridge Management College, UK and Naonal University of Singapore.

Mr. Amitha Gooneratne – Mr. Gooneratne has held several senior posions at Commercial Bank of

Ceylon PLC and was appointed as the Managing Director subsequently. He is a Fellow member of The

Instute of Chartered Accountants, United Kingdom and Wales and a Fellow member of The Instute

of Chartered Accountants, Sri Lanka. He was the Founder Chairman of the Financial Ombudsman Sri

Lanka (Guarantee) Ltd. and is the current Vice-Chairman of the Sri Lanka Banks’ Associaon (Guarantee)

Ltd. He is also the Managing Director of Commercial Development Company PLC, a Public Quoted

Company listed in the CSE and is also the Chairman of Commercial Insurance Brokers (Pvt) Limited. He

was also nominated to the Board of Sri Lankan Air Lines during 2002–2004 by the Government of SriLanka.

Prof. Malik Ranasinghe – Professor Malik Ranasinghe is the Vice-Chancellor at the University of

Moratuwa. He is a Senior Professor in Civil Engineering at the University of Moratuwa, a Fellow

member of The Instuon of Engineers, Sri Lanka and the Naonal Academy of Sciences, Sri Lanka. He

is also a Chartered Engineer and an Internaonal Professional Engineer of the Instuon of Engineers,

Sri Lanka and is an independent Non-Execuve Director of Hemas Power PLC. He is a former Chairman

of the Commiee of Vice-Chancellors and Directors (CVCD) of Sri Lanka, a former Council Member of

the Associaon of Commonwealth Universies (ACU), a former Fellow of the Naonal University of

Singapore, a former Non-Execuve Director of the Colombo Stock Exchange and of the Lanka IOC PLC.

Prof. Ranasinghe obtained his PhD in 1990 from the University of Brish Columbia, Vancouver. He was

honoured with the Sri Lanka Associaon for the Advancement of Science (SLAAS) General ResearchCommiee Award in 1999 for Outstanding Contribuon to Sri Lankan Science and with the Trinity Prize

for Engineering in 2004 in recognion of the outstanding contribuons made to his chosen profession.




8.3 Directors’ Interest in Shares

8.3.1 Directors’ Shareholdings in the Company

The Directors have no direct shareholdings in the Company as at 07 April 2011.

8.3.2 Sale or Purchase of Shares by Directors

There were no sales, transfers or purchases of Shares made by the Directors during the two year periodimmediately preceding the date of this Prospectus.

8.3.3 Directors’ Emoluments

There were no emoluments paid in the form of salaries or bonuses to the Directors during FY2010 &

FY2011. The Directors are expected to be remunerated in the form of salaries and bonuses during

FY2012 to an approximate extent of LKR 6.9 million.

8.3.4 Other Directorships Held by the Board

TABLE 8-2: OTHER DIRECTORSHIPS HELD BY THE BOARD

Name of Director Other Directorships Held

Mr. Mohamed Ashro Omar Brandix Hangers (Private) Limited

Adhistan Investments India (Private) Limited

American and Erd Lanka (Private) Limited

American & Erd Bangladesh Limited

Brandix Asia Limited

Brandix Design Soluons (Private) Limited

Brandix Apparel Limited

Brandix Finishing Limited

Ocean Maurius Limited (formerly known as Brandix

Maurius Limited)

Brandix Essenals Limited

Brandix Apparel India (Private) Limited

Brandix Casualwear Limited

Brandix College Of Clothing Technology (Private) Limited

Brandix Management Services (Private) Limited

Brandix Internaonal Limited – Hong Kong

Brandix Inmate Apparel Limited

Brandix India Apparel City (Private) Limited

Seeds Inmate Apparel India Private Limited (Formerly

Known As BIAC Apparel Private Limited

Seeds Maurius Limited

Brandix Lanka Limited

Brandix Lightsew Limited

Brandix Texles Limited

Brandix Texles Holdings Limited

Brandix Lingerie (Private) Limited

Brandix Mercury Asia (Private) Limited

Brandix Uknits (Private) Limited

Brandix Texles - Liaison Oce

Brushco (Private) Limited

Brandix Maurius Holdings Limited (formerly known as

Fookwah Brandix Maurius Limited)

BLK Apparel Maurius Limited

Comfortwear (Private) Limited

Comfortwave (Private) Limited

Colombo Stock Exchange




CLT Apparel India (Private) Limited (formerly known as BIAC

Clothing Private Limited)

Firoze (Private) Limited

Pioneer Elasc (India) Private Limited

John Keells Hotels Limited

Leading Investment Holding Limited

Mansram Ceylon (Private) Limited

Mast Lanka Limited

M H Omar Foundaon

MKC Industries (Private) Limited

Ocean India (Private) Limited

Phoenix Construcon (Private) Limited

Phoenix Holdings (Private) Limited

Phoenix Industries Limited

Phoenix Plantaons (Private) Limited

Phoenix Regal (Private) Limited

Phoenix Ventures Limited

Pioneer Elasc (Maurius) Limited

Stevenson’s Lanka (Private) LimitedSeeds Maurius Limited

Quenby Lanka Prints (Private) Limited

Export Development Board

NANCO (Private) Limited

Mr. Wing Tak Bill Lam Amigo Bangladesh Limited

CPAT (Singapore) Private Limited

Elegance Pacic Trading Limited

Ever Smart Bangladesh Limited

Fast Right Group Limited

Fillace-Pacic Limited

Fortune Joy Investment Limited

Goodscore Limited

King Jumbo Investment Limited

Kingston Bangladesh Limited

Lehan Resources Limited

Pacic HK & China Holdings Limited

Pacic (Nansha) Investments Limited

Pacic SPM Investment Limited

Pacic SPM Holdings Limited

Pacic Texles Overseas Holdings Limited


Pacic GT Limited

Pacic Texles Limited

PCGT Limited

Product Champion Limited

Queenston Bangladesh Limited

Solid Ally Internaonal Limited

BLWT Company Limited

Fih Element Enterprises Limited

Ananta Knitwear Limited


Dr. King Man Clement Lam Fast Right Group Limited

Pacic HK & China Holdings Limited

Pacic (Nansha) Investments Limited

Pacic Overseas Texles Macao Commercial Oshore Limited





Eecve Approach Technology Limited

Ever Truly Limited

Wide Castle Limited

New Champ Development Limited


Mr. Kam Chuen Mau None

Mr. Dave Ranasinghe Comfortwear (Private) Limited

Brandix Apparel Limited

Seeds Inmates India (Private) Limited

Seeds Maurius Limited

Brandix Lingerie (Private) Limited

Mr. Amitha Gooneratne Commercial Bank PLC

Commercial Development Company PLC

Commercial Insurance Brokers (Private) Limited

Lanka Financial Service Bureau Limited

Prof. Malik Ranasinghe Hemas Power PLC

8.3.5 Director’s Interest in Assets

The Directors hold no interest in assets acquired, disposed or leased by the Company during the two

years preceding the Oering. Furthermore, it is not proposed that the Directors will hold any interest in

assets to be acquired, disposed or leased by the Company in the two years subsequent to the Oering.

8.3.6 Directors’ Interest in any Material Contracts

The Directors hold no interest in contracts with the Company.

8.3.7 Statement – Board of Directors

No Director or a person nominated to become a Director of the Company is or was involved in any of

the following events:

• A peon under any bankruptcy laws led against such person or any partnership in which he

was a partner or any corporaon of which he was an execuve ocer;

• Convicted for fraud, misappropriaon or breach of trust or any other similar oence which the

CSE considers a disqualicaon.

8.4 Corporate Governance PraccesThe Directors of the Company are responsible for the governance of the Company and therefore place a

high degree of importance on sound corporate governance pracces and are commied to the highest

standards of corporate governance within the organizaon.

The Company understands, supports and has applied the core concepts that underlie enterprise

governance and ensures that its standards remain in compliance with the regulatory requirement of

the CSE Lisng Rules.

In line with this, the Company has appointed Two (02) Independent Non-Execuve Directors to the

Board of TJL namely Prof. Malik Ranasinghe and Mr. Amitha Gooneratne facilitang independent

judgment in Board discussions and decisions.

In line with this, Directors and funcons of the above commiees are detailed below.




8.5 Remuneraon Commiee

The Remuneraon Commiee, set up on 15 April 2011, consists of three Non-Execuve Directors of

which two are Independent Non-Execuve Directors. The two Independent Non-Execuve Directors

are namely Prof. Malik Ranasinghe and Mr. Amitha Gooneratne. The former has been appointed as

the Chairman of the Remuneraon Commiee. As aforemenoned the Commiee also consists of one

other Non-Execuve Director namely Mr. Mohamed Ashro Omar.

The Commiee is responsible for making recommendaons to the Board on:

I. Remuneraon framework and levels of the Senior Management.

II. Senior Management performance hurdles.

III. Senior Management performance and equity based remuneraons plans.

IV. Remuneraon of Execuve Directors.

Aggregate remuneraon paid to Execuve and Non-Execuve Independent Directors during last year

and amount expected to be paid in the current year is given under Secon 8.3.3 of this Prospectus.

8.6 Audit Commiee

The Audit Commiee, set up on 15 April 2011, consists of three Non-Execuve Directors of which

two are Independent Non-Execuve Directors. The two Independent Non-Execuve Directors are Mr.

Amitha Gooneratne and Prof. Malik Ranasinghe. The former has been appointed as the Chairman of

the Audit Commiee.

As menoned above, the Commiee also consists of one other Non-Execuve Director namely

Mr. Wing Tak Bill Lam.

8.7 Senior Management

Mr. Kam Chuen Mau – Director, Producons Refer prole in Secon 8.2

Mr. Shehan Witharana – Director, Operaons

Mr. Witharana has total work experience of over 16 years in manufacturing, trading, and services

industry. Prior to joining the Company, he was the Financial Controller at Linea Clothing (Pvt) Limited –

MAS Holdings Limited, Senior Accountant at John Keells Holdings and the Accountant at Aitken Spence

& Co. Limited. He is a Finalist of the Chartered Instute of Management Accountants, UK, a Member of

the Associaon of Accounng Technicians, London, and has aended programs in strategic management,

corporate management and leadership management oered through NUS Business School, Singapore,

The Associaon of Overseas Technical Scholarship, Japan, and Doug Adams Leadership Program, Sri

Lanka, respecvely.

Mr. Zhu Hua Je – Senior General Manager, Piece Dyeing & Yarn Dyeing Factory

Mr. Zhu has a total work experience of over 21 years in the industry of which he has spent 13 years in

managerial posions. Prior to joining the Company Mr. Zhu was a factory manager of Ocean Lanka Sri

Lanka (Private) Limited and Pacic (Panyu) Texles Limited, China.

Mr. Pubudu de Silva – General Manager, Producon

Mr. de Silva joined the Company in 2001 and is responsible for producon and engineering operaons

of the Company.

Prior to joining the Company Mr. de Silva was the Producon Planner for Interfashion Co. Limited and

Head of Planning at Slimline (Pvt) Limited. He has a Masters Degree in Business Administraon from

the University of Lincoln, UK, a Masters Degree in Manufacturing from the University of Colombo, Sri

Lanka and an Execuve Diploma in Business Administraon from the University of Colombo, Sri Lanka.

He is also in Six Sigma Black Belt training at the Naonal Instute of Business Management (NIBM).




Mr. Rodney Arland – Deputy General Manager, Markeng & Merchandising

Mr. Arland has total work experience of 14 years in the industry of which he has spent ve years

in managerial posions. He joined the Company in 2001 and is responsible for markeng and

merchandising operaons of the Company. Mr. Arland has a postgraduate degree in Markeng and

has won an ISO Recognion award. Prior to joining the Company, he was a Senior Merchandiser at

Bangkok Phaisarn Texles.

Mr. Sanjaya Basnayake – Deputy General Manager, Dyeing & Finishing

Mr. Basnayake has total work experience of over 17 years in the industry of which he has spent over 10

years in managerial posions. He is responsible for the dyeing and nishing funcons of the Company.

Prior to joining the Company he was a Junior Execuve and an Execuve at Hayleys-ADC. He has an NDT

in Texle & Clothing Technology from the University of Moratuwa and a Diploma in Management from

OUSL. He has experse in technology of dyeing and nishing and implementaon of cost reducon

projects. He is also a member of the Texle Instute of UK.

Mr. Randeer Mendis – Manager, Inventory Controlling

Mr. Mendis has total work experience of over 14 years in the industry of which he has spent over ve

years in managerial posions. Prior to joining TJL, he worked as an import/export assistant at BodyLine (Pvt) Limited. Mr. Mendis has a Diploma in Logiscs and Transport from the Chartered Instute of

Logiscs & Transport, UK and a Diploma in Purchasing and Materials Management from the Instute

of Supply and Materials Management. He is also an Associate Member of the Instute of Supply and

Materials Management.

Mr. Samantha Morawaa – Manager, Colour Lab, Prinng & DCA Procurement (Technical)

Mr. Morawaa has total work experience of over 15 years in the industry of which he has spent over

six years in managerial posions. He is responsible for the texle dyeing and colour management

of the Company. Prior to joining the Company, he was a Junior Execuve at Etacol Co. (Pvt.) Limited

and a Supervisor at Texpro Industries Limited. He has a Masters Degree in Business Administraon, a

Chartered Degree in Texles from the ATI and a Diploma in Texle Technology. He is also a member of the Texle Instute of UK.

Mr. Linkesh Ratnasamy – Manager, Informaon Technology

Prior to joining the Company, Mr. Ratnasamy was an Analyst Programmer at Sybase Power Builder and

the IT Manager at KTec Technologies, South Korea. He is also a member of Indus (SAP Region).

Mr. See Tee Chua – Manager, Kning

Mr. Chua has total work experience of over 24 years in the industry of which he has spent over 10 years

in managerial posions. Prior to joining TJL, he was in technical and managerial posions of producon

factories in Malaysia and Indonesia.

Mr. Sajith Govinda Wickramaarachchi – Deputy General Manager, Human Resources and

Administraon

Mr. Wickramaarachchi has total work experience of over 30 years in the industry of which he has spent

over 16 years in managerial posions. Prior to joining the Company he has worked as a Welfare Service

Manager, a Training Services Manager, Employee Relaons Manager and an Operaons Manager at

Ceylon Tobacco Company. He has also worked as the Manager, HR and Administraon at Virtusa,

General Manager, HR and Administraon at Load Star (Pvt) Limited and as a consultant HR personnel

at Bank of Ceylon.

He has won the Silver Award for the Company at the Naonal HR Awards in 2010. He is also a

member of the Instute of Cered Professional Managers. He has an EDBA from the University of Colombo, Sri Lanka and is currently reading for an HR specialized MBA at the University of Colombo,

Sri Lanka.




Mr. Kapila Wijesekara – Manager, Commercial

Mr. Wijesekara has total work experience of over 17 years in the industry of which he has spent over

six years in managerial posions. He has a Diploma in Internaonal Trade and Imports and Exports

Procedures conducted by the Sri Lanka Customs and Export Development Board, a Diploma in Supply

Chain Management and Logiscs by CINEC Marime Campus and an Advanced Diploma in Logiscs

and Transport from the Chartered Instute of Logiscs and Transport, UK. Prior to joining the Company

he worked as an import/export coordinator at Hayleys Group for seven years.

Mr. Kolitha Tilakaratne – Manager, Finishing

Mr. Tilakaratne has total work experience of over 17 years in the industry of which he has spent over

ve years in managerial posions. Prior to joining the Company he worked as an Execuve, Finishing

Execuve, Finishing Execuve in Charge and as an Assistant Manager at Hayleys MGT. He has an NDT

in Texle Technology.

Mr. Naresh Abeysekara – Chief Financial Ocer

Mr. Abeysekera has total work experience of over 13 years in the industry of which he has spent over

nine years in managerial posions. He is responsible for the overall nance and strategic planning

and corporate branding. He is also an Associate Member of the Instute of Chartered Accountants of

Sri Lanka, an Associate Member of the Instute of Chartered Management Accountants, UK and has

a Masters Degree in Business Administraon from the Post Graduate Instute of Management, USA.

Mr. Abeysekara is also the founder and Vice President of the Instute of Internal Auditors (USA) Sri

Lankan Chapter. Prior to joining the Company, he was in managerial posions at KPMG, Sri Lanka Union

Assurance and Dialog Axiata PLC.

8.8 Senior Managements’ Emoluments

Emoluments paid to the Senior Management in the form of salaries and bonuses during FY2009/10

amounted to LKR 129,371,909. The Senior Management is expected to be remunerated in the form of

salaries and bonuses during the FY2010/11 to an approximate extent of LKR 107 Million. The Chairman

is not expected to be remunerated during FY2010/11.

8.9 Statement - ChairmanThe Chairman of the Company has not been involved in any of the following:

• A peon under any bankruptcy laws led against such person or any partnership in which he

was a partner or any corporaon of which he was an execuve ocer;

• Convicted for fraud, misappropriaon or breach of trust or any other similar oence which the

CSE considers a disqualicaon.

The responsibilies of the Chief Execuve Ocer will be carried out by the Execuve Director of the

Board of Directors.

8.10 Details of Management Agreements

There are no management agreements presently in force or currently being considered by the Company.

8.11 Human Resources

The number of employees of the Company as at the date of this Prospectus was 1,196, as detailed

below:

TABLE 8-3: HUMAN RESOURCES

Category Number of Sta

Managers 15Assistant Managers 18Execuves 146Sta 189

Associates 828Total 1,196

As at 27 June 2011, there were no Trade Unions, Collecve Agreements or acons pending against the

Company in the Labour Tribunals.




9.0 CAPITAL STRUCTURE

As at the date of this Prospectus, the Stated Capital of the Company was Sri Lankan Rupees One Billion

Five Hundred and Ninety Seven Million Two Hundred and Twenty Nine Thousand (LKR 1,597,229,000)

represented by Five Hundred and Seventy Five Million Two Thousand Four Hundred and Forty

(575,002,440) fully paid up Ordinary Shares.

9.1 An Overview of the Capital Structure

The detailed breakdown of the Stated Capital of TJL is given below:

TABLE 9-1: STATED CAPITAL OF TEXTURED JERSEY LANKA LIMITED

Post Split * 31 March 2010 31 March 2009 31 March 2008

Stated Capital (LKR) 1,597,229,000 1,597,229,000 1,597,229,000 1,597,229,000

Number of Ordinary

Shares in Issue 575,002,440 159,722,900 159,722,900 159,722,900

* The Company sub-divided each ve exisng Ordinary Shares into 18 Ordinary Shares on 25 March2011

Note: The Company has no other classes of Shares other than the above menoned Ordinary Shares

The company has oered an ESOP to the senior management personnel of Textured Jersey Lanka

Limited. It will be for a quantum of 1% of the issued Stated Capital as at 26 March 2011. The ESOP will

be in the form of opons with an exercise price of LKR 15 per share and the earliest exercise date for

the opons will be 31 May 2013 with an expiraon date of 30 November 2013. A special resoluon

was passed on 31 March 2011 by the shareholders approving the same. The Company will not be

providing any nancial assistance in respect of the said ESOP.

9.2 Free Transferability of Shares

Upon the Shares of the Company being listed on the CSE, such Shares shall be freely transferable and

the registraon of the transfer of such listed Shares shall not be subject to any restricon, save and

except to the extent required for compliance with statutory requirements.

9.3 Other Securies

The Company has not issued any converble debt securies or any other class of shares other than the

Shares stated above for the Two (02) years preceding the date of this Prospectus. Further there are no

securies of the same or other class subscribed or sold privately in conjuncon with this Oering.

9.4 Takeover OersThere have been no takeover oers by third pares in respect of the Company’s shares during the past

two years and no takeover oers have been made by the Company in respect of shares of third pares.

9.5 Share Re-Purchases or Redempons

The Company has not engaged in any share re-purchase, redempon or stated capital reducon

exercises in the two years preceding the date of this Prospectus.




9.6 Ten Largest Shareholders as at 27 June 2011

TABLE 9-2: TEN LARGEST SHAREHOLDERS

Name No. of Ordinary Shares %

Pacic Textured Jersey Holdings Limited 262,001,464 45.60

Brandix Lanka Limited 197,000,976 34.30

Indra Silva 7,917,300 1.38

Indra Finance (Private) Limited 4,019,600 0.70

Indra Traders 4,019,600 0.70

Dislleries Company of Sri Lanka 3,356,900 0.58

Vidullanka PLC 2,928,000 0.51

Bartleet Finance Limited 2,830,600 0.49

Deutsche Bank Nominee 2,811,100 0.49

Timex Garments (Private) Limited 2,811,100 0.49

Other Shareholders * 85,305,800 14.84

Total 575,002,440 100.00

* Shareholding is amongst 39 public shareholders

9.7 Post IPO Shareholding Structure

TABLE 9-3: POST IPO SHAREHOLDING STRUCTURE

No. of Shares % No. of Shares %(Current) (Post IPO)

Pacic Textured Jersey

Holdings Limited 262,001,464 45.60 262,001,464 40.00

Brandix Lanka Limited 197,000,976 34.30 197,000,976 30.08

Public 116,000,000 20.10 196,000,000 29.92

Total 575,002,440 100.00 655,002,440 100.00

Immediately aer the compleon of the IPO, Pacic Textured Jersey Holdings Limited and Brandix

Lanka Limited will collecvely hold 70.08% of the total issued shares of the Company. Brandix LankaLimited and Pacic Textured Jersey Holdings Limited are not acng in concert in the context of the

denion for “acng in concert” contained in Secon 37 of the Take-overs and Mergers Code 1995

(amended in 2003) promulgated under the Securies and Exchange Commission of Sri Lanka Act No 36

of 1987 (revised in 2003).

9.8 Transfer of Shares by the Major Shareholders in the One Year Preceding the Date of the Prospectus

Transferor Transferee No. of Price per Date of

Shares Share (LKR) Transfer

Brandix Lanka Limited ADL Capital 2,265,300 15.00 30 May 2011 C.D. Kohombanwickramage 2,226,300 15.00 30 May 2011 Deutsche Bank Nominees (Jersey) Limited 2,811,100 15.00 5 May 2011 Dislleries Company of Sri Lanka PLC 3,356,900 15.00 30 May 2011




HSBC Internaonal Nominee –

UBS AG Singapore Branch (EXSBC) 2,694,100 15.00 5 May 2011 Indra Finance (Private) Limited 4,019,600 15.00 30 May 2011 TARRA Fund 2,031,400 15.00 30 May 2011 L.W.A. De Soysa 2,148,300 15.00 5 May 2011 M.P. Haradasa 2,343,300 15.00 30 May 2011 M.M. Fuad 787,500 15.00 6 May 2011 Periceyl (Private) Limited 2,694,100 15.00 30 May 2011 RuRev Capital (Private) Limited 2,694,100 15.00 30 May 2011 Vidullanka PLC 2,928,000 15.00 30 May 2011

Pacic Textured Jersey A.H. Udeshi 2,050,900 15.00 9 May 2011 Holdings Limited Asia Pacic Investments (Private) Limited 2,031,400 15.00 30 May 2011

Auro Holdings (Private) Limited 2,674,600 15.00 30 May 2011 Bartleet Finance Limited 2,830,600 15.00 30 May 2011 Browns Investments (Private) Limited 2,031,400 15.00 30 May 2011 Classic Ventures Security (Private) Limited 2,031,400 15.00 26 May 2011 D.J.N.Hearachchi 2,031,400 15.00 9 May 2011 D.P. Peiris 2,031,400 15.00 16 May 2011 D.S.T. Jayawardena 2,031,400 15.00 25 May 2011 David Peiris Motor Company Limited 2,031,400 15.00 30 May 2011 Dee Investments (Private) Limited 2,031,400 15.00 30 May 2011 Fergasam Garment Industries (Private) Limited 2,811,100 15.00 30 May 2011 Foundaon Garments (Private) Limited 2,031,400 15.00 11 May 2011 G.S.N. Peiris 2,674,600 15.00 30 May 2011 Guardian Capital Partners PLC 2,343,300 15.00 30 May 2011 Heraymila Investments Limited 2,050,900 15.00 17 May 2011 Hovael Construcon (Private) Limited 2,031,400 15.00 5 May 2011 Indra Property Development (Private) Limited 2,694,100 15.00 30 May 2011 Y.S.H.I.K. Silva 7,917,300 15.00 27 May 2011 Indra Traders (Private) Limited 4,019,600 15.00 30 May 2011 J B Cocoshell (Private) Limited 2,031,400 15.00 13 May 2011 J.D.N. Kekulawela 2,031,400 15.00 6 May 2011 L.T. Samarawickrama 2,031,400 15.00 10 May 2011 M.M. Fuad 1,302,300 15.00 6 May 2011 M. Sritharan 2,031,400 15.00 30 May 2011 McBridge Blue (Private) Limited 2,031,400 15.00 6 May 2011 McSen Range (Private) Limited 2,031,400 15.00 30 May 2011 N.K. Ranasingha 2,109,300 15.00 5 May 2011 N.C. Peiris 2,031,400 15.00 9 May 2011 Nawaloka Piling (Private) Limited 2,031,400 15.00 30 May 2011 W.D.N.H. Perera 2,031,400 15.00 9 May 2011 Nuwara Eliya Property Developers

(Private) Limited 2,050,900 15.00 30 May 2011 Rosewood (Private) Limited 2,031,400 15.00 30 May 2011 South Asian Investment (Private) Limited 2,031,400 15.00 30 May 2011 Timex Garments (Private) Limited 2,811,100 15.00 30 May 2011




9.9 Raos

TABLE 9-4: RATIO ANALYSIS – YEAR ENDED 31 MARCH

2010 2011

Protability Raos

Revenue Growth (%) 11% 15%

COS/Revenue (%) 88% 88% GP Margin (%) 12% 12%

Administraon Exp. Growth (%) -5% -9%

Operang Prot Margin (%) 7% 8%

Net Prot Margin (%) 7% 7%

ROA (%) 11% 9%

ROE (%) 24% 23%

Liquidity Raos

Current Rao (x) 1.69 1.09

Quick Asset Rao(x) 0.74 0.32

Investor Raos

EPS (USD) 0.03 0.04

NAV per Share (USD) 0.13 0.17

Gearing Raos

LT Debt/Equity (%) 66% 0.08%

Interest Coverage (x) 13.64 29.26

Total Liability/Equity (%) 127% 143%




90,000

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,0000

10.0 MANAGEMENT DISCUSSION AND ANALYSIS

This secon discusses the performance of TJL during the last ve nancial years.

10.1 Operang Results

Salient extracts from the Income Statement and the Balance Sheet of the Company and the historical

performance of the Company during the ve year period ended 31 March 2011 are given below.

TABLE 10-1: TEXTURED JERSEY LANKA LIMITED – SUMMARIZED INCOME STATEMENTS

All gures in US Dollars

For the period ended 31 Dec 31 Mar 31 Mar 31 Mar 31 Mar

2006 2008* 2009 2010 2011

Revenue 38,765,007 57,633,421 65,204,280 72,384,207 83,187,733

Gross Prot 5,527,173 6,459,158 5,509,754 8,883,901 9,712,440

Operang Prot 2,902,484 2,979,779 2,382,646 5,427,900 6,548,004

Finance Cost (897,494) (1,097,023) (1,071,433) (397,898) (223,754)

PBT 2,004,990 1,882,756 1,311,213 5,030,002 6,324,250

Net Prot 2,004,990 1,882,756 1,311,213 5,005,020 6,135,031

* Note: The 31 March 2008 income statement for 15 months from 1st January 2007 to 31 March 2008

TABLE 10-2: TEXTURED JERSEY LANKA LIMITED – SUMMARIZED BALANCE SHEET

All gures in US Dollars

As at 31 Dec 31 Mar 31 Mar 31 Mar 31 Mar

2006 2008* 2009 2010 2011

Total Non Current Assets 18,436,175 30,943,200 30,714,224 27,364,385 24,429,343

Total Current Assets 16,299,307 19,964,147 21,172,192 20,154,217 41,508,158

TOTAL ASSETS 34,735,482 50,907,347 51,886,416 47,518,602 65,937,501

Total Capital & Reserves 12,938,955 14,821,711 16,132,924 20,959,128 27,094,159

Total Non Current Liabilies 4,351,531 17,431,979 17,484,708 14,599,331 908,158

Total Current Liabilies 17,444,996 18,653,657 18,268,784 11,960,143 37,935,184

Total Equity & Liabilies 34,735,482 50,907,347 51,886,416 47,518,602 65,937,501

10.2 Performance of Operaons for the Five Years Ended 31 March 2011

Revenue – The movement in revenue of the Company during the ve years ended 31 March 2011 is

depicted below.

CHART 10-1: REVENUE MOVEMENT FOR TJL

2006 2008 (15 2009 2010 2011

months)

38,765 57,633 65,204 72,384 83,188

U S D ’ 0 0 0




The Company has recorded a CAGR of 16% over the last ve years. Even though there was a decline

observed in the global economy due to recessionary condions, TJL has sll managed to grow

consistently in revenue terms. Strong relaonships with customers were key to maintaining a high

growth rate of revenue.

Gross prot and operang prot – The gure below illustrates the gross and operang prots for the

Company along with the gross and operang prot margins.

CHART 10-2: GROSS PROFIT AND OPERATING PROFIT MOVEMENT FOR TJL

Gross prots and operang prots in terms of absolute terms have grown at a CAGR of 12% and 18%

respecvely over the past ve years. Even though the margins experienced a slight decline in 2009 due

to global recessionary condions it has recovered in 2010 and has connued its upward trend in 2011

as well. This is commendable considering the high coon prices experienced during the last nancial

year. The Company’s ability to pass on cost increases to customers and conscious eorts towards

reducing costs have assisted in keeping margins stable.

Net prot – The movement in net prot of the Company during the ve nancial years ended 31st

March 2011 is depicted below.

CHART 10-3: NET PROFIT MOVEMENT FOR TJL

Net prot has grown at a CAGR of 21% over the past ve years. The large increase is due to the

signicant reducon in nance costs. The Company has been able to reduce its import loans and

overdra facilies signicantly driving down nance costs.

Further increases are expected with the Company’s future plans of adding products with higher margins

such as nylon and polyester to their product porolio and expected increase in demand for texle &

clothing. The Company is also iniang cost saving methods to beer manage its cost of sales which

would further increase overall prot margins of the Company.

2006 2008 (15 2009 2010 2011

months)

Gross Prot 5,527 6,459 5,510 8,883 9,712

Operang Prot 2,902 2,980 2,383 5,427 6,548

Operang Margin 7% 5% 4% 8% 8%

GP Margin 14% 11% 8% 12% 12%

U S D ’ 0 0 0

12,000

10,000

8,000

6,000

4,000

2,000

-

25%

20%

15%

10%

5%

0%

2006 2008 (15 2009 2010 2011

months)

Net Prot 2,005 1,883 1,311 5,005 6,135

Net Prot Margin 5.17% 3.27% 2.01% 6.95% 7.37%

U S D ’ 0 0 0

7,000

6,000

5,000

4,000

3,000

2,000

1,000

-

8.00%

7.00%

6.00%

5.00%

4.00%

3.00%

2.00%

1.00%

0.00%




11.0 STATUTORY AND OTHER GENERAL INFORMATION

11.1 Hosng of Prospectus, Applicaon Form and the Arcles of Associaon on the Web

This Prospectus, Applicaon Form and the Arcles of Associaon of the Company will be available on

the website of the CSE (www.cse.lk) and on the Company website (www.texturedjersey.com) from the

date hereof, for a period of not less than Fourteen (14) Market Days.

11.2 Inspecon of Documents

The Arcles of Associaon, Auditor’s Report, Accountants’ Report, Audited Financial Statements for TJL

as at 31 March 2011, and all other documents to which references are made in this Prospectus could

be inspected by the public during normal working hours at the Registered Oce of the Company from

the date hereof for a period not less than Fourteen (14) Market Days.

11.3 Brokerage

Brokerage at the rate of Zero decimal Five per centum (0.5%) of the Share Issue Price will be paid in

respect of the number of shares alloed/allocated on Applicaons bearing the seal of the Bankers to

the Oering, or a member/trading member of the CSE.




12.0 TAXATION

The following is an overview of selected taxaon and other regulaons that may be relevant to the

Company and potenal investors with regard to share transacons in the Democrac Socialist Republic

of Sri Lanka. The discussion does not claim to be a comprehensive explanaon of regulaons and

consideraons that pertain to the purchase, ownership and disposion of the Shares in issue. The

explanaons are based on provisions eecve in Sri Lanka at the me of prinng of this Prospectus.Investors are advised to consult their own advisors prior to engaging in transacons related to the

Issue.

12.1 Corporate Taxaon

As per the Agreement entered between the Company and the Board of Investment of Sri Lanka (BOI),

dated 24 July 2000 and the supplementary agreements entered thereaer, the Company would be

exempted from tax for a period of 15 years commencing from 12 September 2001. Aer the expiraon

of the tax exempon period, the prots of the Company for any year of assessment shall be charged at

the rate of Twelve per centum (12%) for a period of eight years.

12.2 Economic Service Charge

The Company will be liable to pay ESC at the rate of Zero decimal Twenty Five per centum (0.25%)

eecve from the quarter ending 30 June 2011 on its turnover and the ESC rate up to the quarter

ended 31 March 2011 is Zero decimal One per centum (0.1%).

12.3 Value Added Tax

The Company is currently liable to pay VAT at Zero per centum (0%) on direct and indirect export sales

and Twelve per centum (12%) on local sales.

12.4 Withholding Tax for Dividends

In general, dividends distributed by resident companies out of taxable income to resident or non-resident shareholders are subject to WHT at the rate of Ten per centum (10%) under Secon 65 of

the Inland Revenue Act No. 10 of 2006 as duly amended (hereinaer referred to as the IRA). The

Company is not required to deduct WHT from dividend distributed out of tax exempt prots during

the tax holiday period and one year thereaer as the BOI agreement has been entered into prior to 6

November 2002. Thereaer the Company is required to deduct WHT at source and remit the same to

the Department of Inland Revenue.

Other than the WHT referred to above, dividends paid to shareholders of the Company will not be

subject to any other Sri Lankan tax except in the case of persons (other than companies) to whom it

constutes a business receipt.

Dividend income received by a company resident in Sri Lanka from another company resident in SriLanka does not form part of statutory income subject to fullling certain condions (either Ten per

centum (10%) WHT has been made under the abovemenoned Secon 65, dividend is exempt under

secon 10 of the IRA or dividend consists of any dividend received by the st menoned resident

company from another resident company) and therefore not taxable in the hands of the recipient

company.

12.5 Naon Building Tax

The Company is liable to pay NBT at the rate of Two per centum (2%) on local sales.




13.0 STATUTORY DECLARATIONS

Statutory Declaraon by the Directors

27 June 2011

We, the undersigned, being the Directors of Textured Jersey Lanka Limited hereby declare and conrm

that we have read the provisions of the Companies Act No.7 of 2007 relang to the issue of theProspectus and that those provisions have been complied with.

This Prospectus has been seen and approved by us and we collecvely and individually accept full

responsibility for the accuracy of the informaon given and conrm that the provisions of the Lisng

Rules of the CSE and the Companies Act. No. 7 of 2007 and any amendments to it from me to me

have been complied with and aer making all reasonable enquiries 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 representaons regarding the future performance of the Company have been

given in the Prospectus, such representaons have been made aer due and careful enquiry of the

informaon available to the Company and making assumpons that are considered to be reasonable

at the present point in me and according to our best judgment.

Name Designaon Signature

Mr. Mohamed Ashro Omar Chairman & Non-Execuve Director Sgd.

Mr. Wing Tak Bill Lam Non-Execuve Director Sgd.

Dr. King Man Clement Lam Non-Execuve Director Sgd.

Mr. Kam Chuen Mau Execuve Director Sgd.

Mr. Dave Ranasinghe Non-Execuve Director Sgd.

Mr. Amitha Gooneratne Independent Non-Execuve Director Sgd.

Prof. Malik Ranasinghe Independent Non-Execuve Director Sgd.

Statutory Declaraon by the Financial Advisors and Joint Managers to the Issue

27 June 2011

We, Acuity Partners (Private) Limited, of No. 53, Dharmapala Mawatha, Colombo 3 being the Financial

Advisors and Joint Managers to the Issue of Textured Jersey Lanka Limited hereby declare that to the

best of our knowledge and belief the Prospectus constutes full and true disclosure of all material facts

about the Issue and the Company whose Shares are being issued.

Sgd. Sgd.

Director Director




Statutory Declaraon by the Financial Advisors and Joint Managers to the Issue

27 June 2011

We, CT Capital (Private) Limited, of No. 04-03, Majesc City, Colombo 04 being the Financial Advisors

and Joint Managers to the Issue of Textured Jersey Lanka Limited hereby declare that to the best of our

knowledge and belief the Prospectus constutes full and true disclosure of all material facts about the

Issue and the Company whose Shares are being issued.

Sgd. Sgd.

Director Director

Statutory Declaraon by the Company

27 June 2011

An applicaon has been made to the CSE for permission to deal in and for a lisng for all of the Ordinary

Vong Shares oered by the Company and those New Shares which are the subject of this Issue.

Such permission will be granted when the Ordinary Shares are listed on the CSE. The CSE assumes

no responsibility for the correctness of any of the statements made or opinions expressed or reports

included in this Prospectus. Lisng on the CSE is not to be taken as an indicaon of the merits of the

Company or of the securies oered.

Sgd. Sgd.

Director Director




ACCOUNTANT’S REPORT AND FIVE YEAR SUMMARY




Five years summary – Income statement

(All amounts in Sri Lankan Rupees thousands)

For the year ended 31 December 31 March 31 March 31 March 31 March

2006 2008 2009 2010 2011

(15 Months) (Restated)

Revenue 3,973,413 6,254,379 7,188,120 8,351,690 9,284,583

Gross prot 566,535 700,948 607,395 1,025,025 1,084,007

Operang prot 297,505 323,365 262,663 626,271 730,824

Prot before tax 205,512 204,316 144,548 580,362 705,851

Tax - - - (2,882) (21,119)

Prot aributable to shareholders 205,512 204,316 144,548 577,480 684,732

Note As stated, the Company changed its accounng policy on deferred tax liability to comply with the UrgentIssues Task Force ruling issued on 07 September 2010. Accordingly, the accounng policy was adopted

retrospecvely and deferred tax liability was provided in full, using the liability method, on temporary

dierences arising between the tax bases of assets and liabilies and their carrying amounts in the nancial

statements.




Five years summary – Balance sheet


As at 31 December 31 March 31 March 31 March 31 March

2006 2008 2009 2010 2011


Non-current assets 1,963,453 3,363,526 3,559,778 3,139,790 2,677,212

Current assets 1,735,877 2,170,103 2,453,857 2,312,495 4,548,881

Total assets 3,699,330 5,533,629 6,013,635 5,452,285 7,226,093

Capital and reserves

Stated capital 1,597,229 1,597,229 1,597,229 1,597,229 1,597,229

Exchange equalizaon reserve 193,206 222,011 336,149 314,437 194,105

(Accumulated losses) /

retained earnings (412,436) (208,120) (63,572) 493,184 1,177,916

Net assets 1,377,999 1,611,120 1,869,806 2,404,850 2,969,250

Non-current liabilies 463,438 1,894,857 2,026,478 1,675,127 99,526

Current liabilies 1,857,893 2,027,652 2,117,351 1,372,308 4,157,317

Total equity and liabilies 3,699,330 5,533,629 6,013,635 5,452,285 7,226,093




Five years summary – Cash ow statement



2006 2008 2009 2010 2011


Net cash generated from

/ (used in) operang acvies (230,008) 344,698 808,123 905,687 (215,405)

Net cash used in

invesng acvies (219,301) (1,659,005) (298,052) (81,235) (101,496)

Net cash generated from /

(used in) nancing acvies 118,682 1,303,502 (109,277) (859,742) (96,664)

Increase / (decrease) in

cash and cash equivalents (330,627) (10,805) 400,794 (35,290) (413,565)

At start of the year / period (2,084) (332,711) (343,516) 57,278 21,988

At end of the year / period (332,711) (343,516) 57,278 21,988 (391,577)




Five years summary – Financial raos and statements of changes in equity



2006 2008 2009 2010 2011


Earnings per share 1.29 1.28 0.90 3.62 4.29

Net assets per share 8.63 10.09 11.71 15.06 18.59

Current rao (mes) 0.93 1.07 1.16 1.69 1.09

Statement of changes Stated capital Advance Exchange Accumulated

in equity against equalizaon prots / Total

share capital reserve (losses)

Balance as at 1st January 2006 1,597,229 Nil 124,503 (617,948) 1,103,784

Prot for the year Nil Nil Nil 205,512 205,512

Eect of movement in foreign

exchange rates Nil Nil 68,703 Nil 68,703

Balance as at 31st

December 2006 1,597,229 Nil 193,206 (412,436) 1,377,999

Balance as at 1st January 2007 1,597,229 Nil 193,206 (412,436) 1,377,999

Prot for the 15 months Nil Nil Nil 204,316 204,316

Eect of movement inforeign exchange rates Nil Nil 28,805 Nil 28,805

Balance as at 31st March 2008 1,597,229 Nil 222,011 (208,120) 1,611,120




Five years summary – Financial raos and statements of changes in equity (Contd.)(All amounts in Sri Lankan Rupees thousands)

Statement of changes Stated capital Advance Exchange Accumulated

in equity against equalizaon prots / Total

share capital reserve (losses)

Balance as at 1st April 2008 1,597,229 Nil 222,011 (208,120) 1,611,120

Prot for the year Nil Nil Nil 144,548 144,548

Eect of movement in foreign

exchange rates Nil Nil 114,138 Nil 114,138

Balance as at 31st March 2009 1,597,229 Nil 336,149 (63,572) 1,869,806

Balance as at 1st April 2009

As previously reported 1,597,229 Nil 336,149 (63,572) 1,869,806

Eect of deferred tax provision Nil Nil Nil (20,724) (20,724)As restated 1,597,229 Nil 336,149 (84,296) 1,849,082

Net prot for the year

As previously reported Nil Nil Nil 580,362 580,362

Eect of deferred tax provision Nil Nil Nil (2,882) (2,882)

As restated Nil Nil Nil 577,480 577,480

Eect of movement in

foreign exchange rates Nil Nil (21,712) Nil (21,712)

Balance as at 31st March 2010 1,597,229 Nil 314,437 493,184 2,404,850


(Restated) 1,597,229 Nil 314,215 516,790 2,428,234

As previously reported Nil Nil Nil (23,384) (23,384)

Eect of deferred tax provision Nil Nil 222 (222) Nil

Eect of movement in

foreign exchange rates 1,597,229 Nil 314,437 493,184 2,404,850

Net prot for the year Nil Nil Nil 684,732 684,732

Eect of movement in

foreign exchange rates Nil Nil (120,332) Nil (120,332)

Balance as at 31st March 2011 1,597,229 Nil 194,105 1,177,916 2,969,250




Five years summary – Income statement

(All amounts in USD)


2006 2008 2009 2010 2011


Revenue 38,765,007 57,633,421 65,204,280 72,384,207 83,187,733

Gross prot 5,527,173 6,459,158 5,509,754 8,883,901 9,712,440

Operang prot 2,902,484 2,979,779 2,382,646 5,427,900 6,548,004

Prot before tax 2,004,990 1,882,756 1,311,213 5,030,002 6,324,250

Tax - - - (24,982) (189,219)

Prot aributable to

shareholders 2,004,990 1,882,756 1,311,213 5,005,020 6,135,031

Note As stated, the Company changed its accounng policy on deferred tax liability to comply with the

Urgent Issues Task Force ruling issued on 07 September 2010. Accordingly, the accounng policy was

adopted retrospecvely and deferred tax liability was provided in full, using the liability method, on

temporary dierences arising between the tax bases of assets and liabilies and their carrying amounts

in the nancial statements.




Five years summary – Balance sheet



2006 2008 2009 2010 2011


Non-current assets 18,436,175 30,943,200 30,714,224 27,364,385 24,429,343

Current assets 16,299,307 19,964,147 21,172,192 20,154,217 41,508,158

Total assets 34,735,482 50,907,347 51,886,416 47,518,602 65,937,501


Stated capital 17,666,037 17,666,037 17,666,037 17,666,037 17,666,037

(Accumulated losses) /retained earnings (4,727,082) (2,844,326) (1,533,113) 3,293,091 9,428,122

Net assets 12,938,955 14,821,711 16,132,924 20,959,128 27,094,159

Non-current liabilies 4,351,531 17,431,979 17,484,708 14,599,331 908,158

Current liabilies 17,444,996 18,653,658 18,268,784 11,960,143 37,935,184

Total equity and liabilies 34,735,482 50,907,347 51,886,416 47,518,602 65,937,501




Five years summary – Cash ow statement



2006 2008 2009 2010 2011


Net cash generated

from / (used in) operang

acvies (1,449,871) 3,542,660 7,855,010 7,649,871 (2,769,677)

Net cash used in invesng

acvies (2,060,424) (15,287,572) (2,703,662) (704,084) (909,389)

Net cash generated from /

(used in) nancing acvies 406,887 11,708,736 (1,496,920) (7,248,357) (85,679)

Increase / (decrease) in cashand cash equivalents (3,103,408) (36,176) 3,654,428 (302,570) (3,764,745)

At start of the year / period (20,638) (3,124,046) (3,160,222) 494,206 191,636

At end of the year / period (3,124,046) (3,160,222) 494,206 191,636 (3,573,109)




Five years summary – Financial raos and statements of changes in equity



2006 2008 2009 2010 2011


Earnings per share 0.01 0.01 0.01 0.03 0.04

Net assets per share 0.08 0.09 0.10 0.13 0.17

Current rao (mes) 0.93 1.07 1.16 1.69 1.09

Statement of changes Stated capital Advance Accumulated

in equity against prots / Total

share capital (losses)

Balance as at 1st January 2006 17,666,037 Nil (6,732,072) 10,933,965

Prot for the year Nil Nil 2,004,990 2,004,990

Balance as at 31st December 2006 17,666,037 Nil (4,727,082) 12,938,955

Balance as at 1st January 2007 17,666,037 Nil (4,727,082) 12,938,955

Prot for the 15 months Nil Nil 1,882,756 1,882,756

Balance as at 31st March 2008 17,666,037 Nil (2,844,326) 14,821,711




Five years summary – Financial raos and statements of changes in equity (Contd.)


Statement of changes Stated capital Advance Accumulated

in equity against prots / Total

share capital (losses)

Balance as at 1st April 2008 17,666,037 Nil (2,844,326) 14,821,711

Prot for the year Nil Nil 1,311,213 1,311,213

Balance as at 31st March 2009 17,666,037 Nil (1,533,113) 16,132,924


As previously reported 17,666,037 Nil (1,533,113) 16,132,924

Eect of deferred tax provision Nil Nil (178,816) (178,816)

As restated 17,666,037 Nil (1,711,929) 15,954,108


As previously reported Nil Nil 5,030,002 5,030,002


As restated Nil Nil 5,005,020 5,005,020

Balance as at 31st March 2010 17,666,037 Nil 3,293,091 20,959,128


As previously reported 17,666,037 Nil 3,496,889 21,162,926


As restated 17,666,037 Nil 3,293,091 20,959,128

Net prot for the year Nil Nil 6,135,031 6,135,031

Balance as at 31st March 2011 17,666,037 Nil 9,428,122 27,094,159




AUDITOR’S REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011




TEXTURED JERSEY LANKA (PRIVATE) LIMITED

FINANCIAL STATEMENTS 31 MARCH 2011




CONTENTS

Page

Annual report of the Board 93-96

Statement of the Directors’ responsibility for nancial reporng 97

Independent auditor’s report 98

Income statement 99

Balance sheet 100

Statement of changes in equity 101

Cash ow statement 102

Notes to the nancial statements 103-121





Annual Report of the board of directors for the year ended 31 March 2011

1 The directors present herewith the audited nancial statements of Textured Jersey Lanka (Private)

Limited (“the Company”) for the year ended 31 March 2011.

Formaon

2 The Company was incorporated and registered in Sri Lanka on 12 July 2000, under the Companies Act,

No. 17 of 1982, as a private limited liability company under the name of Textured Jersey Lanka (Private)

Limited and was re-registered under the Companies Act, No, 07 of 2007 on 19 September 2008.

Nature of the business of the Company

3 The nature of the business of the Company is given in Note 1 to the nancial statements on page 103.

Financial statements

4 The nancial statements of the Company for the year ended 31 March 2011 which include the income

statement, balance sheet, statement of changes in equity, cash ow statement and the notes to the

nancial statements are set out on pages 103 to 121.

Auditor’s report

5 The auditor’s report is set out on page 98.

Changes in accounng policies

6 The accounng policies adopted by the Company have been consistently applied from previous years

except for adopon of Sri Lanka Accounng Standard (LKAS) 12; Income Taxes pursuant to the Urgent

Issues Task Force (UITF) ruling issued on 07 September 2010.

Review of business

7 The state of aairs of the Company as at 31 March 2011 is set out in the balance sheet on page

100.

Property, plant and equipment

8 The movements in property, plant and equipment during the year are set out in Note 13 to the nancial

statements.

Market value of properes

9 The directors are of the opinion that the carrying amount of properes stated in Note 13 to the nancial

statements reects their fair value.




Annual report of the Board connued on pages 94 to 96


Annual Report of the board of directors for the year ended 31 March 2011 (Contd)

Dividends

10 No dividends have been proposed by the directors of the Company for the year ended 31 March 2011

(Year ended 31 March 2010 - USD Nil).

Reserves

11 Total reserves and their composion are set out in the statement of changes in equity on page 101 of

the nancial statements.

Substanal shareholdings

12 As per the share register the under noted persons held ordinary share capital of the Company as at 31

March 2011.

No. of shares Holding

(%)

Brandix Lanka Limited 63,889,160 40

Pacic Textured Jersey Holdings Limited 95,833,740 60

159,722,900 100

Directors

13 The Board of directors of the Company as of 31 March 2011 were:

Mr Wing Tak Bill Lam

Mr Mohamed Ashro Omar

Mr Paul Kang Po Tsang

Mr King Man Clement Lam

Mr Mohamed Aslam Omar

Mr Ajith Joseph Johnpillai

Mr Rohan Peiris Goonelleke rered from the Board with eect from 31 August 2010. The Board

wishes to place on record the Company’s sincere appreciaon of the services rendered by Mr Rohan

Peiris Goonelleke.

All the other directors held oce for the whole of the year ended 31 March 2011.

Directors’ interest in contracts and proposed contracts with the Company

14 The directors’ interests in contracts and proposed contracts with the Company, both direct and

indirect, are set out in Note 27 to the nancial statements. Where necessary, the directors have

disclosed the nature of their interests in contracts and proposed contracts.

Remuneraon and other benets of directors

15 The remuneraon and other benets of the directors are given in Note 7 to the nancial statements

on page 110.

Directors’ interests in shares of the Company

16 As at 31 March 2011, none of the directors held shares of the Company.




Annual report of the Board connued on pages 95 to 96



Amounts payable to the rm holding oce as an auditor

17 The remuneraon payable by the Company to the independent auditors is given in Note 7 to the

nancial statements on page 110.

Auditor’s relaonship or any interest with the Company

18 The directors are sased that, based on wrien representaons made by the independent auditors

to the Board, the auditors did not have any relaonship or any interest with the Company that would

impair their independence.

Corporate governance

19 The business and aairs of the Company are managed and directed with the objecve of balancingthe aainment of corporate objecves with the alignment of corporate behaviour within the legal

and good governance framework of the industry and Sri Lanka, the accountability to shareholders

and responsibility to other stakeholders.

Statutory payments

20 All statutory payments due to the Government of Sri Lanka and on behalf of employees have been

made or accrued for as at the balance sheet date.

Environmental protecon

21 Aer making adequate enquiries from management, the Directors are sased that the Company

operates in a manner that minimises the detrimental eects on the environment and providesproducts and services that have a benecial eect on the customers and the communies within

which the Company operates.

Donaons

22 The Company has made donaons amounng to USD 5,775 during the year ended 31 March 2011

(Year ended 31 March 2010 - USD 3,518).

Going concern

23 The nancial statements are prepared on going concern principles. Aer making adequate enquiries

from management, the directors are sased that the Company has adequate resources to connue

its operaons in the foreseeable future.

Post balance sheet events

24 Subsequent to the balance sheet date, the shareholder loans described in Note 20 to the nancial

statements have been seled in full. No other events had occurred since the balance sheet date and

the approval of these nancial statements, which would require adjustments to, or disclosure in,

these nancial statements.




Annual report of the Board connued on page 96



Appointment of auditors

25 A resoluon to re-appoint the auditors, M/s PricewaterhouseCoopers, Chartered Accountants, who

have expressed their willingness to connue, will be proposed at the Annual General Meeng.

BY ORDER OF THE BOARD

COLOMBO DIRECTOR DIRECTOR SECRETARY





Statement of the Directors’ responsibility for nancial reporng

The responsibility of the Directors in relaon to the nancial statements of the Company, is set out in the following

statement. The responsibility of the Auditors, in relaon to the nancial statements, prepared in accordance

with the provisions of the Companies Act, No. 07 of 2007 [“ the Act”], is set out in the Independent Auditors’

Report on page 98.

The nancial statements comprise the:

o income statement, which present a true and fair view of the results of the Company for the year ended

31 March 2011; and

o balance sheet, which present a true and fair view of the state of aairs of the Company as at the end

of the year ended 31 March 2011, which comply with the requirements of the Act.

The Directors have ensured that, in preparing these nancial statements:

o appropriate accounng policies have been selected and applied in a consistent manner and material

departures, if any, have been disclosed and explained;

o all applicable Accounng Standards issued by the Instute of Chartered Accountants of Sri Lanka, as

relevant, have been followed; and

o judgments and esmates have been made which are reasonable and prudent.

The Directors have also ensured that the Company has adequate resources to connue in operaon to jusfy

applying the going concern basis in preparing these nancial statements.

Further, the Directors have as part of their responsibility ensured that the Company maintains sucient

accounng records to disclose, with reasonable accuracy the nancial posion of the Company, and to ensure

that the nancial statements presented comply with the requirements of the Act.

The Directors have also taken reasonable steps to safeguard the assets of the Company and in this regard to giveproper consideraon to the establishment of appropriate internal control systems with a view to prevenng and

detecng fraud and other irregularies.

The management of the Company meets periodically with the independent statutory auditors to review the

manner in which the auditors are performing their responsibilies, and to discuss auding, internal control and

nancial reporng issues. To ensure complete independence, the independent statutory auditors have full and

free access to the members of the Board to discuss any maer of substance.

The Directors are required to have prepared the nancial statements and to provide the independent auditors

with every opportunity to take whatever steps and undertake whatever inspecons that may be considered to

be appropriate to enable them to give an independent audit opinion.

The Directors are of the view that they have discharged their responsibilies as set out in this statement.

Compliance report

The Directors conrm that to the best of their knowledge, all taxes, dues and levies payable by the Company,

all contribuons, levies and taxes payable on behalf of and in respect of the employees of the Company, and all

other known statutory dues as were due and payable by the Company as at the balance sheet date have been

paid, or where relevant provided for.


COLOMBO SECRETARY




Independent Auditor’s Report

To the members of Textured Jersey Lanka (Private) Limited

Report on the Financial Statements

1 We have audited the accompanying nancial statements of Textured Jersey Lanka (Private) Limited, which

comprise the balance sheet as at 31 March 2011, and the income statement, statement of changes in equity

and cash ow statement for the year then ended, and a summary of signicant accounng policies and other

explanatory notes as set out on pages 103 to 121.

Management’s Responsibility for the Financial Statements

2 Management is responsible for the preparaon and fair presentaon of these nancial statements inaccordance with Sri Lanka Accounng Standards. This responsibility includes: designing, implemenng and

maintaining internal control relevant to the preparaon and fair presentaon of nancial statements that are

free from material misstatement, whether due to fraud or error; selecng and applying appropriate accounng

policies; and making accounng esmates that are reasonable in the circumstances.

Scope of Audit and Basis of Opinion

3 Our responsibility is to express an opinion on these nancial statements based on our audit. We conducted

our audit in accordance with Sri Lanka Auding Standards. Those standards require that we plan and perform

the audit to obtain reasonable assurance whether the nancial statements are free from material misstatement.

An audit includes examining, on a test basis, evidence supporng the amounts and disclosures in the nancial

statements. An audit also includes assessing the accounng principles used and signicant esmates made by

management, as well as evaluang the overall nancial statement presentaon.

We have obtained all the informaon and explanaons which to the best of our knowledge and belief were

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

opinion.

Opinion

4 In our opinion, so far as appears from our examinaon, the Company maintained proper accounng records

for the year ended 31 March 2011 and the nancial statements give a true and fair view of the Company’s state

of aairs as at 31 March 2011 and of its results and cash ows for the year then ended in accordance with Sri

Lanka Accounng Standards.

Report on Other Legal and Regulatory Requirements

5 These nancial statements also comply with the requirements of Secon 151 (2) of the Companies Act, No.

07 of 2007.

CHARTERED ACCOUNTANTS

COLOMBO





Income statement

(all amounts in US Dollars)

Year ended Year ended

Notes 31 March 31 March

2011 2010

Sales 5 83,187,733 72,384,207

Cost of sales (73,475,293) (63,500,306)

Gross prot 9,712,440 8,883,901

Other operang income 6 70,685 65,375

Distribuon expenses (704,817) (726,426)

Administrave expenses (2,530,304) (2,794,950)

Operang prot 7 6,548,004 5,427,900

Finance costs - net 9 (223,754) (397,898)

Prot before tax 6,324,250 5,030,002

Tax 10 (189,219) (24,982)

Net prot 6,135,031 5,005,020

Earnings per share - basic (USD) 11 0.04 0.03

The notes on pages 103 to 121 form an integral part of these nancial statements.

Report of the independent auditor’s on page 98





Balance sheet

(all amounts in US Dollars) Notes 31 March 31 March

2011 2010ASSETS

Non-current assets

Property, plant and equipment 13 22,569,224 25,939,390

Capital work-in-progress 14 652,671 46,342

Intangible assets 15 464,191 609,036

Receivables and prepayments 17 743,257 769,617

24,429,343 27,364,385

Current assets

Inventories 16 29,342,721 11,346,021

Receivables and prepayments 17 11,961,432 8,242,117Cash and cash equivalents 18 204,005 566,079

41,508,158 20,154,217

Total assets 65,937,501 47,518,602

EQUITY


Stated capital 25 17,666,037 17,666,037

Retained earnings 9,428,122 3,293,091

27,094,159 20,959,128

LIABILITIES

Non-current liabilies

Borrowings 20 20,996 13,882,100

Deferred tax liabilies 22 393,017 203,798

Dened benet obligaons 21 494,145 513,433

908,158 14,599,331

Current liabilies

Trade and other payables 19 17,318,262 8,521,317

Borrowings 20 20,616,922 3,438,826

37,935,184 11,960,143

Total liabilies 38,843,342 26,559,474Total equity and liabilies 65,937,501 47,518,602

The Board of Directors is responsible for the preparaon

and presentaon of these nancial statements. These

nancial statements were approved and issue by the

Board of Directors on ………………....

I cerfy that these nancial statements have been

prepared in compliance with the requirements of

the Companies Act No, 07 of 2007.

....................................................................... ) Sgd.

) Directors Chief Financial Ocer

....................................................................... )

Signed on behalf of the Board on 01 June 2011



Sgd.

Sgd.





Statement of changes in equity

(Accumulated

(all amounts in US Dollars) Stated losses) /

Notes capital retained Total

earnings

Balance as at 1 April 2009

- As previously reported 17,666,037 (1,533,113) 16,132,924

- Eect of deferred tax provision 22 Nil (178,816) (178,816)

- As restated 17,666,037 (1,711,929) 15,954,108

Net prot for the year Nil 5,005,020 5,005,020

Balance as at 31 March 2010 17,666,037 3,293,091 20,959,128


- As previously reported 17,666,037 3,496,889 21,162,926

- Eect of deferred tax provision 22 Nil (203,798) (203,798)

- As restated 17,666,037 3,293,091 20,959,128

Net prot for the year Nil 6,135,031 6,135,031

Balance as at 31 March 2011 17,666,037 9,428,122 27,094,159







Cash ow statement

(all amounts in US Dollars) Year ended Year ended


2011 2010

Cash ows from operang acvies

Cash (used in) / generated from operaons 26 (2,353,773) 7,937,180

Interest received 9 12,322 128,414

Interest paid 9 (295,197) (395,568)

Dened benet obligaons paid 21 (133,029) (20,155)

Net cash (used in) / generated from operang acvies (2,769,677) 7,649,871

Cash ows from invesng acvies

Addions to capital work-in-progress 14 (730,083) (933,942)

Purchase of property, plant and equipment 13 (210,023) (80,084)

Purchase of intangible assets 15 (39,968) Nil

Proceeds from disposal of property, plant and equipment 70,685 309,942

Net cash used in invesng acvies (909,389) (704,084)

Cash ows from nancing acvies

Net movement in borrowings (85,679) (7,248,357)

Net cash used in nancing acvies (85,679) (7,248,357)

Decrease in cash and cash equivalents (3,764,745) (302,570)

Movement in cash and cash equivalents

At start of year 191,636 494,206Decrease (3,764,745) (302,570)

At end of year 18 (3,573,109) 191,636







Notes to the nancial statements

(In the notes all amounts are shown in US Dollars unless otherwise stated)

1 General informaon

Textured Jersey Lanka (Private) Limited carries on the business of manufacturing and selling of WeKnit Fabrics. The Company is a limited liability company incorporated and domiciled in Sri Lanka. The

address of its registered oce is Block D8-D14, C V Gooneratne Seethawaka Internaonal Industrial Park,

Avissawella.

These nancial statements have been approved for issue by the Board of Directors on 1 June 2011.

2 Summary of signicant accounng policies

The principal accounng policies applied in the preparaon of these nancial statements are set out below.

These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparaon

The nancial statements are prepared in accordance with and comply with Sri Lanka Accounng

Standards. The nancial statements are prepared under the historical cost convenon. Where any item

is not covered by Sri Lanka Accounng Standards (LKASs), Internaonal Accounng Standards (IASs) and

Internaonal Financial Reporng Standards (IFRSs) are followed.

The preparaon of nancial statements in conformity with LKASs, IASs and IFRSs requires the use of certain

crical accounng esmates. It also requires management to exercise their judgment in the process of

applying the Company’s accounng policies.

Financial statements are prepared and presented in US Dollars and the Directors of the Company are of the

opinion that the use of US Dollars as the reporng currency provides informaon about the Company that

is useful and it reects the economic substance of the underlying events and circumstances relevant tothe Company due to the majority value of the Company’s transacons being denominated in US Dollars,

such as:

(a) Sales prices for manufactured fabrics are invoiced and seled in US Dollars.

(b) All raw material purchases, which constute the majority of the expenses are paid for in US Dollars.

(c) Financing acvies such as borrowings and issuance of equity instruments are carried out in US

Dollars.

(d) The property, plant and equipment were paid for in US Dollars, except for a few local purchases.

Hence the Directors of the Company decided to use US Dollars as the measurement and presentaoncurrency of the nancial statements from the date of incorporaon.

Financial statements are also prepared in Sri Lanka Rupees to fulll statutory requirements.

2.2 Foreign currency translaon

(a) Funconal and presentaon currency

The items included in the nancial statements are measured using the currency of the primary economic

environment in which the enty operates (‘the funconal currency’). The nancial statements are

presented in “United States Dollar”, which is considered the Company’s funconal and presentaon

currency.





Notes to the nancial statements (Contd)

2 Summary of signicant accounng policies (Contd)

2.2 Foreign currency translaon (Contd)

(b) Transacons and balances

Foreign currency transacons are translated into the reporng currency using the exchange rates prevailing

at the dates of the transacons. Foreign exchange gains and losses resulng from the selement of

such transacons and from the translaon at year end exchange rates of monetary assets and liabilies

denominated in foreign currencies are recognised in the income statement.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented

in the income statement within ‘interest income and nance costs’.

2.3 Property, plant and equipment

All property, plant and equipment is stated at historical cost less depreciaon.

(a) Measurement

The historical cost includes all costs directly aributable to bringing an asset to working condion for its

intended use and signicant renovaons.

The subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as

appropriate, only when it is probable that future economic benets associated with the item will ow to

the Company and the cost of the item can be measured reliably. The carrying amount of the replaced parts

are derecognised. All repairs and maintenance are charged to the income statement during the nancial

period in which they are incurred.

Cost of long term capital projects are carried forward in capital work-in-progress unl they are available foruse.

An asset’s carrying amount is wrien down immediately to its recoverable amount if the carrying amount

is greater than its esmated recoverable amount.

The interest costs on borrowings to nance the construcon of property, plant and equipment are

capitalised during the period that is taken to complete and prepare the asset for its intended use.

Capital work in progress represents all amounts paid on work undertaken, and sll in an unnished state

as at the end of the year.

(b) Depreciaon

Depreciaon is calculated using the straight line method to allocate the cost of each asset, to their residual

values over their esmated useful lives commencing from the date of acquision, date available for use or

date of commencement of use. On disposal of assets depreciaon is calculated exclusive of the date on

which disposal takes place.

The esmated useful life of property, plant and equipment is as follows:

Leasehold buildings 50 years

Plant and equipment and installaons 10 years

Fixtures and ngs 8 years

Oce equipment 5 years

Motor vehicles 4 years Computer and communicaon equipment 4 years

Gains and losses on disposal of property, plant and equipment are determined by reference to their

carrying amount and are taken into account in determining operang prot.







2.3 Property, plant and equipment (Contd)

(c) Impairment of property, plant and equipment

The carrying value of property, plant and equipment is reviewed for impairment either annually or when

events or changes in circumstances indicate the carrying value may not be recoverable. If any such

indicaon exists and where the carrying values exceed the esmated recoverable amount the assets are

wrien down to their recoverable amount. Impairment losses are recognised in the income statement.

2.4 Computer soware development cost

Generally, costs associated with developing computer soware programmes are recognised as an expense

as incurred. However, costs that are clearly associated with an idenable and unique product which

will be controlled by the Company and has probable benets exceeding the cost beyond one year, are

recognised as an intangible asset. Associated costs include consultants costs of the development team andan appropriate poron of relevant overheads.

Expenditure which enhances and extends the benets of computer soware programmes beyond their

original specicaons and lives is recognised as a capital improvement and added to the original cost of

the soware. Computer soware development costs recognised as intangible assets are amorsed using

the straight line method over their useful life, not exceeding a period of 4 years.

Costs associated with the maintenance of exisng computer soware programmes is expensed as incurred,

to the income statement.

2.5 Impairment of non-nancial assets

Assets that have an indenite useful life, are not subject to amorsaon and are tested annually for

impairment. Assets that are subject to amorsaon are reviewed for impairment whenever events or

changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss

is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The

recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes

of assessing impairment, assets are grouped at the lowest levels for which there are separately idenable

cash ows (cash-generang units). Non-nancial assets that suered an impairment are reviewed for

possible reversal of the impairment at each reporng date.

2.6 Accounng for leases by the lessee

Leases of property, plant and equipment where the Company has substanally all the risks and rewards of

ownership are classied as nance leases. Finance leases are capitalised at the lease’s commencement at

the lower of the fair value of the leased property and the present value of the minimum lease payments.

Each lease payment is allocated between the liability and nance charges so as to achieve a constant rate

on the nance balance outstanding. The corresponding rental obligaons, net of nance charges, are

included in other long-term payables. The interest element of the nance cost is charged to the income

statement over the lease period, so as to produce a constant periodic rate of interest on the remaining

balance of the liability for each period. The property, plant and equipment acquired under nance leases

is depreciated over the shorter of the useful life of the asset or the lease term.

Leases of assets under which all the risks and benets of ownership are eecvely retained by the lessor

are classied as operang leases. Payments made under operang leases are charged to the income

statement on a straight line basis over the period of lease.






2.7 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted

average cost (WAC) method. The cost of nished goods and work in progress comprises raw materials,

direct labour, other direct costs and related producon overheads (based on normal operang capacity).

It excludes borrowing costs. Net realisable value is the esmated selling price in the ordinary course of

business, less the costs of compleon and selling expenses.

2.8 Trade receivables

Trade receivables are carried at ancipated realisable value. An esmate is made for doubul receivables

based on a review of all outstanding amounts at the year end. Bad debts are wrien o during the year in

which they are idened.

Trade receivables are amounts due from customers for products sold in the ordinary course of business. If

collecon is expected in one year or less (in the normal operang cycle of the business if longer), they are

classied as current assets. If not, they are presented as non current assets.

2.9 Cash and cash equivalents

For the purposes of the cash ow statement, cash and cash equivalents comprise cash in hand, deposits

held at call with banks, net of bank overdras. In the balance sheet, bank overdras are included in

borrowings in current liabilies.

2.10 Stated capital

The ordinary shares are classied as equity.

2.11 Trade payables

Trade payables are obligaons to pay for goods or services that have been acquired in the ordinary course

of business from suppliers. Accounts payables are classied as current liabilies if payment is due within

one year or less (or in the normal operang cycle of the business if longer). If not, they are presented as

non - current liabilies.

2.12 Borrowings

Borrowings are recognised at the values at which borrowings have been obtained net of transacon costs

incurred.

2.13 Provisions

Provisions are recognised when the Company has a present legal or construcve obligaons as a result of past events, it is probable that an oulow of resources embodying economic benets will be required to

sele the obligaon, and a reliable esmate of the amount of the obligaon can be made.

Where there are a number of similar obligaons, the likelihood that an oulow will be required in

selement is determined by considering the class of obligaons as a whole. A provision is recognised even

if the likelihood of an oulow with respect to any one item included in the same class of obligaon may be

small.

The provisions are measured at the present value of expenditures expected to be required to sele the

obligaon.

2.14 Dened benet obligaons

Typically, a dened benet plan denes an amount of benet that an employee will receive on rerement,

which is usually dependent on one or more factors such as period of service and compensaon.




The liability recognised in the balance sheet in respect of dened benet plans is the present value of

dened benet obligaons at the balance sheet date together with adjustments for unrecognised actuarial

gains or losses and past service costs. The dened benet obligaon is calculated annually by the Company

using the projected unit credit method. The present value of dened benet obligaon is determined bydiscounng the esmated future cash oulows using esmated long term interest rates.

2.15 Dened contribuon plans

All employees of the Company are members of the Employees’ Provident Fund and Employees’ Trust Fund,

to which the Company contributes 12% and 3% respecvely of such employees’ basic or consolidated

wage or salary, cost of living and all other allowances.

The Company has no further payment obligaons once the contribuons have been paid. The contribuons

are recognised as employee benet expenses when they are due.

2.16 Taxaon

The tax expense for the period solely comprise deferred tax.

(a) Income tax

Tax is recognised in the income statement, except to the extent that it relates to items recognised directly

in equity. In this case, the tax is also recognised in equity.

The charge for taxaon is based on the results for the year adjusted for disallowable items and for ming

dierences to the extent that they are unlikely to result in an actual tax liability in the foreseeable future.

Timing dierences arise from the recognion for tax purposes of items of income and expenditure in

dierent accounng periods from those in which they are recognised in the nancial statements.

(b) Deferred taxaon

Deferred income tax is provided in full, using the liability method, on temporary dierences arising

between the tax bases of assets and liabilies and their carrying amounts in the nancial statements.

However, the deferred income tax is not accounted for if it arises from inial recognion of an asset or

liability in a transacon other than a business combinaon that at the me of the transacon aects

neither accounng nor taxable prot or loss.

Deferred income tax is determined using tax rates (and laws) that have been enacted or substanally

enacted by the balance sheet date and are expected to apply when the related deferred income tax assets

is realised or the deferred income tax liability is seled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable prot willbe available against which the temporary dierences can be ulised.

2.17 Revenue recognion

(a) Goods sold and services rendered

Revenue from the sale of goods is recognised in the income statement when the signicant risks and

rewards of ownership have been transferred to the buyer. No revenue is recognised if there are signicant

uncertaines regarding recovery of the consideraon due, associated costs or the possible return of goods.

(b) Interest income

Interest income is recognised on a me-proporon basis.








2.18 Expenditure recognion

(a) Operang expenses

The expenses are recognised on an accrual basis. All expenses incurred in the ordinary course of businessand in maintaining property, plant and equipment in a state of eciency is charged against income in

arriving at the prot for the period.

(b) Net nancing costs

Net nancing costs comprise interest payable on borrowings, interest receivable on funds invested, and

foreign exchange gains and losses that are recognised in the income statement.

All interest and other costs incurred in connecon with borrowings are expensed as incurred as part of net

nancing costs.

2.19 Comparaves

“Bank charges” previously disclosed under nance costs are now shown under administrave expenses

and “distribuon expenses” previously disclosed under cost of sales are now shown under distribuon

expenses.

Management believes that the above re-classicaon gives a fairer presentaon.

3 Financial risk management

3.1 Financial risk factors

The Company’s acvies expose it to a variety of nancial risks: market risk (including currency risk, interest

rate risk and price risk), credit risk and liquidity risk. The Company’s overall risk management programme

focuses on the unpredictability of nancial markets and seeks to minimise potenal adverse eects on the

Company’s nancial performance.

3.1.1 Foreign exchange risk

The Company operates internaonally and is exposed to foreign exchange risk arising from various currency

exposures, primarily with respect to the United States Dollar and Sri Lankan Rupee.

Foreign exchange risk arises when future commercial transacons or recognised assets or liabilies are

denominated in a currency that is not the enty’s funconal currency.

3.1.2 Interest rate risk

The Company’s income and operang cash ows are substanally independent of changes in market

interest rates.

The Company’s interest rate risk arises from short-term borrowings. The borrowings at variable rates

expose the Company to cash ow interest rate risk whilst borrowings at xed rates exposes the Company

to interest rate risk. The Company analyses its interest rate exposure on a dynamic basis.

3.1.3 Credit risk

Credit risk arises from cash and cash equivalents and deposits with banks and nancial instuons, as

well as credit exposures to customers, including outstanding receivables. The ulisaon of credit limits is

regularly monitored.

3.1.4 Liquidity risk

Prudent liquidity risk management implies maintaining sucient cash and availability of funding throughan adequate amount of commied credit facilies. Due to the dynamic nature of the underlying businesses,

Company treasury maintains exibility in funding by maintaining availability under commied credit

lines.






3 Financial risk management (Contd)

3.2 Capital risk management

The Company’s objecves when managing capital are to safeguard the Company’s ability to connue asa going concern in order to provide returns for shareholders and benets for other stakeholders and to

maintain an opmal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid

to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

4 Crical accounng esmates, assumpons and judgments

“Esmates, assumpons and judgements are connually evaluated and are based on historical experience

and other factors, including expectaons of future events that are believed to be reasonable under the

circumstances. “

The Company makes esmates and assumpons concerning the future. The resulng accounng esmates

will, by denion, seldom equal the related actual results. The esmates and assumpons that have a

signicant risk of causing a material adjustment to the carrying amount of assets and liabilies within the

next nancial year are discussed below:

4.1 Impairment of property plant and equipment

The Company reviews for impairment of property, plant and equipment in accordance with the Accounng

Policy in note 2.3. The recoverable amount of these assets have been determined based on higher of the

assets’ fair value less cost to sell and value in use. These calculaons require the use of esmates and

judgements.

Management believes that any reasonably possible change in the esmated future cash ows of theoperaons on which the recoverable amounts of the cash-generang units is based would not cause the

cash-generang units’ carrying on amount to exceed its recoverable amount.


The Company has both dened benet and dened contribuon plans. A dened contribuon plan is a

pension plan under which the Company pays xed contribuons into a separate enty. The Company has

no longer or construcve obligaons to pay further contribuons if the fund does not hold sucient assets

to pay all employees the benets relang to employees service in the current and prior periods. A dened

benet plan is a pension plan that is not a dened contribuon plan. Typically, dened benet plans dene

an amount of pension benet that an employee will receive on rerement, usually dependent on one or

more factors such as age, years of service and compensaon.

The liability recognised in the balance sheet in respect of dened benet pension plans is the present value

of the dened benet obligaon at the balance sheet date together with adjustments for unrecognised

actuarial gains or losses and past service costs. The dened benet obligaon is calculated once in two

years by independent actuaries using the projected unit credit method. The present value of the dened

benet obligaon is determined by discounng the esmated future cash oulows using interest rates of

high-quality corporate bonds that are denominated in the currency in which the benets will be paid and

that have terms to maturity approximang to the terms of the related pension liability.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumpons are

charged or credited to income over the employees’ expected average remaining working lives.

Past-service costs are recognised immediately in income, unless the changes to the pension plan are

condional on the employees remaining in service for a specied period of me (the vesng period). In

this case, the past-service costs are amorsed on a straight-line basis over the vesng period.






4 Crical accounng esmates, assumpons and judgments (Contd)

4.2 Dened benet obligaons (Contd)

For dened contribuon plans, the Company pays contribuon to publicly administered pension insuranceplans on a mandatory basis. The Company has no further payment obligaons once the contribuons have

been paid. The contribuons are recognised as employee benet expense when they are due.

It is expected that such actuarial valuaons will be carried out once in a year. The principal assumpons

made are given below:

Rate of discount 12% p.a.

Rate of pay increase 7% to 10% p.a.

Rerement age 55 years

5 Sales

Sales are made up as follows: Year ended Year ended

31 March 31 March

2011 2010

Sales

- export 883,319 577,117

- local 82,304,414 71,807,090

83,187,733 72,384,207

Sales shown under local sales are stated under suspended and normal Value Added Tax system. Sales

made through related pares are disclosed in Note 27 to the nancial statements.

6 Other operang income

Other operang income wholly consists of prot on disposal of property, plant and equipment of USD

70,685 (Year ended 31 March 2010 - USD 65,375).

7 Operang prot

The following items have been charged / (credited) in arriving at operang prot:


31 March 31 March

2011 2010

Directors’ emoluments 10,000 18,500

Auditors’ remuneraon

- audit 2,500 2,500

- non audit 1,200 1,200

Depreciaon (Note 13) 3,703,943 3,894,353

(Reversal of provision) / provision for slow

moving inventories [Note 16(a)] (1,231,978) 632,137

Reversal of provision for bad and doubul debts [Note 17(b)] (10,048) (20,697)

Amorsaon of intangible assets - soware development (Note 15) 184,813 119,202

Amorsaon of leasehold land [Note 17(a)] 26,360 27,190

Repair and maintenance expenditure 1,349,833 1,819,156

Sta costs (Note 8) 4,558,835 4,439,497




8 Sta costs


31 March 31 March2011 2010

Salaries, wages and other fringe benets 3,980,438 3,954,522

Dened benet obligaons (Note 21) 113,741 53,202

Dened contribuon plans 464,656 431,773

4,558,835 4,439,497

Average number of employees employed by the Company

during the year:

Permanent employees 1,196 1,130

9 Finance costs - net


31 March 31 March

2011 2010

Interest income (12,322) (128,414)

Net foreign transacon and translaon (gains) / losses (59,121) 130,744

Interest expense

- short term working capital loans 204,501 239,801

- bank overdras 76,718 116,110

- bank borrowings 13,978 39,657

223,754 397,898

10 Tax


31 March 31 March

2011 2010

Current tax Nil Nil

Deferred tax charge (Note 22) 189,219 24,982

189,219 24,982

The tax on the Company’s prot before tax diers from the theorecal amount that would arise using the

basic tax rate applicable to prots of the Company as follows:







31 March 31 March

2011 2010

Prot before tax 6,324,250 5,030,002

Tax calculated at a tax rate of 12%

(Year ended 31 March 2010 - 12%) 758,910 603,600

Income not subject to tax (741,477) (831,185)

Expenses not deducble for tax purposes 66,543 29,467

Adjustments due to the esmated deferred

tax base in previous years 105,243 223,100

Tax charge 189,219 24,982

The Company was inially exempted from income tax on its prots for a period of 12 years, from the rst

year of commencement of commercial operaons. The commercial operaons commenced in October

2001. Following the addional investment made by the shareholders and increase in xed assets of the

Company to Rs 2.5 billion, a supplementary agreement was entered between the Company and the

Board of Investment of Sri Lanka extending the exisng tax exempon period from 12 to 15 years on 31

January 2007. Aer the expiraon of the tax exempon period, the prots of the enterprise for any year

of assessment shall be charged at the rate of 12% for a period of 8 years.

In view of the above, the Company is not liable to income tax for the year of assessment 2010/2011.

The tax losses available for carry forward as at 31 March 2011 amounng to USD 459,435 (as at 31 March

2010 - USD 445,919) wholly consist of tax losses incurred up to year of assessment 2000 / 2001 before

commencement of tax holiday.

Further informaon about deferred tax is provided in Note 22.

11 Earnings per share

Basic earnings per share is calculated by dividing the net prot aributable to equity holders of the

Company by the weighted average number of ordinary shares in issue during the year:


31 March 31 March2011 2010

Net prot aributable to equity holders of the Company 6,135,031 5,005,020

Weighted average number of ordinary shares in issue (Note 25) 159,722,900 159,722,900

Earnings per share - USD 0.04 0.03

12 Dividends

No dividend was declared and paid for the year ended 31 March 2011 (Year ended 31 March 2010 - USD

Nil).








14 Capital work-in-progress


31 March 31 March

2011 2010

Balance at beginning of the year 46,342 111,159

Expenses incurred on property, plant and equipment 730,083 933,942

Transferred to property plant and equipment (Notes 13) (123,754) (504,706)

Transferred to intangible assets (Notes15) Nil (494,053)

Balance at end of the year 652,671 46,342

15 Intangible assets

This intangible assets wholly consists of expenditure incurred on soware development by the Company.


31 March 31 March

2011 2010


Amorsaon charge (Note 7) (184,813) (119,202)

Transferred from capital work-in-progress Nil 494,053

Addions 39,968 Nil


16 Inventories

31 March 31 March

2011 2010

Raw materials 13,706,704 4,392,404

Work-in-progress 8,935,505 4,211,004

Finished goods 3,022,748 1,038,069

Engineering spares, needles and sinkers 1,830,382 1,215,086

Euent chemicals, fuel and consumables 177,297 137,531

Goods in transit 1,670,085 351,927

29,342,721 11,346,021

(a) Inventories are stated aer provision for slow moving and non moving inventories and the total

movement on the provision is as follows:


31 March 31 March

2011 2010

Balance at beginning of the year 1,657,534 1,025,397


moving inventories (Note 7) (1,231,978) 632,137

Balance at end of the year 425,556 1,657,534

(b) Bank overdras are secured over inventories.




17 Receivables and prepayments

31 March 31 March

2011 2010

Non - current

Prepayments on leasehold land [See Note (a) below] 743,257 769,617

Current

Trade receivables 6,215,828 5,004,845

Trade receivables from related companies [See Note 27(iii)] 4,807,471 2,651,886

Other receivables [See Note (c) below] 797,026 521,867

Prepayments 141,107 63,519

11,961,432 8,242,117

(a) The non-current poron of prepayments solely consists of the operang lease paid in advance for the

lands occupied by the Company. The Company amorses the leasehold lands over the lease period, on a

straight line basis. Current poron of prepayments on leasehold land is included in prepayments under

receivables and prepayments - current. Reconciliaon of the prepaid operang lease is as follows:


31 March 31 March

2011 2010

At beginning of the year 848,171 875,361

Amorsaon (26,360) (27,190)

At end of the year 821,811 848,171

Prepaid operang leases can be analysed as follows:

31 March 31 March

2011 2010

Current (Not later than one year) 78,554 78,554

Non-current (Later than one year) 743,257 769,617

821,811 848,171

(b) Receivables and prepayments are stated aer provision for bad debts and the movement on theprovision is as follows:


31 March 31 March

2011 2010


Reversal of provision for bad and doubul debtors (10,048) (20,697)


(c) Other receivables mainly consist of VAT receivables of USD 580,639 (as at 31 March 2010 - USD342,605).








18 Cash and cash equivalents

31 March 31 March

2011 2010

Short term bank deposits Nil 264,756

Cash at bank and in hand 204,005 301,323

204,005 566,079

The weighted average eecve interest rate on short term deposits was 2.75% (Year ended 31 March 2010

- 3.5%).

For the purpose of the cash ow statement, the year end cash and cash equivalents comprise the following:

31 March 31 March

2011 2010

Cash and bank balances 204,005 566,079

Bank overdras (Note 20) (3,777,114) (374,443)

(3,573,109) 191,636

19 Trade and other payables

31 March 31 March

2011 2010

Trade payables 4,686,505 5,228,121

Amounts due to related companies [Note 27(iv)] 10,944,437 1,506,884

Accrued expenses [See Note (a) below] 1,033,713 1,081,161

Other payables 653,607 705,151

17,318,262 8,521,317

(a) Accrued expenses mainly consists of electricity payable of USD 404,160 (As at 31 March 2010 - USD

396,236), markeng oce expenses of USD 142,930 (As at 31 March 2010 - USD 180,993) and import

clearing and wharf charges of USD 54,954 (As at 31 March 2010 - USD 60,115).

20 Borrowings

31 March 31 March

2011 2010

CurrentBank overdras [see note (a) below] 3,777,114 374,443

Import loans [see note (b) below] 16,747,425 2,967,546

Bank loan [see note (c) below] 92,383 96,837

20,616,922 3,438,826

Non-current

Shareholder loans

Brandix Lanka Limited Nil 6,393,400

Pacic Texles Limited Nil 7,379,382

Nil 13,772,782

Bank borrowings

Bank loan [see note (c) below] 20,996 109,31820,996 13,882,100

20,637,918 17,320,926




(a) The bank overdras are secured over inventories.

(b) Import loan facilies are secured over buildings and immovable plant and machinery.

(c) Bank borrowings are secured on dye vessels and automated dye and chemical dispenser.

(d) Shareholders loans are unsecured and interest free. Shareholder loans have been seled in full

subsequent to the balance sheet date (Note 28).

(e) The interest rate exposure of the borrowings of the Company are as follows:

31 March 31 March

2011 2010

Total borrowings:

- at xed rates 113,378 206,155- at oang rates 20,524,540 3,341,989

20,637,918 3,548,144

Weighted average eecve interest rates:

- US Dollar borrowings LIBOR + 3.75 % LIBOR + 3.75 %

- Sri Lanka Rupee borrowings 13.0% 22.0%

- Sri Lanka Rupee borrowings - bank loan 8.5% 8.5%

- Bank overdras LIBOR + 3.75 % LIBOR + 4.5 %

21 Dened benet obligaons

The movement in the dened benet obligaons during the period / year is as follows:


31 March 31 March

2011 2010


Current service cost 83,561 84,350

Interest cost 61,612 70,669

Actuarial gains (31,432) (101,817)

113,741 53,202Benets paid (133,029) (20,155)

Exchange translaon loss Nil 2,892

At the end of the year 494,145 513,433

The amounts recognised in the income statement are as follows:


31 March 31 March

2011 2010


Interest cost 61,612 70,669Actuarial gains (31,432) (101,817)

113,741 53,202








The principal actuarial assumpons used in the calculaon were as follows:


31 March 31 March2011 2010

Discount rate 12.0% p.a 14.8% p.a

Future salary increases - non execuve sta 10% p.a 10% p.a

- execuve sta 7% p.a 10% p.a

Sta turnover factor - non execuve sta 20% p.a 17% p.a


The provision for dened benet obligaons is not externally funded.

22 Deferred tax liabilies

Deferred income taxes are calculated on all temporary dierences under the liability method as per LKAS

12; Income Taxes and pursuant to UITF ruling issued on 07 September 2010. Deferred tax on temporary

dierences within the tax holiday period had been measured at the tax rate that is expected to apply

aer the tax holiday period and on the basis that liability arises on the expiraon of the tax exempt

period. Temporary dierences at the balance sheet date were calculated using a tax rate of 12% that

would be applicable on export prot on expiry of the tax exempon period. The movement on the

deferred income tax account is as follows:


31 March 31 March

2011 2010

At the beginning of the year- as previously reported 203,798 Nil

Prior year adjustments Nil 178,816

- as restated 203,798 178,816

Income statement charge (Note 10) 189,219 24,982


22 Deferred tax liabilies (Contd)

Deferred income tax assets and liabilies are oset when there is a legally enforceable right to oset

current tax assets against current tax liabilies and when the deferred income taxes relate to the same

scal authority. The oset amounts are as follows.

31 March 31 March

2011 2010

Deferred tax assets :

- Deferred tax assets to be recovered aer more than 12 months (166,461) (316,906)

- Deferred tax assets to be recovered within 12 months Nil Nil

(166,461) (316,906)

Deferred tax liabilies :

- Deferred tax liabilies to be recovered aer more than 12 months 559,478 520,704

- Deferred tax liabilies to be recovered within 12 months Nil Nil

559,478 520,704

Deferred tax liabilies (net) 393,017 203,798




The movement in deferred income tax assets and liabilies during the year, without taking into consideraon

the oseng of balances within the same tax jurisdicon, is as follows:

Accelerated

tax

Deferred tax liabilies depreciaon Total

At 1 April 2009 412,161 412,161

Charged to income statement 108,543 108,543

At 31 March 2010 520,704 520,704


At 31 March 2011 559,478 559,478

Dened Obsolete

benet stock Bad debts Tax

Deferred tax assets obligaons provisions provisions losses Total

At 1 April 2009 (57,299) (123,048) Nil (52,998) (233,345)

Credited to income

statement (4,313) (75,856) (2,880) (512) (83,561)

At 31 March 2010 (61,612) (198,904) (2,880) (53,510) (316,906)

Charged to income

statement 2,320 148,541 1,206 (1,622) 150,445

At 31 March 2011 (54,076) (50,363) (1,674) (55,132) (166,461)

23 Conngencies

There were no material conngent liabilies outstanding as at the balance sheet date.

24 Commitments

Operang lease commitments

The Company obtained the land on a 50 year lease for which the Company has a commitment to pay an

annual fee of USD 1,150 per acre, on 18.18 acres to the Board of Investment as lease rent. Further, theCompany obtained another block of land on a 30 year lease during the nancial year ended 31 December

2006 in order to construct residenal facilies for the employees for which the Company has an addional

commitment to pay an annual fee of Rs 1,000 per acre, on 3.063 acres.

Further, the Company obtained another 2 blocks of land on a 30 year lease on 23 March 2007 in order to

facilitate the expansion of producon capacity, for which the Company is commied to pay an annual fee

of USD 3,850 per acre as lease rent.

Capital commitments

There were no material capital commitments outstanding as at the balance sheet date.








25 Stated capital No. of Amount

Shares (USD)

As at 31 March 2010 159,722,900 17,666,037

At 31 March 2011 159,722,900 17,666,037

26 Cash generated from operaons

Reconciliaon of prot before tax to cash generated from operaons:


31 March 31 March

2011 2010

Prot before tax 6,324,250 5,030,002Adjustments for:

Depreciaon (Note 13) 3,703,943 3,894,353

Amorsaon of intangible assets (Note 15) 184,813 119,202

Amorsaon of leasehold lands (Note 17) 26,360 27,190

(Reversal of provision) / provision for slow moving inventories [Note 16(a)] (1,231,978) 632,137


Interest income (Note 9) (12,322) (128,414)

Interest expenses (Note 9) 295,197 395,568

Prot on disposal of property, plant and equipment (Note 6) (70,685) (65,375)

Exchange translaon loss (Note 21) Nil 2,892

Changes in working capital:

- Inventories (16,764,722) (593,136)

- Trade and other receivables (3,709,267) (517,208)

- Trade and other payables 8,796,945 (892,536)

Provision for dened benet obligaons (Note 21) 113,741 53,202

Cash generated from operaons (2,353,773) 7,937,180

27 Directors’ interest in contracts with the Company and related party transacons

Mr Wing Tak Bill Lam, Mr Paul Kang Po Tsang and Mr King Man Clement Lam, directors of the Company

are also directors of Pacic Texle Limited. Mr King Man Clement Lam is also a director of Pacic Overseas

Texles Macao Commercial Oshore Limited. Mr Mohamed Ashro Omar, Mr Mohamed Aslam Omarand Mr Ajith Joseph Johnpillai , directors of the Company are also directors of Brandix Lanka Limited and

Brandix Apparel Limited, Brandix Texles Limited and Brandix College of Clothing (Private) Limited.

The following transacons were carried out with related pares:

(i) Sale of goods and services: Year ended Year ended

31 March 31 March

Sale of goods: 2011 2010

Brandix Apparel Limited 30,850,878 17,740,686




(ii) Purchase of goods and services:


31 March 31 March

Purchase of raw materials: 2011 2010

Pacic Texles Limited 15,579,649 5,627,273

15,579,649 5,627,273

Purchase of administrave and other services:

Pacic Texles Limited 525,428 439,572

(iii) Receivables from related pares: 31 March 31 March

2011 2010


Brandix Texles Limited 2,035 Nil

4,807,471 2,651,886

(iv) Payables to related pares:

Brandix Lanka Limited 17,260 4,663

Brandix College of Clothing Technology (Private) Limited 71 Nil

Pacic Texles Limited 10,926,881 1,502,221Brandix Casualware (Private) Limited 68 Nil

Brandix Uknits (Private) Limited 157 Nil

10,944,437 1,506,884

(v) Key Management compensaon:

Salaries and other benets 432,929 470,714

28 Post balance sheet events

No events had occurred since the balance sheet date and the approval of these nancial statements,which would require adjustments to, or disclosure in, these nancial statements.







FINANCIAL STATEMENTS 31 MARCH 2011




CONTENTS

Page

Annual report of the Board 125-127

Statement of the Directors’ responsibility for nancial reporng 128

Independent auditor’s report 129

Income statement 130

Balance sheet 131

Statement of changes in equity 132

Cash ow statement 133

Notes to the nancial statements 134-152




Annual Report of the board of directors for the year ended 31 March 2011

1 The directors present herewith the audited nancial statements of Textured Jersey Lanka (Private) Limited

(“the Company”) for the nine months ended 31 March 2011.

Formaon

2 The Company was incorporated and registered in Sri Lanka on 12 July 2000, under the Companies Act,No. 17 of 1982, as a private limited liability company under the name of Textured Jersey Lanka (Private)

Limited and was re-registered under the Companies Act, No, 07 of 2007 on 19 September 2008.

Nature of the business of the Company

3 The nature of the business of the Company is given in Note 1 to the nancial statements on page 134.

Financial statements

4 The nancial statements of the Company for the year ended 31 March 2011 which include the income

statement, balance sheet, statement of changes in equity, cash ow statement and the notes to the

nancial statements are set out on pages 130 to 152.

Auditor’s report

5 The auditor’s report is set out on page 129.

Changes in accounng policies

6 The accounng policies adopted by the Company have been consistently applied from previous years

except for adopon of Sri Lanka Accounng Standard (LKAS) 12; Income Taxes pursuant to the Urgent

Issues Task Force (UITF) ruling issued on 07 September 2010.

Review of business

7 The state of aairs of the Company as at 31 March 2011 is set out in the balance sheet on page 131.

Property, plant and equipment

8 The movements in property, plant and equipment during the year are set out in Note 13 to the nancial

statements.

Market value of properes

9 The directors are of the opinion that the carrying amount of properes stated in Note 13 to the nancial

statements reects their fair value.

Dividends

10 No dividends have been proposed by the directors of the Company for the year ended 31 March 2011

(Year ended 31 March 2010 - Rs Nil).

Reserves

11 Total reserves and their composion are set out in the statement of changes in equity on page 132 of the

nancial statements.

Substanal shareholdings

12 As per the share register the under noted persons held ordinary share capital of the Company as at 31

March 2011.




No. of shares Holding

(%)

Brandix Lanka Limited 63,889,160 40

Pacic Textured Jersey Holdings Limited 95,833,740 60

159,722,900 100

Directors

13 The Board of directors of the Company as of 31 March 2011 were:

Mr Wing Tak Bill Lam

Mr Mohamed Ashro Omar

Mr Paul Kang Po Tsang

Mr King Man Clement Lam

Mr Mohamed Aslam Omar

Mr Ajith Joseph Johnpillai

Mr Rohan Peiris Goonelleke rered from the Board with eect from 31 August 2010. The Board wishes

to place on record the Company’s sincere appreciaon of the services rendered by Mr Rohan Peiris

Goonelleke.

All the other directors held oce for the whole of the year ended 31 March 2011.

Directors’ interest in contracts and proposed contracts with the Company

14 The directors’ interests in contracts and proposed contracts with the Company, both direct and indirect,

are set out in Note 28 to the nancial statements. Where necessary, the directors have disclosed the

nature of their interests in contracts and proposed contracts.

Remuneraon and other benets of directors

15 The remuneraon and other benets of the directors are given in Note 7 to the nancial statements on

page 141.

Directors’ interests in shares of the Company

16 As at 31 March 2011, none of the directors held shares of the Company.

Amounts payable to the rm holding oce as an auditor

17 The remuneraon payable by the Company to the independent auditors is given in Note 7 to the nancialstatements on page 141.

Auditor’s relaonship or any interest with the Company

18 The directors are sased that, based on wrien representaons made by the independent auditors to

the Board, the auditors did not have any relaonship or any interest with the Company that would impair

their independence.

Corporate governance

19 The business and aairs of the Company are managed and directed with the objecve of balancing the

aainment of corporate objecves with the alignment of corporate behaviour within the legal and good

governance framework of the industry and Sri Lanka, the accountability to shareholders and responsibilityto other stakeholders.




Statutory payments

20 All statutory payments due to the Government of Sri Lanka and on behalf of employees have been made

or accrued for as at the balance sheet date.

Environmental protecon

21 Aer making adequate enquiries from management, the Directors are sased that the Company operates

in a manner that minimises the detrimental eects on the environment and provides products andservices that have a benecial eect on the customers and the communies within which the Company

operates.

Donaons

22 The Company has made donaons amounng to Rs 622,226 during the year ended 31 March 2011 (Year

ended 31 March 2010 - Rs 405,907).

Going concern

23 The nancial statements are prepared on going concern principles. Aer making adequate enquiries

from management, the directors are sased that the Company has adequate resources to connue its

operaons in the foreseeable future.

Post balance sheet events

24 Subsequent to the balance sheet date, the shareholder loans described in Note 20 to the nancial

statements have been seled in full. No other events had occurred since the balance sheet date and

the approval of these nancial statements, which would require adjustments to, or disclosure in, these

nancial statements.

Appointment of auditors

25 A resoluon to re-appoint the auditors, M/s PricewaterhouseCoopers, Chartered Accountants, who have

expressed their willingness to connue, will be proposed at the Annual General Meeng.


COLOMBO DIRECTOR DIRECTOR SECRETARY

DATE





Statement of the Directors’ responsibility for nancial reporng

The responsibility of the Directors in relaon to the nancial statements of the Company, is set out in the following

statement. The responsibility of the Auditors, in relaon to the nancial statements, prepared in accordance

with the provisions of the Companies Act, No. 07 of 2007 [“ the Act”], is set out in the Independent Auditors’

Report on page 129.

The nancial statements comprise the:

o income statement, which present a true and fair view of the results of the Company for the year ended 31

March 2011; and

o balance sheet, which present a true and fair view of the state of aairs of the Company as at the end of

the year ended 31 March 2011, which comply with the requirements of the Act.

The Directors have ensured that, in preparing these nancial statements:

o appropriate accounng policies have been selected and applied in a consistent manner and material

departures, if any, have been disclosed and explained;

o all applicable Accounng Standards issued by the Instute of Chartered Accountants of Sri Lanka, as

relevant, have been followed; and

o judgments and esmates have been made which are reasonable and prudent.

The Directors have also ensured that the Company has adequate resources to connue in operaon to jusfy

applying the going concern basis in preparing these nancial statements.

Further, the Directors have as part of their responsibility ensured that the Company maintains sucient

accounng records to disclose, with reasonable accuracy the nancial posion of the Company, and to ensure

that the nancial statements presented comply with the requirements of the Act.

The Directors have also taken reasonable steps to safeguard the assets of the Company and in this regard to giveproper consideraon to the establishment of appropriate internal control systems with a view to prevenng and

detecng fraud and other irregularies.

The management of the Company meets periodically with the independent statutory auditors to review the

manner in which the auditors are performing their responsibilies, and to discuss auding, internal control and

nancial reporng issues. To ensure complete independence, the independent statutory auditors have full and

free access to the members of the Board to discuss any maer of substance.

The Directors are required to have prepared the nancial statements and to provide the independent auditors

with every opportunity to take whatever steps and undertake whatever inspecons that may be considered to

be appropriate to enable them to give an independent audit opinion.

The Directors are of the view that they have discharged their responsibilies as set out in this statement.

Compliance report

The Directors conrm that to the best of their knowledge, all taxes, dues and levies payable by the Company,

all contribuons, levies and taxes payable on behalf of and in respect of the employees of the Company, and all

other known statutory dues as were due and payable by the Company as at the balance sheet date have been

paid, or where relevant provided for.


COLOMBO SECRETARY




Independent Auditor’s Report

To the members of Textured Jersey Lanka (Private) Limited

Report on the Financial Statements

1 We have audited the accompanying nancial statements of Textured Jersey Lanka (Private) Limited, which

comprise the balance sheet as at 31 March 2011, and the income statement, statement of changes inequity and cash ow statement for the year then ended, and a summary of signicant accounng policies

and other explanatory notes as set out on pages 130 to 152.

Management’s Responsibility for the Financial Statements

2 Management is responsible for the preparaon and fair presentaon of these nancial statements in

accordance with Sri Lanka Accounng Standards. This responsibility includes: designing, implemenng and

maintaining internal control relevant to the preparaon and fair presentaon of nancial statements that

are free from material misstatement, whether due to fraud or error; selecng and applying appropriate

accounng policies; and making accounng esmates that are reasonable in the circumstances.

Scope of Audit and Basis of Opinion

3 Our responsibility is to express an opinion on these nancial statements based on our audit. We conducted

our audit in accordance with Sri Lanka Auding Standards. Those standards require that we plan and

perform the audit to obtain reasonable assurance whether the nancial statements are free from material

misstatement.

An audit includes examining, on a test basis, evidence supporng the amounts and disclosures in the

nancial statements. An audit also includes assessing the accounng principles used and signicant

esmates made by management, as well as evaluang the overall nancial statement presentaon.

We have obtained all the informaon and explanaons which to the best of our knowledge and belief

were necessary for the purposes of our audit. We therefore believe that our audit provides a reasonable

basis for our opinion.

Opinion

4 In our opinion, so far as appears from our examinaon, the Company maintained proper accounng

records for the year ended 31 March 2011 and the nancial statements give a true and fair view of the

Company’s state of aairs as at 31 March 2011 and of its results and cash ows for the year then ended in

accordance with Sri Lanka Accounng Standards.

Report on Other Legal and Regulatory Requirements

5 These nancial statements also comply with the requirements of Secon 151 (2) of the Companies Act,

No. 07 of 2007.

CHARTERED ACCOUNTANTS

COLOMBO





Income statement

(all amounts in Sri Lankan Rupees Thousands unless otherwise specically stated)



2011 2010

Sales 5 9,284,583 8,351,690

Cost of sales (8,200,576) (7,326,665)

Gross prot 1,084,007 1,025,025

Other operang income 6 7,889 7,543

Distribuon expenses (78,665) (83,816)

Administrave expenses (282,407) (322,481)

Operang prot 7 730,824 626,271

Finance costs - net 9 (24,973) (45,909)

Prot before tax 705,851 580,362

Tax 10 (21,119) (2,882)

Net prot 684,732 577,480

Earnings per share - basic (USD) 11 4.29 3.62


Report of the independent auditors on page 129





Balance sheet



2011 2010

ASSETS

Non-current assets

Property, plant and equipment 13 2,473,360 2,976,286

Capital work-in-progress 14 71,527 5,317

Intangible assets 15 50,871 69,881

Receivables and prepayments 17 81,454 88,306

2,677,212 3,139,790

Current assets

Inventories 16 3,215,671 1,301,842Receivables and prepayments 17 1,310,853 945,701

Cash and cash equivalents 18 22,357 64,952

4,548,881 2,312,495

Total assets 7,226,093 5,452,285

EQUITY


Stated capital 25 1,597,229 1,597,229

Exchange equalisaon reserve 26 194,105 314,437

Retained earnings 1,177,916 493,184

2,969,250 2,404,850 LIABILITIES

Non-current liabilies

Borrowings 20 2,301 1,592,832

Deferred tax liabilies 22 43,071 23,384

Dened benet obligaons 21 54,154 58,911

99,526 1,675,127

Current liabilies

Trade and other payables 19 1,897,909 977,737

Borrowings 20 2,259,408 394,571

4,157,317 1,372,308

Total liabilies 4,256,843 3,047,435

Total equity and liabilies 7,226,093 5,452,285

The Board of Directors is responsible for the preparaon

and presentaon of these nancial statements. These

nancial statements were approved and issue by the

Board of Directors on ………………....

I cerfy that these nancial statements have been

prepared in compliance with the requirements of

the Companies Act No, 07 of 2007.

....................................................................... )

) Directors Chief Financial Ocer

....................................................................... )Signed on behalf of the Board on 01 June 2011



Sgd.

Sgd.

Sgd.





Statement of changes in equity


Exchange (Accumulated

Stated equalisaon losses) /

Notes capital reserve retained Total

earnings


- As previously reported 1,597,229 336,149 (63,572) 1,869,806

- Eect of deferred tax provision 22 Nil Nil (20,724) (20,724)

- As restated 1,597,229 336,149 (84,296) 1,849,082


- As previously reported Nil Nil 580,362 580,362


- As restated Nil Nil 577,480 577,480

Eect of movement in foreign exchange rates Nil (21,712) Nil (21,712)

Balance as at 31 March 2010 1,597,229 314,437 493,184 2,404,850

Balance as at 1 April 2010 1,597,229 314,215 516,790 2,428,234

- As previously reported


- Eect of movement in foreign exchange rates 22 Nil 222 (222) Nil- As restated 1,597,229 314,437 493,184 2,404,850

Net prot for the year Nil Nil 684,732 684,732

Eect of movement in foreign exchange rates Nil (120,332) Nil (120,332)

Balance as at 31 March 2011 1,597,229 194,105 1,177,916 2,969,250







Cash ow statement




2011 2010

Cash ows from operang acvies

Cash (used in) / generated from operaons 27 (168,987) 953,653

Interest received 9 1,375 Nil

Interest paid 9 (32,946) (45,641)

Dened benet obligaons paid 21 (14,847) (2,325)

Net cash (used in) / generated from operang acvies (215,405) 905,687

Cash ows from invesng acviesAddions to capital work-in-progress 14 (81,485) (107,758)

Purchase of property, plant and equipment 13 (23,439) (9,239)

Purchase of intangible assets 15 (4,461) Nil

Proceeds from disposal of property, plant and equipment 7,889 35,762

Net cash used in invesng acvies (101,496) (81,235)

Cash ows from nancing acvies

Net movement in borrowings (96,664) (859,742)

Net cash used in nancing acvies (96,664) (859,742)

Decrease in cash and cash equivalents (413,565) (35,290)

Movement in cash and cash equivalents

At start of year 21,988 57,278

Decrease (413,565) (35,290)

At end of year 18 (391,577) 21,988







Notes to the nancial statements

(In the notes all amounts are shown in Sri Lanka Rupees Thousands unless otherwise specically stated)

1 General informaon

Textured Jersey Lanka (Private) Limited carries on the business of manufacturing and selling of We Knit

Fabrics. The Company is a limited liability company incorporated and domiciled in Sri Lanka. The address of

its registered oce is Block D8-D14, C V Gooneratne Seethawaka Internaonal Industrial Park, Avissawella.

These nancial statements have been approved for issue by the Board of Directors on 1 June 2011.

2 Summary of signicant accounng policies

The principal accounng policies applied in the preparaon of these nancial statements are set out

below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparaon

Financial statements are prepared in accordance with Sri Lanka Accounng Standards. The nancial

statements are prepared under the historical cost convenon. Where any item is not covered by Sri

Lanka Accounng Standards (SLASs), Internaonal Financial Reporng Standards (IFRSs) are followed

except for IAS 32 (Financial Instruments : Presentaon), IAS 39 (Financial Instruments : Recognion and

Measurement) and IFRS 7 (Financial Instruments : Disclosures) that have not been adopted in Sri Lanka.

The preparaon of nancial statements in conformity with SLASs & IFRSs requires the use of certain crical

accounng esmates. It also requires management to exercise its judgment in the process of applying the

Company’s accounng policies.

The nancial statements of the Company are prepared in USDs in accordance with and in compliance with

Sri Lanka Accounng Standards and the conversion to Sri Lanka Rupees is performed in accordance with

the recommendaons made in the Sri Lanka Accounng Standard (SLAS) 21; The Eects of Changes in

Foreign Exchange Rates (Revised). The procedures followed are as follows:

(a) Assets and liabilies for each balance sheet presented (including comparaves) are translated at the

closing rate exisng at the date of each balance sheet presented;

(b) Income and expenses for each income statement (including comparaves) are translated at the

exchange rates exisng at the dates of the transacons or a rate that approximates the actual exchange

rates; and

(c) All resulng exchange dierences are recognised directly in equity.

Foreign currency transacons of the Company are recorded at the average exchange rate prevailing in

the month of the transacon. Gains and losses resulng from the selement of such transacons and

from the translaon of monetary assets and liabilies denominated in foreign currencies at the year end

exchange rate, are recognised in the income statement.

2.2 Foreign currency translaon

(a) Funconal and presentaon currency

The items included in the nancial statements are measured using the currency of the primary economic

environment in which the enty operates (‘the funconal currency’). The nancial statements are presentedin “United States Dollar”, which is considered the Company’s funconal and presentaon currency.







2.2 Foreign currency translaon (Contd)

(b) Transacons and balances

Foreign currency transacons are translated into the reporng currency using the exchange rates prevailing

at the dates of the transacons. Foreign exchange gains and losses resulng from the selement of

such transacons and from the translaon at year end exchange rates of monetary assets and liabilies

denominated in foreign currencies are recognised in the income statement.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented

in the income statement within ‘interest income and nance costs’.

2.3 Property, plant and equipment

All property, plant and equipment is stated at historical cost less depreciaon.

(a) Measurement

The historical cost includes all costs directly aributable to bringing an asset to working condion for its

intended use and signicant renovaons.

The subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as

appropriate, only when it is probable that future economic benets associated with the item will ow to

the Company and the cost of the item can be measured reliably. The carrying amount of the replaced parts

are derecognised. All repairs and maintenance are charged to the income statement during the nancial

period in which they are incurred.

Cost of long term capital projects are carried forward in capital work-in-progress unl they are available for

use.

An asset’s carrying amount is wrien down immediately to its recoverable amount if the carrying amount

is greater than its esmated recoverable amount.

The interest costs on borrowings to nance the construcon of property, plant and equipment are

capitalised during the period that is taken to complete and prepare the asset for its intended use.

Capital work in progress represents all amounts paid on work undertaken, and sll in an unnished state

as at the end of the year / period.

(b) Depreciaon

Depreciaon is calculated using the straight line method to allocate the cost of each asset, to their residual

values over their esmated useful lives commencing from the date of acquision, date available for use or

date of commencement of use. On disposal of assets depreciaon is calculated exclusive of the date on

which disposal takes place.

The esmated useful life of property, plant and equipment is as follows:

Leasehold buildings 50 years

Plant and equipment and installaons 10 years

Fixtures and ngs 8 years

Oce equipment 5 years

Motor vehicles 4 years

Computer and communicaon equipment 4 years

Gains and losses on disposal of property, plant and equipment are determined by reference to their carrying

amount and are taken into account in determining operang prot.







2.3 Property, plant and equipment (Contd)

(c) Impairment of property, plant and equipment

The carrying value of property, plant and equipment is reviewed for impairment either annually or when

events or changes in circumstances indicate the carrying value may not be recoverable. If any such

indicaon exists and where the carrying values exceed the esmated recoverable amount the assets are

wrien down to their recoverable amount. Impairment losses are recognised in the income statement.

2.4 Computer soware development cost

Generally, costs associated with developing computer soware programmes are recognised as an expense

as incurred. However, costs that are clearly associated with an idenable and unique product which

will be controlled by the Company and has probable benets exceeding the cost beyond one year, are

recognised as an intangible asset. Associated costs include consultants costs of the development team and

an appropriate poron of relevant overheads.

Expenditure which enhances and extends the benets of computer soware programmes beyond their

original specicaons and lives is recognised as a capital improvement and added to the original cost of

the soware. Computer soware development costs recognised as intangible assets are amorsed using

the straight line method over their useful life, not exceeding a period of 4 years.

Costs associated with the maintenance of exisng computer soware programmes is expensed as incurred,

to the income statement.

2.5 Impairment of non-nancial assets

Assets that have an indenite useful life, are not subject to amorsaon and are tested annually forimpairment. Assets that are subject to amorsaon are reviewed for impairment whenever events or

changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss

is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The

recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes

of assessing impairment, assets are grouped at the lowest levels for which there are separately idenable

cash ows (cash-generang units). Non-nancial assets that suered an impairment are reviewed for

possible reversal of the impairment at each reporng date.

2.6 Accounng for leases by the lessee

Leases of property, plant and equipment where the Company has substanally all the risks and rewards of

ownership are classied as nance leases. Finance leases are capitalised at the lease’s commencement atthe lower of the fair value of the leased property and the present value of the minimum lease payments.

Each lease payment is allocated between the liability and nance charges so as to achieve a constant rate

on the nance balance outstanding. The corresponding rental obligaons, net of nance charges, are

included in other long-term payables. The interest element of the nance cost is charged to the income

statement over the lease period, so as to produce a constant periodic rate of interest on the remaining

balance of the liability for each period. The property, plant and equipment acquired under nance leases

is depreciated over the shorter of the useful life of the asset or the lease term.

Leases of assets under which all the risks and benets of ownership are eecvely retained by the lessor

are classied as operang leases. Payments made under operang leases are charged to the income

statement on a straight line basis over the period of lease.






2.7 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted

average cost (WAC) method. The cost of nished goods and work in progress comprises raw materials,

direct labour, other direct costs and related producon overheads (based on normal operang capacity).It excludes borrowing costs. Net realisable value is the esmated selling price in the ordinary course of

business, less the costs of compleon and selling expenses.

2.8 Trade receivables

Trade receivables are carried at ancipated realisable value. An esmate is made for doubul receivables

based on a review of all outstanding amounts at the year end. Bad debts are wrien o during the year in

which they are idened.

Trade receivables are amounts due from customers for products sold in the ordinary course of business. If

collecon is expected in one year or less (in the normal operang cycle of the business if longer), they are

classied as current assets. If not, they are presented as non current assets.

2.9 Cash and cash equivalents

For the purposes of the cash ow statement, cash and cash equivalents comprise cash in hand, deposits

held at call with banks, net of bank overdras. In the balance sheet, bank overdras are included in

borrowings in current liabilies.

2.10 Stated capital

The ordinary shares are classied as equity.

2.11 Trade payables

Trade payables are obligaons to pay for goods or services that have been acquired in the ordinary course

of business from suppliers. Accounts payables are classied as current liabilies if payment is due within

one year or less (or in the normal operang cycle of the business if longer). If not, they are presented as

non - current liabilies.

2.12 Borrowings

Borrowings are recognised at the values at which borrowings have been obtained net of transacon costs

incurred.

2.13 Provisions

Provisions are recognised when the Company has a present legal or construcve obligaons as a result of past events, it is probable that an oulow of resources embodying economic benets will be required to

sele the obligaon, and a reliable esmate of the amount of the obligaon can be made.

Where there are a number of similar obligaons, the likelihood that an oulow will be required in

selement is determined by considering the class of obligaons as a whole. A provision is recognised even

if the likelihood of an oulow with respect to any one item included in the same class of obligaon may be

small.

The provisions are measured at the present value of expenditures expected to be required to sele the

obligaon.


Typically, a dened benet plan denes an amount of benet that an employee will receive on rerement,

which is usually dependent on one or more factors such as period of service and compensaon.




The liability recognised in the balance sheet in respect of dened benet plans is the present value of

dened benet obligaons at the balance sheet date together with adjustments for unrecognised actuarial

gains or losses and past service costs. The dened benet obligaon is calculated annually by the Company

using the projected unit credit method. The present value of dened benet obligaon is determined bydiscounng the esmated future cash oulows using esmated long term interest rates.

2.15 Dened contribuon plans

All employees of the Company are members of the Employees’ Provident Fund and Employees’ Trust Fund,

to which the Company contributes 12% and 3% respecvely of such employees’ basic or consolidated

wage or salary, cost of living and all other allowances.

The Company has no further payment obligaons once the contribuons have been paid. The contribuons

are recognised as employee benet expenses when they are due.

2.16 Taxaon

The tax expense for the period solely comprise deferred tax.

(a) Income tax

Tax is recognised in the income statement, except to the extent that it relates to items recognised directly

in equity. In this case, the tax is also recognised in equity.

The charge for taxaon is based on the results for the year adjusted for disallowable items and for ming

dierences to the extent that they are unlikely to result in an actual tax liability in the foreseeable future.

Timing dierences arise from the recognion for tax purposes of items of income and expenditure in

dierent accounng periods from those in which they are recognised in the nancial statements.

(b) Deferred taxaon

Deferred income tax is provided in full, using the liability method, on temporary dierences arising

between the tax bases of assets and liabilies and their carrying amounts in the nancial statements.

However, the deferred income tax is not accounted for if it arises from inial recognion of an asset or

liability in a transacon other than a business combinaon that at the me of the transacon aects

neither accounng nor taxable prot or loss.

Deferred income tax is determined using tax rates (and laws) that have been enacted or substanally

enacted by the balance sheet date and are expected to apply when the related deferred income tax assets

is realised or the deferred income tax liability is seled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable prot willbe available against which the temporary dierences can be ulised.

2.17 Revenue recognion

(a) Goods sold and services rendered

Revenue from the sale of goods is recognised in the income statement when the signicant risks and

rewards of ownership have been transferred to the buyer. No revenue is recognised if there are signicant

uncertaines regarding recovery of the consideraon due, associated costs or the possible return of goods.

(b) Interest income

Interest income is recognised on a me-proporon basis.








2.18 Expenditure recognion

(a) Operang expenses

The expenses are recognised on an accrual basis. All expenses incurred in the ordinary course of business

and in maintaining property, plant and equipment in a state of eciency is charged against income in

arriving at the prot for the period.

(b) Net nancing costs

Net nancing costs comprise interest payable on borrowings, interest receivable on funds invested, and

foreign exchange gains and losses that are recognised in the income statement.

All interest and other costs incurred in connecon with borrowings are expensed as incurred as part of net

nancing costs.

2.19 Comparaves

“Bank charges” previously disclosed under nance costs are now shown under administrave expensesand “distribuon expenses” previously disclosed under cost of sales are now shown under distribuon

expenses.

Management believes that the above re-classicaon gives a fairer presentaon.

3 Financial risk management

3.1 Financial risk factors

The Company’s acvies expose it to a variety of nancial risks: market risk (including currency risk, interest

rate risk and price risk), credit risk and liquidity risk. The Company’s overall risk management programme

focuses on the unpredictability of nancial markets and seeks to minimise potenal adverse eects on the

Company’s nancial performance.

3.1.1 Foreign exchange risk

The Company operates internaonally and is exposed to foreign exchange risk arising from various currency

exposures, primarily with respect to the United States Dollar and Sri Lankan Rupee.

Foreign exchange risk arises when future commercial transacons or recognised assets or liabilies are

denominated in a currency that is not the enty’s funconal currency.

3.1.2 Interest rate risk

The Company’s income and operang cash ows are substanally independent of changes in market

interest rates.The Company’s interest rate risk arises from short-term borrowings. The borrowings at variable rates

expose the Company to cash ow interest rate risk whilst borrowings at xed rates exposes the Company

to interest rate risk. The Company analyses its interest rate exposure on a dynamic basis.

3.1.3 Credit risk

Credit risk arises from cash and cash equivalents and deposits with banks and nancial instuons, as

well as credit exposures to customers, including outstanding receivables. The ulisaon of credit limits is

regularly monitored.

3.1.4 Liquidity risk

Prudent liquidity risk management implies maintaining sucient cash and availability of funding through

an adequate amount of commied credit facilies. Due to the dynamic nature of the underlying businesses,

Company treasury maintains exibility in funding by maintaining availability under commied credit

lines.






3 Financial risk management (Contd)

3.2 Capital risk management

The Company’s objecves when managing capital are to safeguard the Company’s ability to connue asa going concern in order to provide returns for shareholders and benets for other stakeholders and to

maintain an opmal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid

to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

4 Crical accounng esmates, assumpons and judgments

“Esmates, assumpons and judgements are connually evaluated and are based on historical experience

and other factors, including expectaons of future events that are believed to be reasonable under the

circumstances. “

The Company makes esmates and assumpons concerning the future. The resulng accounng esmateswill, by denion, seldom equal the related actual results. The esmates and assumpons that have a

signicant risk of causing a material adjustment to the carrying amount of assets and liabilies within the

next nancial year are discussed below:

4.1 Impairment of property plant and equipment

The Company reviews for impairment of property, plant and equipment in accordance with the Accounng

Policy in note 2.3. The recoverable amount of these assets have been determined based on higher of the

assets’ fair value less cost to sell and value in use. These calculaons require the use of esmates and

judgements.

Management believes that any reasonably possible change in the esmated future cash ows of theoperaons on which the recoverable amounts of the cash-generang units is based would not cause the

cash-generang units’ carrying on amount to exceed its recoverable amount.


The Company has both dened benet and dened contribuon plans. A dened contribuon plan is a

pension plan under which the Company pays xed contribuons into a separate enty. The Company has

no longer or construcve obligaons to pay further contribuons if the fund does not hold sucient assets

to pay all employees the benets relang to employees service in the current and prior periods. A dened

benet plan is a pension plan that is not a dened contribuon plan. Typically, dened benet plans dene

an amount of pension benet that an employee will receive on rerement, usually dependent on one or

more factors such as age, years of service and compensaon.

The liability recognised in the balance sheet in respect of dened benet pension plans is the present value

of the dened benet obligaon at the balance sheet date together with adjustments for unrecognised

actuarial gains or losses and past service costs. The dened benet obligaon is calculated once in two

years by independent actuaries using the projected unit credit method. The present value of the dened

benet obligaon is determined by discounng the esmated future cash oulows using interest rates of

high-quality corporate bonds that are denominated in the currency in which the benets will be paid and

that have terms to maturity approximang to the terms of the related pension liability.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumpons are

charged or credited to income over the employees’ expected average remaining working lives.

Past-service costs are recognised immediately in income, unless the changes to the pension plan are

condional on the employees remaining in service for a specied period of me (the vesng period). In this

case, the past-service costs are amorsed on a straight-line basis over the vesng period.






4 Crical accounng esmates, assumpons and judgments (Contd)

4.2 Dened benet obligaons (Contd)

For dened contribuon plans, the Company pays contribuon to publicly administered pension insurance

plans on a mandatory basis. The Company has no further payment obligaons once the contribuons have

been paid. The contribuons are recognised as employee benet expense when they are due.

It is expected that such actuarial valuaons will be carried out once in a year. The principal assumpons

made are given below:

Rate of discount 12% p.a.

Rate of pay increase 7% to 10% p.a.

Rerement age 55 years

5 Sales

Sales are made up as follows: Year ended Year ended

31 March 31 March

2011 2010

Sales

- export 98,587 66,588

- local 9,185,996 8,285,102

9,284,583 8,351,690

Sales shown under local sales are stated under suspended and normal Value Added Tax system. Salesmade through related pares are disclosed in Note 28 to the nancial statements.

6 Other operang income

Other operang income wholly consists of prot on disposal of property, plant and equipment of Rs

7,889,153 (Year ended 31 March 2010 - Rs 7,542,968).

7 Operang prot

The following items have been charged / (credited) in arriving at operang prot::


31 March 31 March2011 2010

Directors’ emoluments 2,065 2,135

Auditors’ remuneraon

- audit 279 288

- non audit 134 138

Depreciaon (Note 13) 413,397 449,330

(Reversal of provision) / provision for

slow moving inventories [Note 16(a)] (137,501) 72,936


Amorsaon of intangible assets - soware development (Note 15) 20,627 13,754Amorsaon of leasehold land [Note 17(a)] 2,942 3,137

Repair and maintenance expenditure 150,655 209,894

Sta costs (Note 8) 508,812 512,229




8 Sta costs


31 March 31 March

2011 2010Salaries, wages and other fringe benets 444,257 456,273

Dened benet obligaons (Note 21) 12,695 6,138

Dened contribuon plans 51,860 49,818

508,812 512,229

Average number of employees employed by the Company

during the year:

Permanent employees 1,196 1,170

9 Finance costs - net

Year ended Year ended31 March 31 March

2011 2010

Interest income (1,375) (14,816)

Net foreign transacon and translaon (gains) / losses (6,598) 15,084

Interest expense

- short term working capital loans 22,824 27,668

- bank overdras 8,562 13,397

- bank borrowings 1,560 4,576

24,973 45,909

10 Tax

Year ended Year ended31 March 31 March

2011 2010

Current tax - Nil

Deferred tax charge (Note 22) 21,119 2,882

21,119 2,882

The tax on the Company’s prot before tax diers from the theorecal amount that would arise using

the basic tax rate applicable to prots of the Company as follows:


31 March 31 March2011 2010


Tax calculated at a tax rate of 12%

(Year ended 31 March 2010 - 12%) 84,702 69,643

Income not subject to tax (82,756) (95,902)

Expenses not deducble for tax purposes 7,426 3,400

Adjustments due to the esmated deferred tax

base in previous years 11,747 25,741

Tax charge 21,119 2,882

The Company was inially exempted from income tax on its prots for a period of 12 years, from the rst

year of commencement of commercial operaons. The commercial operaons commenced in October

2001. Following the addional investment made by the shareholders and increase in xed assets of the

Company to Rs 2.5 billion, a supplementary agreement was entered between the Company and the






Board of Investment of Sri Lanka extending the exisng tax exempon period from 12 to 15 years on 31

January 2007. Aer the expiraon of the tax exempon period, the prots of the enterprise for any year

of assessment shall be charged at the rate of 12% for a period of 8 years.

In view of the above, the Company is not liable to income tax for the year of assessment 2010/2011.

The tax losses available for carry forward as at 31 March 2011 amounng to Rs 50,349,482 (as at 31 March

2010 - Rs 51,164,746) wholly consist of tax losses incurred up to year of assessment 2000 / 2001 before

commencement of tax holiday.

Further informaon about deferred tax is provided in Note 22.

11 Earnings per share

Basic earnings per share is calculated by dividing the net prot aributable to equity holders of the

Company by the weighted average number of ordinary shares in issue during the period / year:


31 March 31 March

2011 2010

Net prot aributable to equity holders of the Company (Rs) 684,730,810 577,479,208

Weighted average number of ordinary shares in issue (Note 25) 159,722,900 159,722,900

Earnings per share - Rs 4.29 3.62

12 Dividends

No dividend was declared and paid for the year ended 31 March 2011 (Year ended 31 March 2010 - Rs

Nil).






14 Capital work-in-progress


31 March 31 March

2011 2010

Balance at beginning of year 5,317 12,883

Expenses incurred on property, plant and equipment 81,485 107,758

Transferred to property plant and equipment (Note 13) (13,812) (58,233)

Transferred to intangible assets (Note15) - (57,004)

Eect of movement in foreign exchange rates (1,463) (87)


15 Intangible assets

This intangible assets wholly consists of expenditure incurred on soware development by the Company.


31 March 31 March

2011 2010


Amorsaon charge (Note 7) (20,627) (13,754)

Transferred from capital work-in-progress (Note 14) - 57,004

Addions 4,461 Nil



16 Inventories

31 March 31 March

2011 2010

Raw materials 1,502,119 503,984

Work-in-progress 979,242 483,171

Finished goods 331,263 119,108

Engineering spares, needles and sinkers 200,592 139,419

Euent chemicals, fuel and consumables 19,430 15,780

Goods in transit 183,025 40,380

3,215,671 1,301,842

(a) Inventories are stated aer provision for slow moving and non moving inventories and the total

movement on the provision is as follows:


31 March 31 March

2011 2010



moving inventories (Note 7) (137,501) 72,936

Eect of movement in foreign exchange rates (6,048) (1,593)


(b) Bank overdras are secured over inventories.








17 Receivables and prepayments

31 March 31 March

2011 2010

Non - current

Prepayments on leasehold land [See Note (a) below] 81,454 88,306

Current

Trade receivables 681,192 574,256

Trade receivables from related companies [See Note 27(iii)] 526,851 304,277

Other receivables [See Note (c) below] 87,346 59,880

Prepayments 15,464 7,288

1,310,853 945,701

(a) The non-current poron of prepayments solely consists of the operang lease paid in advance for the

lands occupied by the Company. The Company amorses the leasehold lands over the lease period, on a

straight line basis. Current poron of prepayments on leasehold land is included in prepayments under

receivables and prepayments - current. Reconciliaon of the prepaid operang lease is as follows:


31 March 31 March

2011 2010

At beginning of year 97,319 101,454

Amorsaon (2,942) (3,137)



Prepaid operang leases can be analysed as follows:

31 March 31 March

2011 2010

Current (Not later than one year) 8,609 9,013

Non-current (Later than one year) 81,454 88,306

90,063 97,319

(b) Receivables and prepayments are stated aer provision for bad debts and the movement on theprovision is as follows:


31 March 31 March

2011 2010


Reversal of provision for bad and doubul debtors (1,121) (2,388)

Eect of movement in foreign exchange rates (103) (38)


(c) Other receivables mainly consist of VAT receivables of Rs 63,632,228 (as at 31 March 2010 -

Rs 39,310,498).




18 Cash and cash equivalents

31 March 31 March

2011 2010

Short term bank deposits Nil 30,378Cash at bank and in hand 22,357 34,574

22,357 64,952

The weighted average eecve interest rate on short term deposits was 2.75% (Year ended 31 March 2010

- 3.5%).

For the purpose of the cash ow statement, the period / year end cash and cash equivalents comprise

the following:

31 March 31 March

2011 2010

Cash and bank balances 22,357 64,952Bank overdras (Note 20) (413,934) (42,964)

(391,577) 21,988

19 Trade and other payables

31 March 31 March

2011 2010

Trade payables 513,594 599,875

Amounts due to related companies [Note 27(iv)] 1,199,401 172,900

Accrued expenses [See Note (a) below] 113,285 124,053

Other payables 71,629 80,909

1,897,909 977,737

(a) Accrued expenses mainly consists of electricity payable of Rs 44,291,894 (As at 31 March 2010 - Rs

45,464,119), markeng oce expenses of Rs 15,663,699 (As at 31 March 2010 - Rs 20,767,137) and import

clearing and wharf charges of Rs 6,022,409 (As at 31 March 2010 - Rs 6,897,595).

20 Borrowings

31 March 31 March

2011 2010

Current

Bank overdras [see note (a) below] 413,934 42,964

Import loans [see note (b) below] 1,835,350 340,496


2,259,408 394,571

Non-current

Shareholder loans

Brandix Lanka Limited Nil 733,579

Pacic Texles Limited Nil 846,710

Nil 1,580,289

Bank borrowings


2,301 1,592,832

2,261,709 1,987,403








(a) The bank overdras are secured over inventories.

(b) Import loan facilies are secured over buildings and immovable plant and machinery.

(c) Bank borrowings are secured on dye vessels and automated dye and chemical dispenser.

(d) Shareholders loans are unsecured and interest free. Shareholder loans have been seled in full

subsequent to the balance sheet date (Note 29).

(e) The interest rate exposure of the borrowings of the Company are as follows:

31 March 31 March

2011 2010

Total borrowings:

- at xed rates 12,425 23,654

- at oang rates 2,249,284 383,460- interest free Nil 1,580,289

2,261,709 1,987,403

Weighted average eecve interest rates:

- US Dollar borrowings LIBOR + 3.75 % LIBOR + 3.75 %

- Sri Lanka Rupee borrowings 13.0% 22.0%

- Sri Lanka Rupee borrowings - bank loan 8.5% 8.5%

- Bank overdras LIBOR + 3.75 % LIBOR + 4.5 %

21 Dened benet obligaons

The movement in the dened benet obligaons during the period / year is as follows:


31 March 31 March

2011 2010



Interest cost 6,877 8,154

Actuarial gains (3,508) (11,748)

12,695 6,138Benets paid (14,847) (2,325)

Exchange translaon loss (2,605) (244)

At the end of the year 54,154 58,911

The amounts recognised in the income statement are as follows:


31 March 31 March

2011 2010


Interest cost 6,877 8,154Actuarial gains (3,508) (11,748)

12,695 6,138






The principal actuarial assumpons used in the calculaon were as follows:


31 March 31 March2011 2010

Discount rate 12.0% p.a 14.8% p.a

Future salary increases - non execuve sta 10% p.a 10% p.a


Sta turnover factor - non execuve sta 20% p.a 17% p.a


The provision for dened benet obligaons is not externally funded.

22 Deferred tax liabilies

Deferred income taxes are calculated on all temporary dierences under the liability method as per LKAS12; Income Taxes and pursuant to UITF ruling issued on 07 September 2010. Deferred tax on temporary

dierences within the tax holiday period had been measured at the tax rate that is expected to apply

aer the tax holiday period and on the basis that liability arises on the expiraon of the tax exempt

period. Temporary dierences at the balance sheet date were calculated using a tax rate of 12% that

would be applicable on export prot on expiry of the tax exempon period. The movement on the

deferred income tax account is as follows:


31 March 31 March

2011 2010

At the beginning of the year- as previously reported Nil Nil

Prior year adjustments 23,384 20,724

- as restated 23,384 20,724

Income statement charge (Note 10) 21,119 2,882



22 Deferred tax liabilies (Contd)

Deferred income tax assets and liabilies are oset when there is a legally enforceable right to oset

current tax assets against current tax liabilies and when the deferred income taxes relate to the samescal authority. The oset amounts are as follows.

31 March 31 March

2011 2010

Deferred tax assets :

- Deferred tax assets to be recovered aer more than 12 months (18,242) (36,361)

- Deferred tax assets to be recovered within 12 months Nil Nil

(18,242) (36,361)

Deferred tax liabilies :

- Deferred tax liabilies to be recovered aer more than 12 months 61,313 59,745

- Deferred tax liabilies to be recovered within 12 months Nil Nil61,313 59,745

Deferred tax liabilies (net) 43,071 23,384






The movement in deferred income tax assets and liabilies during the year, without taking into consideraon

the oseng of balances within the same tax jurisdicon, is as follows:

Acceleratedtax

Deferred tax liabilies depreciaon Total

At 1 April 2009 47,769 47,769


Eect of movement in foreign exchange rates (548) (548)

At 31 March 2010 59,745 59,745


Eect of movement in foreign exchange rates (1,834) (1,834)

At 31 March 2011 59,742 59,742

Dened Obsolete

benet stock Bad debts Tax

Deferred tax assets obligaons provisions provisions losses Total

At 1 April 2009 (6,640) (14,261) Nil (6,144) (27,045)

Credited to income

statement (497) (8,753) (332) (60) (9,642)

foreign exchange rates 68 192 2 64 326

At 31 March 2010 (7,069) (22,822) (330) (6,140) (36,361)

Charged to incomestatement 851 6,443 136 (166) 7,264

foreign exchange rates 201 596 8 186 991

At 31 March 2011 (6,017) (15,783) (186) (6,120) (28,106)

23 Conngencies

There were no material conngent liabilies outstanding as at the balance sheet date.

24 Commitments

Operang lease commitments

The Company obtained the land on a 50 year lease for which the Company has a commitment to pay an

annual fee of USD 1,150 per acre, on 18.18 acres to the Board of Investment as lease rent. Further, the

Company obtained another block of land on a 30 year lease during the nancial year ended 31 December

2006 in order to construct residenal facilies for the employees for which the Company has an addional

commitment to pay an annual fee of USD 1,000 per acre, on 3.063 acres

Further, the Company obtained another 2 blocks of land on a 30 year lease on 23 March 2007 in order to

facilitate the expansion of producon capacity, for which the Company is commied to pay an annual fee

of US$ 3,850 per acre as lease rent

Capital commitments

There were no material capital commitments outstanding as at the balance sheet date.






25 Stated capital No. of Amount

Shares (RS)

As at 31 March 2010 159,722,900 1,597,229,000At 31 March 2011 159,722,900 1,597,229,000

26 Exchange equalisaon reserve

The exchange equalisaon reserve at the balance sheet date represents the all exchange dierences

resulng from the translaon of assets, liabilies, income, expense and equity items as explained in Note

2.1 to the accounng polices.

27 Cash (used in) / generated from operaons

Reconciliaon of prot before tax to cash (used in) / generated from operaons:


31 March 31 March

2011 2010


Adjustments for:

Depreciaon (Note 13) 413,397 449,331

Amorsaon of intangible assets (Note 15) 20,627 13,754

Amorsaon of leasehold lands (Note 17) 2,942 3,137

(Reversal of provision) / provision for slow moving inventories [Note 16(a)] (137,501) 72,936


Interest income (Note 9) (1,375) NilInterest expenses (Note 9) 32,946 45,641

Prot on disposal of property, plant and equipment (Note 6) (7,889) (7,543)

Exchange translaon loss (Note 21) 6,718 11,264

Changes in working capital:

- Inventories (1,776,328) (55,255)

- Trade and other receivables (360,121) (50,394)

- Trade and other payables 920,172 (113,330)

Provision for dened benet obligaons (Note 21) 12,695 6,138

Cash generated from operaons (168,987) 953,653

28 Directors’ interest in contracts with the Company and related party transacons

Mr Wing Tak Bill Lam, Mr Paul Kang Po Tsang and Mr King Man Clement Lam, directors of the Company

are also directors of Pacic Texle Limited. Mr King Man Clement Lam is also a director of Pacic Overseas

Texles Macao Commercial Oshore Limited. Mr Mohamed Ashro Omar, Mr Mohamed Aslam Omar

and Mr Ajith Joseph Johnpillai , directors of the Company are also directors of Brandix Lanka Limited and

Brandix Apparel Limited, Brandix Texles Limited and Brandix College of Clothing (Private) Limited.

The following transacons were carried out with related pares:

(i) Sale of goods and services: Year ended Year ended

31 March 31 March

Sale of goods: 2011 2010







(ii) Purchase of goods and services:


31 March 31 March Purchase of raw materials: 2011 2010

Pacic Texles Limited 1,738,845 649,275

1,738,845 649,275

Purchase of administrave and other services:

Pacic Texles Limited 58,643 50,718

(iii) Receivables from related pares: 31 March 31 March2011 2010

Brandix Apparel Limited 526,628 304,277

Brandix Texles Limited 223 Nil

526,851 304,277

(iv) Payables to related pares:

Brandix Lanka Limited 1,892 535

Brandix College of Clothing Technology (Private) Limited 8 Nil

Pacic Texles Limited 1,197,477 172,365

Brandix Casualware (Private) Limited 7,452 Nil

Brandix Uknits (Private) Limited 17,206 Nil

1,224,035 172,900

(v) Key Management compensaon:

Salaries and other benets 48,319,206 54,310,981

29 Post balance sheet events

No events had occurred since the balance sheet date and the approval of these nancial statements,

which would require adjustments to, or disclosure in, these nancial statements.




Disclosure of informaon pertaining to parent and ulmate parent of the Company

There was no parent subsidiary relaonship between Textured Jersey Lanka Limited and its shareholders

as at 31 March 2011. However, the said details will be provided in future nancial statements.

Segment informaon for business segments or geographical segments

According to the Sri Lanka Accounng Standards (SLAS) 28, a business segment is a group of assets and

operaons engaged in providing products or services that are subject to risks and returns that are dierentfrom those of other business segments. A geographical segment is engaged in providing products or

services within a parcular economic environment that are subject to risks and return that are dierent

from those of segments operang in other economic environments.

The Company manufactures we knit fabrics exclusively to garment manufacturers. Indirect sales of the

Company which comprise more than 99% of the sales are made locally. Therefore, the total revenue of

the Company is reported as one business segment since it falls under the business unit of manufacturing

and selling of we knit fabrics.

However, the said details will be provided in future nancial statements.

Subdivision of shares

The Company sub-divided each ve exisng Ordinary Shares into 18 Ordinary Shares on 25 March 2011.

This sub division has not been reected in the Audited Financial Statements for the year ended 31 March

2011.

However, the said details will be incorporated in future nancial statements where necessary.




ANNEXURE A – INDEX ON TABLES ILLUSTRATED IN THE PROSPECTUS

List of Tables

TABLE 4-1: WORLD’S LARGEST COTTON PRODUCERS IN METRIC TONS 27

TABLE 4-2: WORLD’S TOP FIVE TEXTILE IMPORTERS AS A % SHARE IN WORLD TEXTILE IMPORTS 29

TABLE 4-3: WORLD’S TOP FIVE CLOTHING IMPORTERS AS A % SHARE IN WORLD CLOTHING IMPORTS 29

TABLE 4-4: COTTON APPAREL EXPORTS TO THE UNITED STATES BY COUNTRY 30

TABLE 4-5: LABOUR COST (USD/HOUR) 31

TABLE 5-1: CONTRIBUTION OF THE TEXTILE & APPAREL INDUSTRY TO EXPORT EARNINGS 32

TABLE 5-3: COUNTRY CLASSIFICATION OF GARMENT EXPORTS 33

TABLE 5-4: TOP 15 COUNTRIES OF U.S. TEXTILE IMPORTS 35

TABLE 5-5: LABOUR COST (USD/HOUR) 38

TABLE 5-6: INDICATORS ON EASE OF DOING BUSINESS IN SOUTH ASIA 39

TABLE 6-1: SELECTED FINANCIAL DATA FOR PACIFIC TEXTILES HOLDINGS LIMITED 42

TABLE 6-2: TEN LARGEST SHAREHOLDERS OF PACIFIC TEXTILES HOLDINGS LIMITED 42

TABLE 6-3: BOARD OF DIRECTORS OF PACIFIC TEXTILES HOLDINGS LIMITED 43

TABLE 6-4: BOARD OF DIRECTORS OF PACIFIC TEXTURED JERSEY HOLDINGS LIMITED 43

TABLE 6-5: BOARD OF DIRECTORS OF BRANDIX LANKA LIMITED 44

TABLE 6-6: TYPES OF FABRIC PRODUCED BY TJL 44

TABLE 6-7: ANNUAL PRODUCTION AND RELATED INFORMATION FOR TJL 47

TABLE 6-8: YARN COSTS FOR TJL 47

TABLE 6-9: ELECTRICITY COSTS FOR TJL 48

TABLE 8-1: DETAILS OF TEXTURED JERSEY LANKA LIMITED BOARD OF DIRECTORS 57

TABLE 8-2: OTHER DIRECTORSHIPS HELD BY THE BOARD 59TABLE 8-3: HUMAN RESOURCES 64

TABLE 9-1: STATED CAPITAL OF TEXTURED JERSEY LANKA LIMITED 65

TABLE 9-2: TEN LARGEST SHAREHOLDERS 66

TABLE 9-3: POST IPO SHAREHOLDING STRUCTURE 66

TABLE 9-4: RATIO ANALYSIS – YEAR ENDED 31ST MARCH 68

TABLE 10-1: TEXTURED JERSEY LANKA LIMITED – SUMMARIZED INCOME STATEMENTS 69

TABLE 10-2: TEXTURED JERSEY LANKA LIMITED – SUMMARIZED BALANCE SHEET 69




ANNEXURE B – INDEX ON CHARTS AND FIGURES ILLUSTRATED IN THE PROSPECTUS

List of Charts

CHART 4-1: COTTON PRODUCTION IN CHINA – 1970/71-2007/08 28

CHART 4-2: LEADING PRODUCERS OF COTTON YARN AS A % OF GLOBAL PRODUCTION

CHART 4-3: WORLD’S LARGEST COTTON PRODUCERS 29

CHART 4-4: EXPORT OF KNITTED APPAREL BY KEY COMPETING COUNTRIES 30

CHART 4-5: GLOBAL APPAREL RETAIL INDUSTRY VALUES 31

CHART 5-1: MAJOR SOURCES OF FOREIGN EXCHANGE EARNINGS 32

CHART 5-2: YEAR WISE BEAK UP OF SRI LANKA’S TEXTILE INDUSTRY BY PRODUCT 33

CHART 5-3: TOTAL TEXTILE & CLOTHING IMPORTS OF EU 34

CHART 5-4: TOTAL TEXTILE & CLOTHING IMPORTS OF UK 34

CHART 5-5: TOTAL TEXTILE & CLOTHING IMPORTS OF US 34

CHART 5-6: ANNUAL GROWTH OF SRI LANKA TEXTILE & APPAREL EXPORTS – 2008 & 2009 35

CHART 5-7: VALUE WISE ANNUAL CHANGE IN TEXTILE &CLOTHING IMPORTS TO US BY KEY COMPETING COUNTRIES 36

CHART 5-8: VALUE WISE ANNUAL CHANGE IN GARMENT

IMPORTS TO UK BY KEY COMPETING COUNTRIES 36

CHART 5-9: TEXTILE EXPORTS OF SRI LANKA – KNITTED & WOVEN 36

CHART 5-10: COMPOSITION OF APPAREL EXPORTS (2002 VERSUS 2010) 36

CHART 5-11: TEXTILE & CLOTHING IMPORTS OF SRI LANKA 37

CHART 5-13: POWER COSTS IN KEY COMPETING COUNTRIES IN USD/KWH 38

CHART 5-14: PRIME LENDING RATES IN KEY COMPETING COUNTRIES 38

CHART 5-15: CORPORATE TAX RATES IN KEY COMPETING COUNTRIES 39

CHART 5-16: SRI LANKA TEXTILE & CLOTHING EXPORTS FROM JUN 2009-NOV 2010 40

CHART 7-1: MONTHLY GLOBAL COTTON PRICE (2005-2010) 53

CHART 7-2: AVERAGE TARIFF AND COST OF ELECTRICITY IN SRI LANKA (2005-2009) 54

CHART 7-3: MOVEMENT OF LKR AGAINST USD (2006 – OCT. 2010) 55

CHART 10-1: REVENUE MOVEMENT FOR TJL 69

CHART 10-2: GROSS PROFIT AND OPERATING PROFIT MOVEMENT FOR TJL 70

CHART 10-3: NET PROFIT MOVEMENT FOR TJL 70

List of FiguresFIGURE 4-1: TEXTILE INDUSTRY PRODUCTION CHAIN 26

FIGURE 5-12: MAJOR COST DRIVERS IN THE SRI LANKA TEXTILE & CLOTHING INDUSTRY 37

FIGURE 6-1: GROUP STRUCTURE 41

FIGURE 6-2: PRODUCTION PROCESS 46




ANNEXURE C – COLLECTION POINTS

Copies of the Applicaon Form and/or the Prospectus can be obtained free of charge from the following collecon

points.

Name Address Tel. & Fax No. E-mail Prospectus Applicaon

Available Form

Available

Members & Trading Members of the CSE

Acuity Stockbrokers Level 6, Acuity House, Tel: 011 220 6206 [email protected] ✓ ✓

(Private) Limited 53, Dharmapala Mawatha, Fax: 011 220 6298/9 Colombo 03 Kandy Branch Tel: 081 220 5609, ✓ ✓

081 220 3623

Arrenga Capital Level 23, East Tower, Tel: 011 7277000, [email protected] ✓ ✓

(Private) Limited World Trade Centre, Fax: 011 7277099 Colombo 01

Asha Phillips Securies Limited Level 4, “Millennium House”, Tel: 011 242 9100 ✓ ✓

46/58, Navam Mawatha, Fax: 011 242 9199 [email protected] Colombo 02

Matara Branch Tel: 041 222 3240, 041 222 3940 ✓

Kandy Branch Tel: 081 447 4118, 081 220 4750 ✓

Kurunegala Branch Tel: 037 469 1844 ✓

Negombo Branch Tel: 031 222 7474 ✓

Jana Branch Tel: 021 222 1614 ✓

Asia Securies (Private) Limited Level 21, West Tower, Tel: 011 242 3905, [email protected] ✓ ✓

World Trade Centre, Echelon Square, 011 532 0000 Colombo 01 Fax: 011 233 6018

Assetline Securies 282, Kaduwela Road, Tel: 011 470 0111, 011 230 7366 ✓ ✓

(Private) Limited Baaramulla Fax: 011 470 0112 [email protected] Matara Branch Tel: 041 439 0766-7 ✓Kandy Branch Tel: 081 448 1638/9, 081 447 4233 ✓

Kurunegala Branch Tel: 037 469 0384, 037 222 2808

Bartleet Mallory Stockbrokers Level “G”, “Bartleet House” Tel: 011 522 0200 ✓ ✓

(Private) Limited 65, Braybrooke Place, Fax: 011 243 4985 [email protected] Colombo 02 Kandy Branch Tel: 081 562 2779, 081 562 2781 ✓

Matara Branch Tel: 041 541 0005-6, 041 223 2985 ✓

Negombo Branch Tel: 031 567 7838, 031 222 1550 ✓

Jana Branch Tel: 021 222 1800 ✓

Capital Alliance Securies Level 5, “Millennium House”, Tel: 011 231 7777 ✓ ✓

(Private) Limited 46/58, Navam Mawatha, Fax: 01 231 7788 Colombo 02 Matara Branch Tel: 041 439 0610, 041 222 0085 ✓


Kurunegala Branch Tel: 037 222 2034-5 ✓

Capital TRUST Securies 42, Sir Mohamed Macan Markar Tel: 011 533 5225 [email protected] ✓ ✓

(Private) Limited Mawatha, Colombo 03 Fax: 011 536 5725

Kandy Branch Tel: 081 562 6839 ✓

Kurunegala Branch Tel: 037 567 1403, 037 567 7939 ✓

Matara Branch Tel: 041 562 3200, 041 562 3202 ✓

Negombo Branch Tel: 031 567 5291-4 ✓

Jana Branch Tel: 021 567 7001-2 ✓

Ceylinco StockbrokerS Ceylino House, Level 9, Tel: 011 471 4300, 011 471 4388, [email protected] ✓ ✓

s(Private) Limited 69, Janadhipathi Mawatha, 011 471 4389, 077 789 1871,Colombo 01 077 789 6064 Fax: 011 238 7228

Kurunegala Branch Tel: 037 222 0297, 037 223 4633 ✓




Claridge Stockbrokers 10, Gnanartha Pradeepa Mawatha, Tel: 011 269 7974 [email protected] ✓ ✓

(Private) Limited Colombo 08 Fax: 011 267 7576

CT Smith Stockbrokers 4-14, Majesc City, Tel: 011 255 2290-4 [email protected] ✓ ✓

(Private) Limited 10, Staon Road, Fax: 011 255 2289 Colombo 04

D N H Financial (Private) Level 16, West Tower, Tel: 011 573 2222 [email protected] ✓ ✓

Limited World Trade Center, Fax: 011 573 6264

Colombo 01 Negombo Branch Tel: 031 5676451 ✓

First Guardian Equies 32nd Floor, East Tower, Tel: 011 588 4400 [email protected] ✓ ✓

(Private) Limited World Trade Centre, Fax: 011 588 4401 Echelon Square, Colombo 01

Heraymila Securies Limited Level 8, South Wing, Tel: 011 235 9100 [email protected] ✓ ✓

“Millennium House”, Fax: 011 230 5522 46/58, Navam Mawatha, Colombo 02

IIFL Securies Ceylon 27th Floor, East Tower, Tel: 011 233 3000 [email protected] ✓ ✓

(Private) Limited World Trade Center Fax: 011 233 3383 Colombo 01

J B Securies (Private) Ltd. 150, St. Joseph Street Tel: 011 249 0900, [email protected] ✓ ✓

Colombo 14 077 249 0900, 077 249 0901 Fax: 011 243 0070, 011 244 6085,

011 244 7875

John Keells Stockbrokers 130, Glennie Street, Tel: 011 230 6250, 011 234 2066-7, [email protected] ✓ ✓

(Private) Limited Colombo 02 011 244 6694-5, 011 233 8066-7,

011 243 9047-8, 011 471 0721-4 Fax: 011 234 2068, 011 232 6863

Lanka Securies (Private) 228/2, Galle Road, Tel: 011 470 6757, 011 255 4942 [email protected] ✓ ✓

Limited Colombo 04 Fax: 011 470 6767

Kandy Branch Tel: 081 493 9206 ✓

Kurunegala Branch Tel: 037 493 4067 ✓


Jana Branch Tel: 021 459 0460, 021 492 5148 ✓

NDB Stockbrokers (Private) 5th Floor, NDB Building Tel: 011 231 4170-8 [email protected] ✓ ✓

Limited 40, Navam Mawatha Fax: 011 231 4180 Colombo 02

New World Securies 2nd Floor, 45/2, Braybrooke Street, Tel: 011 235 8700/20 [email protected] ✓ ✓


Richard Pieris Securies 69, Hyde Park Corner, Tel: 077 7448900 [email protected] ✓ ✓


S C Securies (Private) Limited 2nd Floor, 55, D.R. Wijewardena Tel: 011 471 1000 [email protected] ✓ ✓

Mawatha, Colombo 10 Fax: 011 239 4405 Matara Branch Tel: 041 2220090 ✓

Kandy Branch Tel: 081 4474299 ✓

SKM Lanka Holdings 377/3, Galle Road, Tel: 011 237 2413-4 [email protected] ✓ ✓

(Private) Limited Colombo 03 Fax: 011 237 2416 Jana Branch Tel: 021 222 1596

Somerville Stockbrokers 137, Vauxhall Street, Tel: 011 232 9201-5, 011 2332827, [email protected] ✓ ✓

(Private) Limited Colombo 02 011 2338292-3

Fax: 011 233 8291

SMB Securies 47, Dharmapala Mawatha, Tel: 011 553 9593 [email protected] ✓ ✓

(Private) Limited Colombo 03 Fax: 011 233 9292 Jana Branch Tel: 071 8736499

Taprobane Securies 2nd Floor, 10, Gothami Road, Tel: 011 532 8200 [email protected], ✓ ✓

(Private) Limited Colombo 08 Fax: 011 532 8277 [email protected]

TKS Securies (Private) Limited 19-01, East Tower, Tel: 011 7857799 [email protected] ✓ ✓

World Trade Center, Colombo 01 Fax: 011 7857857

Name Address Tel. & Fax No. E-mail Prospectus Applicaon

Available Form

Available




Haon Naonal Bank Branches

The following web link, hp://lankaclear.com/products_and_services/sl_interbank_payment_system_overview.php could also be accessed to locate bank and branch codes.

Branch Name Branch Address Telephone E-mail Prospectus Applicaon

Available Form

Available

Aluthgama No. 303 Gall Road, Aluthgama 034-227 1739, 034-227 1742 [email protected] ✓ ✓

Aluthkade 31, 33, 35 Quarry Road, Colombo 12 011 244 5042 ✓ ✓Ambalangoda No. 94/1, New Road, Ambalangoda 091-22 58748, 091-225 8749 [email protected] ✓ ✓

Ambalantota No. 73, Main Street, Ambalantota 047-222 3169 [email protected] ✓ ✓

Ampara Siyarata Building, D.S.Senanayake Steet, Ampara 063-222 2634, 063-222 2635 [email protected] ✓ ✓

Anuradhapura No.30, Maithripala Senanayake Mw, Anuradhapura 025-222 2474, 025-474 3743, ✓ ✓

025-581 0002 [email protected]

Avissawella No.72, Yayantota Road Avissawella 036-223 0227 [email protected] ✓ ✓

Badulla No. 15, 15 1/1, Udayarajah Mawatha, Badulla 055-222 2991, 055-222 2051, ✓ ✓


Balangoda No. 70 A/1, Barnes Ratwaa Mw, Balangoda 045-228 7353 [email protected] ✓ ✓

Bambalapiya No.285, Galle Road, Colombo 4. 011-250 1698, 011-250 1785 [email protected] ✓ ✓

Bandarawela No. 70, Dharmavijaya Mawatha, Bandarawela 057-223 0584, 057-223 0809, ✓ ✓

057-474 3700, 057-474 3743 [email protected]

Bacaloa No.5, Central Road, Bacaloa 065-222 2813 [email protected] ✓ ✓

Biyagama Biyagama Export Processing Zone, ✓ ✓

Administrave-Complex, Biyagama 011-246 5340 [email protected]

Boralesgamuwa No.24, Maharagama Road, Boralesgamuwa 011-251 6533, 011-251 6534 [email protected] ✓ ✓

Borella No.53/1, D S Senanayake Mawatha, Borella, Colombo 8. 011-269 6929, 011-268 4834, ✓ ✓

011-267 2016, 011-461 4934. [email protected]

Chilaw No. 28A, Kurunegala Road, Chilaw 032-222 3271, 032-222 3911 [email protected] ✓ ✓

Cinnamon Gardens No. 251, Dharmapala Mawatha, Colombo 07 011-268 1718, 011-268 1721, ✓ ✓

011-268 6537, 011-268 9176,


City Oce No. 16, Janadhipathi Mawatha Colombo 1 011-242 1466, 011-242 1467, ✓ ✓

011-242 1469, 011-232 8769,

011-238 6374, 011-238 6375,

011-238 6376, 011-556 2562 [email protected]

Dambulla No. 700/B, Anuradhapura Road, Dambulla 066-228 4819, 066-228 5249 [email protected] ✓ ✓

Dankotuwa No. 114, Pannala Road, Dankotuwa 031-225 8797 [email protected] ✓ ✓

Dehiwela No:196, Galle Road Dehiwela 011-272 3362, 011-272 3374 [email protected] ✓ ✓

Dematagoda No.284, Baseline Road Colombo 09 011-2678 582/3, 011-474 3715 [email protected] ✓ ✓

Elpiya No. 18, Main Street, Elpiya 091-229 1832 [email protected] ✓ ✓

Embilipiya Sarathchandra Building Main Street, Embilipiya 047-223 0300, 047-226 1444, ✓ ✓


Galle No. 3, Wackwella Road, Galle 091-223 2248, 091-223 4792, ✓ ✓


Gampaha No.3A, Mangala Road Gampaha 033-222 2520, 033-467 0189 [email protected] ✓ ✓

Gampola No. 12, Kandy Road, Gampola 081-474 3700, 081-235 2864, ✓ ✓

081-235 1974, 081-574 0005 [email protected]

Grandpass No.182, St Joseph’s Street Colombo 14 011-233 2723, 011-233 0514, ✓ ✓


Greenpath No.38, Ananda Kumaraswamy, Mw Green Path, Colombo 03 011-538 2382 [email protected] ✓ ✓

Hambantota No. 47, Wilmot Street, Hambantota 047-222 0505, 047-437 8639 [email protected] ✓ ✓

Haon No. 78, Dimbulla Road, Haon 051-222 2554, 051-222 3089 [email protected] ✓ ✓

Head Oce Branch No.479, T B Jayah Mawatha Colombo 10 011-266 0160, 011-266 0660 [email protected] ✓ ✓

Hendala No 28, Elakanda Road Hendala 011-573 3624 [email protected] ✓ ✓

Homagama No. 71, High Level Road Homagama 011-285 7126, 011-444 0846 [email protected] ✓ ✓

Horana No.153, Anguruwatota Rd., Horana 034-226 1595, 034-226 1337 [email protected] ✓ ✓

Ja ela No.73, Old Negombo Road, Kanuwana Ja ela 011-223 2752, 011-223 2753, ✓ ✓011-483 3319 [email protected]

Jafna 212, 214 Hospital Road, Jafna 021 222 2787 [email protected] ✓ ✓

Kadawatha Weerasekera Building No. 335, 357/1 Kandy Road Kadawatha 011-481 3602 [email protected] ✓ ✓




Kaduwela No.496/A, Avissawella Road Kaduwela 011-257 9467, 011-441 1396 [email protected] ✓ ✓

Kalmunai No. 24, Police Staon Road, Kalmunai 067-22 29913 [email protected] ✓ ✓

Kalutara No.417, Galle Road, Kalutara South Kalutara 034- 222 2152, 034- 222 9780 [email protected] ✓ ✓

Kandana No.52, Negombo Road Kandana 011-222 9389 [email protected] ✓ ✓

Kandy City Centre L1 – 16, 05, Dalada Veediya, Kandy 081 220 5841 ✓ ✓

Kandy No. 1, Dalada Veediya, Kandy 081-223 4869, 081-222 8370-4, ✓ ✓

081-474 3743, 081-448 1229 [email protected]

Kantale 24, Main Street, Kantale 026 223 4383 [email protected] ✓ ✓

Katugastota 4, Sri Ratnapala Mawatha, Katugatota 081-447 2639, 081-249 7083, ✓ ✓


Kelaniya Rajamaha Viharaya Juncon, Biyagama Road, Kelaniya 011-436 2011 [email protected] ✓ ✓

Katunayake No: 510/2, Dhammaloka Mawatha Aweriwae, Katunayake 011-225 4809, 011-225 4826 [email protected] ✓ ✓

Kegalle No. 233, Kandy Road, Kegalle 035-222 3731, 035-2223732 [email protected] ✓ ✓

Kiribathgoda No. 141, Kandy Road Kiribathgoda 011-2914414, 011-2914415, ✓ ✓

011-4813196 [email protected]

Kirulapane No.22, Edmonton Road,(Base line Road), Colombo 6 011-2513299, 011-5532324 [email protected] ✓ ✓

Kohuwela 179, Dutugemunu Street, Kohuwela 011-5745837 ✓ ✓

Kollupiya No.293, Galle Road, Colombo 3 011-2576763, 011-2576764, ✓ ✓


Koawa No: 35/1,High Level Road, Koawa 011-2846082 [email protected] ✓ ✓

Kuliyapiya No. 225, Main Street, Kuliyapiya 037-2281909, 037-2281910 [email protected] ✓ ✓

Kurunegala No. 6, St. Anne’s Street, Kurunegala 037-2223246, 037-2225127, ✓ ✓

037-4690524/5 [email protected]

Maharagama No.145, Colombo Rd, Maharagama 011-2851468, 011-2851469 [email protected] ✓ ✓

Maligawae Maligawae Secretariat Colombo 10 011-2382282, 011-2446789 [email protected] ✓ ✓

Mannar No. 68, Main Street, Mannar 023-2232154 [email protected] ✓ ✓

Maradana No. 657, Kularathne Mawatha (Maradana Road) Colombo 10 011-2673371, 01-4734219 [email protected] ✓ ✓

Marawila 534, Colombo Road, Marawila 032-2254111 ✓ ✓

Matale No. 109 King Street, Matale 066-2224410, 066-2224409, ✓ ✓


Matara No. 58D, Esplanade Road, Matara 041-2222588, 041-4390588 [email protected] ✓ ✓

Matugama 56- 58, Neboda Road Matugama 034-4936194 [email protected] ✓ ✓

Middeniya Wallasmulla Road, Middeniya 047-4924290 [email protected] ✓ ✓

Monaragala No. 131, Wellawaya Road, Monaragala 055-2276214 [email protected] ✓ ✓

Moratumulla No 38, Sri Premaratana Mw Moratumulla 011-2653120, 011-2653121 [email protected] ✓ ✓

Moratuwa No.143/1, New Galle Road Moratuwa 011-2647345, 011-2648573 [email protected] ✓ ✓

Mount Lavinia No.605, Galle Road, Mt.Lavinia 011-2739122, 011-4203257 [email protected] ✓ ✓

Mutwal No. 523, Ferguson Road, Colombo 15 011-2525433, 011-2525434 [email protected] ✓ ✓

Narahenpita No.255/2, Kirula Road Colombo 05 011-2369913, 011-2369914 [email protected] ✓ ✓

Nawam Matha Ext. Oce Forbes & Walker Building No.46/38, Navam Mawatha Colombo 02. 011-2304915-17, 011-2304919 [email protected] ✓ ✓

Nawala Ext. Oce No 10/5 Narehenpita Road, Nawala 011-4852317 [email protected] ✓ ✓

Negombo No.18, Rajapakse Broadway Negombo 031-4873165, 031-2222585, ✓ ✓

031-2224301, 031-2237146 [email protected]

Nikaweraya No. 51, Rathnasekara Building, Maho Road, Nikaweraya 037-4928859 [email protected] ✓ ✓

Niambuwa No. 22, Kandy Road Niambuwa 033-2287462, 033-4678666, ✓ ✓


Nugegoda No.181, High level Road, Nugegoda 011-2828346-7, 011-2828981, ✓ ✓

011-2853887, 011-4411301 [email protected]

Nuwara Eliya No. 42, Queen Elizabeth Drive, Nuwara Eliya 052-2222348, 052-2222856, ✓ ✓


Panadura No.402, 404, Galle Road Panadura 038-2235249 [email protected]✓ ✓

Panchikawae No 168, Panchikawae Rd., Colombo 10 011-2327143/ 011-4722292 [email protected] ✓ ✓

Pelmadulla No. 71 C, Main Street, Pelmadulla 045–2274714, 045-2274716 [email protected] ✓ ✓

Peah No. 149-151, Main Street Colombo 11 011-2343800 [email protected] ✓ ✓


Available Form

Available





Available Form

Available

Piliyandala No. 63, Moratuwa Road Piliyandala 011-2614111/ 011-2614158/ ✓ ✓


Point Pedro No. 29, Thumpalai Road, Point Pedro 021-2264935 [email protected] ✓ ✓

Polonnaruwa No. 467, Main Street Kaduruwela, Polonnaruwa 027-2223326, 027-4743743 [email protected] ✓ ✓

Pussellawa No. 510, Nuwara Eliya Road, Pussellawa 081-2478392 [email protected] ✓ ✓

Pualam No. 6, Kachcheri Road, Pualam 032-2265582, 032-2265581, ✓ ✓

032-4743702, 032-4743700 [email protected]

Ragama No. 60-64, Tewaa Road, Ragama 011-2959721, 011-2959722 [email protected] ✓ ✓

Ratnapura No. 9, Senanayake Mw, Ratnapura 045-2222374, 045-2230508 [email protected] ✓ ✓

Sea Street No. 60 Sea Street Colombo-11 011-2439635, 011-2439637 [email protected] ✓ ✓

Sri Jayawardenapura Koe No.1424, Koe Road, Rajagiriya 011-4402517, 011-2866864, ✓ ✓


Tangalle No. 90, Main Street, Tangalle 047-2240663 [email protected] ✓ ✓

Thalangama No. 253 Kaduwela Road Koswae Thalangama 011-2788430, 011-2788431 [email protected] ✓ ✓

Thimibirigasyaya No.138B, Havelock Road, Colombo 5 011-2582606, 011-2582668 [email protected] ✓ ✓

Thiurukkovil Main Street, Thiurukkovil 067-2265316, 067-4923740 [email protected] ✓ ✓

Thirunelvely 5 & 7, Adiyapatham Road, Thirunelvely 021-2220007 ✓ ✓

Tissamaharama No. 118, Hambantota Road, Tissamaharama 047-2237708 [email protected] ✓ ✓

Trincomalee No. 59, Ehamparam Road, Trincomalee 026-2222572, 026-2221092 [email protected] ✓ ✓

Vavuniya No. 43, Inner Circular Road, Vavuniya 024-2222668, 024-2222103 [email protected] ✓ ✓

Warakapola No. 95 Kandy Road, Warakapola 035-5625908 ✓ ✓

Waala No. 270,270/1 Negombo Road Waala 011-2931385, 011-4811150, ✓ ✓


Welimada No. 35, Nuwara Eliya Road, Welimada 057-2245108 [email protected] ✓ ✓

Weliveriya No. 109/5 Biyagama Road, Weliveriya 033-5628148 ✓ ✓

Wellawae No: 100, 102, Galle Road, Colombo 6 011-2588702, 011-2590636 [email protected] ✓ ✓

Wellawae Ext. Oce No. 523, 523A, Galle Road, Wellawae 011-5554480 [email protected] ✓ ✓

Wellawaya No. 70, Kumaradasa Mw, Wellawaya 055-2274934 [email protected] ✓ ✓

Wennappuwa No. 39, Chilaw Road, Wennappuwa 031–2253064, 031–2253063, ✓ ✓

031–4743702 [email protected]

Wijerama Ext. Oce No 594, Highlevel Road, Wijerama, Nugegoda 011-2802321 [email protected] ✓ ✓

World Trade Centre Level 1, East Block, World Trade Centre, 011-2448344, 011-2447436, ✓ ✓

Ext. Oce Echelon Square, Colombo 01 011-2433719, 011-4743704 [email protected]

Further, Applicaon Forms will be available at all other HNB bank branches.

The Hongkong and Shanghai Banking Corporaon Limited Bank Branches

Branch Name Branch Address Telephone Prospectus Applicaon

Available Form

Available

Echelon Square Level 3, Unit 3, West Tower, ✓ ✓

World Trade Centre, Echelon Square, Colombo 01 011-4736761

Nawam Mawatha 46/38, Forbes & Walker Building, ✓ ✓

Nawam Mawatha, Colombo 02 011-4716317

Union Place 163, Union Place, Colombo 02 011-4795050 ✓ ✓ Bambalapiya 123, Baudhdhaloka Mawatha, Colombo 04 011-4511300 ✓ ✓

Nugegoda 171, Nawala Road, Nugegoda 011-4319595 ✓ ✓ Waala 149, Negombo Road, Waala 011-2980117 ✓ ✓

Kohuwala 135, Dutugemunu Street, Kuhuwala 011-4542580 ✓ ✓

Baaramulla 418, Pannipiya Road, Pelawae, Baaramulla 011-4472200 ✓ ✓

Moratuwa 198, Galle Road, Idama, Moratuwa 011-4854514 ✓ ✓

Kandy 27, Cross Street, Kandy 081-4481281 ✓ ✓

Colombo (Fort) 24, Sir Baron Jayalaka Mawatha, Colombo 01 011-2325435 ✓ ✓

Jana 145, Kankasanthurai Road, Jana 021-4920800 ✓ ✓




ANNEXURE D – CUSTODIAN BANKS

Bank of Ceylon

Head Oce, 11th Floor, 04, Bank of Ceylon Mawatha, Colombo 01 Tel: 011 244 8348, 011 233 8742/55, 011 2544333

Banque Indosuez

C/O Haon Naonal Bank Limited, Cinnamon Garden Branch, 251, Dharmapala Mawatha, Colombo 07 Tel: 011 268 6537, 011 268 9176

Ci Bank

65 C, Dharmapala Mawatha, P.O. Box 888, Colombo 07 Tel: 011 244 7316/8, 011 244 7318, 011 244 9061, 011 232 8526, 011 479 4700

Commercial Bank of Ceylon Limited

Commercial House, 21, Bristol Street, P.O. Box 853, Colombo 01 Tel: 011 244 5010-15, 011 238 193-5

Deutsche Bank

P.O. Box 314 No. 86, Galle Road, Colombo 03 Tel: 011 244 7062, 011 243 8057

Haon Naonal Bank PLC

HNB Towers, 479, T.B. Jayah Mawatha,

Colombo 10 Tel: 011 266 4664

The Hong Kong and Shanghai Banking Corporaon Limited

24, Sir Baron Jayathilake Mawatha, Colombo 01 Tel: 011 232 5435, 011 244 6591, 011 244 6303, 011 234 6422

Naons Trust Bank Limited

256, Sri Ramanathan Mawatha, Colombo 15 Tel: 011 431 3131

Naonal Savings Bank

255, Galle Road, Colombo 03 Tel: 011 257 3008-15

Pan Asia Banking Corporaon PLC

Head Oce, 450, Galle Road,

Colombo 03 Tel: 011 256 5565

People’s Bank

Head Oce, 5th Floor, Sir Chiampalam A Gardiner Mawatha Colombo 02

Tel: 011 278 1481,011 244 6316-15, 011 243 0561

Sampath Bank PLC

110, Sir James Peiris Mawatha, Colombo 02

Tel: 011 533 1441

Seylan Bank PLC

Level 8, Ceylinco Seylan Towers, 90, Galle Road,

Colombo 03

Tel: 011 245 6789, 011 470 1812, 011 470 1819, 011 470 1829

Standard Chartered Bank

37, York Street,

P. O. Box 112, Colombo 01 Tel: 011 479 4400, 011 248 0000

State Bank of India

16, Sir Baron Jayathilake Mawatha, Colombo 01 Tel: 011 232 6133-5, 011 243 9405-6, 011 244 7166

Union Bank of Colombo Limited

15A, Alfred Place, Colombo 03 Tel: 011 237 0870




ANNEXURE E – DETAILS OF THE PRIVATE SELL DOWN OF SHARES

Transferor Transferee No. of Price per Date of

Shares Share (LKR) Transfer

Brandix Lanka Limited ADL Capital 2,265,300 15.00 30 May 2011 C.D. Kohombanwickramage 2,226,300 15.00 30 May 2011 Deutsche Bank Nominees (Jersey) Limited 2,811,100 15.00 5 May 2011 Dislleries Company of Sri Lanka PLC 3,356,900 15.00 30 May 2011 HSBC Internaonal Nominee –

UBS AG Singapore Branch (EXSBC) 2,694,100 15.00 5 May 2011 Indra Finance (Private) Limited 4,019,600 15.00 30 May 2011 TARRA Fund 2,031,400 15.00 30 May 2011 L.W.A. De Soysa 2,148,300 15.00 5 May 2011 M.P. Haradasa 2,343,300 15.00 30 May 2011 M.M. Fuad 787,500 15.00 6 May 2011 Periceyl (Private) Limited 2,694,100 15.00 30 May 2011 RuRev Capital (Private) Limited 2,694,100 15.00 30 May 2011 Vidullanka PLC 2,928,000 15.00 30 May 2011

Pacic Textured Jersey A.H. Udeshi 2,050,900 15.00 9 May 2011 Holdings Limited Asia Pacic Investments (Private) Limited 2,031,400 15.00 30 May 2011

Auro Holdings (Private) Limited 2,674,600 15.00 30 May 2011 Bartleet Finance Limited 2,830,600 15.00 30 May 2011 Browns Investments (Private) Limited 2,031,400 15.00 30 May 2011 Classic Ventures Security (Private) Limited 2,031,400 15.00 26 May 2011 D.J.N.Hearachchi 2,031,400 15.00 9 May 2011 D.P. Peiris 2,031,400 15.00 16 May 2011 D.S.T. Jayawardena 2,031,400 15.00 25 May 2011 David Peiris Motor Company Limited 2,031,400 15.00 30 May 2011 Dee Investments (Private) Limited 2,031,400 15.00 30 May 2011 Fergasam Garment Industries (Private) Limited 2,811,100 15.00 30 May 2011 Foundaon Garments (Private) Limited 2,031,400 15.00 11 May 2011 G.S.N. Peiris 2,674,600 15.00 30 May 2011 Guardian Capital Partners PLC 2,343,300 15.00 30 May 2011 Heraymila Investments Limited 2,050,900 15.00 17 May 2011 Hovael Construcon (Private) Limited 2,031,400 15.00 5 May 2011 Indra Property Development (Private) Limited 2,694,100 15.00 30 May 2011 Y.S.H.I.K. Silva 7,917,300 15.00 27 May 2011 Indra Traders (Private) Limited 4,019,600 15.00 30 May 2011 J B Cocoshell (Private) Limited 2,031,400 15.00 13 May 2011 J.D.N. Kekulawela 2,031,400 15.00 6 May 2011 L.T. Samarawickrama 2,031,400 15.00 10 May 2011 M.M. Fuad 1,302,300 15.00 6 May 2011 M. Sritharan 2,031,400 15.00 30 May 2011 McBridge Blue (Private) Limited 2,031,400 15.00 6 May 2011 McSen Range (Private) Limited 2,031,400 15.00 30 May 2011 N.K. Ranasingha 2,109,300 15.00 5 May 2011 N.C. Peiris 2,031,400 15.00 9 May 2011 Nawaloka Piling (Private) Limited 2,031,400 15.00 30 May 2011 W.D.N.H. Perera 2,031,400 15.00 9 May 2011 Nuwara Eliya Property Developers

(Private) Limited 2,050,900 15.00 30 May 2011

Rosewood (Private) Limited 2,031,400 15.00 30 May 2011 South Asian Investment (Private) Limited 2,031,400 15.00 30 May 2011 Timex Garments (Private) Limited 2,811,100 15.00 30 May 2011

Textured Jersey Lanka Limited prospectus

Documents

Transcript of Textured Jersey Lanka Limited prospectus