Annual Report 2023/2024

Our Vision

To enhance our heritage brand status and serve the nation.

Our Mission

To provide the public with a variety of high quality foods and soaps.

NOTICE OF MEETING

Notice is hereby given that the 72nd Annual General Meeting ("AGM") of Harischandra Mills PLC (the "Company"), will be held at the Registered office of the Company, No. 11, C.A. Harischandra Mawatha, Matara on Wednesday, 04th September 2024 at 11.00 AM for the purpose of considering and if thought fit, passing the following resolutions:

1. To receive and consider the annual report of the board of directors together with the financial statements of the Company for the year ended 31st March 2024 and the report of the auditors thereon.
2. To re-elect Mr. S. A. S. Jayasundara as a director, who retires in terms of Article 98 of the articles of association.
3. To re-appointment of Mr. T. K. Bandaranayake who has reached the age of 81 years to dispense the age limit referred to in section 210 of the Companies Act, No. 7 of 2007.
4. To the re-appointment of Mrs. R. K. Samarasinghe who has reached the age of 83 years to dispense the age limit referred to in section 210 of the Companies Act No 7 of 2007.
5. To the re-appointment of Mr. G.S.V. De Silva who has reached the age of 79 years to dispense the age limit referred to in section 210 of the Companies Act, No. 7 of 2007.
6. To re-appointment of Mrs. M. P. De Silva who has reached the age of 72 years to dispense the age limit referred to in section 210 of the Companies Act, No. 7 of 2007.
7. To declare a final dividend of Rupees Forty (Rs.40/-) per share for the financial year ended 31st March 2024 as recommended by the directors.
8. To pass the following Special Resolution:
   IT IS HEREBY RESOLVED that the exiting articles of association of Company be replaced in its entirety by substituting in place thereof the articles of association attached hereto as Annexure 1, to ensure that the articles of association of the Company complies with the provisions of the Companies Act, No. 7 of 2007, the Listing Rules of the Colombo Stock Exchange ("CSE"), the revised Corporate Governance Rules of the CSE and other relevant laws and regulations.
9. To appoint Mr. G.K. Sudath Kumar as a director of the Company with effect from 04th September 2024. A brief profile of Mr. Sudath Kumar is attached hereto as Annexure 2.
10. To re-appoint KPMG, Chartered Accountants, as auditors of the Company until the next AGM and to authorise the directors to determine their remuneration.
11. To approve the donations and contributions made by the directors during the year under review, and to authorise the directors to determine contributions to charities for the ensuing year.

Note:

1. Proxy forms should be duly completed as per the instructions given therein and sent via registered post to No. 11, C.A. Harischandra Mawatha, Matara or forwarded via e-mail to corporateservices@corporateservices.lk not less than 48 hours before the time appointed for the holding of the meeting.
2. For any questions, please contact Mr. C. T. Gajanayake on 041 2224702 or ctgajanayake@harischandramills.com.

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CORPORATE INFORMATION

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CHAIRMAN'S REVIEW

It is my pleasure to present to you the annual report of Harischandra Mills PLC for the financial year ended 31 March 2024. Despite the many challenges faced, I am pleased to report that the company has demonstrated remarkable resilience and operational excellence.

During the year, our sales experienced a slight decrease of 2.5%. This decline was primarily attributable to external economic pressures and shifts in market dynamics. However, I am proud to announce that our profit after tax surged by an impressive 149%. This substantial increase in profitability is a testament to our strategic focus on key areas such as operational efficiency, cost management, and supply chain optimization.

The remarkable improvement in our profitability underscores the effectiveness of these strategies. Our efforts have significantly enhanced the company's operational effectiveness and efficiency, enabling us to deliver an outstanding financial performance despite an extremely challenging sales environment.

Continuing with the company's tradition, our esteemed shareholders are aware that we have already paid an interim dividend of Rs 40/- per share. Moreover, in accordance with the decision made by the Board of Directors, a proposed final dividend payment of Rs 40/- per share has been recommended.

I would like to extend my heartfelt gratitude to the Managing Director and other members of the Board for their continued strategic guidance and support. I extend my sincere appreciation to our dedicated employees, whose hard work and unwavering commitment have played a pivotal role in achieving these outstanding results. Additionally, I would like to thank our valued shareholders, customers, suppliers, business and banking partners, and the authorities for their continued trust and support.

Going forward, we remain committed to driving growth and delivering value to all our stakeholders. We will continue to build on our strengths, endeavor to adapt to changing market conditions, and pursue opportunities that will ensure sustainable long-term success.

Thank you for your continued confidence in our company.

T.K. Bandaranayake

Chairman

26 July 2024

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MANAGING DIRECTOR'S REPORT

In 2023, after facing severe economic and operational challenges in 2022, the company experienced a period of stabilization and gradual recovery. This year saw improved supply chain conditions, moderated cost pressures, a cautious return to discretionary spending, and enhanced consumer confidence. Meanwhile, the company continued to focus on survival strategies, implementing stringent cost-cutting measures and maintaining essential supply chains to ensure resilience and operational efficiency.

Despite this stability, company's sales have decreased slightly 2.5%. However, despite this dip, the company achieved a remarkable 149% surge in profitability for the year. Further,in the latter part of the year, the government increased the VAT rate to 18%. The company decided to absorb this additional cost without passing it on to customers, ensuring that the prices of its products remained unchanged.

The company's soap segment demonstrated remarkable growth, with a 71% increase in sales during the year. In contrast, the food segment experienced a 6% decline in sales compared to the previous year. Despite this decrease, the food segment's operating profit surged by 85%, showcasing the company's operational efficiency and effective supply chain management. This is further evidenced by the increase in operating cash flow, which rose to Rs. 495 million from Rs. 159 million in the previous year. This significant improvement in profitability underscores the company's ability to optimize operations and manage resources effectively, even in segments facing sales challenges.

As part of our corporate social responsibility initiatives, the company undertook the renovation of the waiting area in the outpatient division of Karapitiya Teaching Hospital. This project aimed to enhance both the aesthetics and the facilities available to patients, providing a more comfortable and welcoming environment. The renovation included modernizing the space with improved seating, better lighting, and updated decor, significantly improving the patient experience and demonstrating the company's commitment to community well-being.

Additionally, the company undertook various projects primarily targeting the education sector. A children's park was donated to Unalla Primary School, and several essential pieces of equipment, including computers and photocopy machines, were donated to multiple schools. These contributions reflect the company's dedication to supporting educational development and providing valuable resources to enhance the learning environment.

In conclusion, I would like to extend my heartfelt gratitude to the Chairman and Board of Directors, our dedicated employees, and all stakeholders for their unwavering support to the company.

S.N. Samarasinghe

Managing Director

26 July 2024

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CORPORATE SOCIAL RESPONSIBILITIES

Development in the Outpatient

Department of Karapitiya

Teaching Hospital

This project marks a significant milestone in our commitment to enhancing healthcare services. By improving the infrastructure and seating facilities in the outpatient department of Teaching Hospital Karapitiya, we aim to p rov i d e p a t i e n t s w i t h a m o re comfortable and conducive environment while they await medical attention. This initiative underscores our dedication to ensuring quality healthcare delivery and prioritizing patient well-being.

A New Children's Park for MR/

Unella Jayanthi Vidyalaya

Addressing a longstanding need, a children's park was constructed for MR/ Unella Jayanthi Vidyalaya, featuring a variety of play equipment. This initiative offers primary students a vibrant and secure environment for recreational activities, enhancing their physical and social development.

Restoration of MOH Clinic

Building in Welipitiya

This initiative has been instrumental, particularly for pregnant mothers commuting from afar to seek medical assistance . The refurbishment guarantees a secure and accommodating space for their healthcare requirements, underscoring our dedication to supporting maternal health.

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Essential Support for Schools and Students

In our commitment to advancing education accessibility, we have undertaken several initiatives as below to support underserved and rural schools and various societies.

• Provided building materials and school band instruments to MA/Hathamunagala Vidyalaya, Matale

• Supplied library cupboards to H/Walasmulla Model Primary School

• Furnished MR/Godapitiya M.V. with steel cupboards and photocopy machine

• Equipped MR/Bibulewela Primary School with photocopy machine and equipment

• Distributed school materials and stationaries to MR/ Warakapitiya Maha Vidyalaya

Food Distribution to

Flood-Affected Families in

Collaboration with Ayurveda

Bikku Hospital, Walgama

In response to the recent flooding, we have partnered with Ayurveda Bikku Hospital in Walgama to provide essential food supplies to affected families. This collaboration aims to ensure that those impacted by the floods receive the necessary support and resources during this challenging time.

Support for Blood Donation

Initiatives

In celebration of World Blood Donors' Day, we contributed to the appreciation program organized by the Southern Regional Blood Centre. Additionally, we supported several blood donation campaigns throughout the year, including those organized by the University of Moratuwa and the Sadisa Social Development Foundation in Thelijjawila. These efforts reflect our commitment to promoting community health and recognizing the vital role of blood donors.

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