Annual Report 2023-24

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ABOUT THIS REPORT

Presenting the 9th Integrated Annual Report of Lanka IOC PLC

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LANKA IOC PLC

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This Report gives a comprehensive look at the interconnectedness of our approach to our operations; with the ultimate purpose of creating sustainable value.

Scope and Boundary

This Report covers the operations of Lanka IOC PLC for the period from 1st April 2023 to 31st March 2024. The financial and sustainability reporting of the Company is performed under an annual reporting cycle. The financial and non-financial information presented in the narrative report represents the information of the Company. There were no significant changes to the Company's organizational structure, size or supply chain during the year under review.

Materiality

The content included in this Report has been carefully selected following a materiality assessment, through which the business, social, environmental and external issues which could have the most significant impact on the Company's ability to generate value were identified. The process for determining material issues is given in this Report.

Forward Looking Statements

The report includes forward-looking statements related to the Company's operations outlining the future outlook, plans, financial and operational projections and targets. Despite futuristic statements being made in a responsible manner,

we encourage the reader to adopt a precautionary approach and bear in mind the possibility that the end-result may differ.

We do not take responsibility, nor are we liable to publicly update or revise these statements following the publication date of this report.

Standards and Principles

• Sri Lanka Accounting Standards (SLFRS/LKAS) issued by CA Sri Lanka Reporting Standards
• International Framework of the International Integrated Reporting Council prepared in accordance with the GRI Standards: Core option
• Sustainable Development Goals Reporting
• Listing Requirements of the Colombo Stock Exchange
• Code of Best Practice on Corporate Governance jointly issued by
  the Securities and Exchange Commission of Sri Lanka and CA Sri Lanka (2017)
• Gender Parity Reporting Framework - CA Sri Lanka
• Laws and regulations of the Companies Act No. 7 of 2007
• Securities and Exchange Commission of Sri Lanka (SEC) Act No. 19 of 2021, including directives and circulars
• Code of Best Practices on Party Transactions (2013 advocated by SEC)

ICON Guide

CAPITAL REPORTS ICON

PRODUCT ICONS

SDGs

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Directors' Responsibility

The ultimate responsibility for ensuring the integrity of this Annual Report lies with the Board of Directors of Lanka IOC PLC. We confirm that the Report provides a balanced view of the performance in 2023-24. We hereby confirm that the 2023-24 Report addresses all relevant material matters and fairly represents the Company's integrated performance. We also confirm that the Report has been prepared in line with the guidance provided in the Integrated Reporting Framework of the International Integrated Reporting Council.

The report has been unanimously approved by the Board and signed on its behalf by :

Mr. Dipak Das

Managing Director

Feedback

We welcome your comments on our 9th Integrated Annual Report 2023-24, together with any queries and suggestions for improvement.

Please direct your valuable feedback to:

Company Secretary

Lanka IOC PLC

Sri Lanka

E-mail: companysecretary@lankaioc.com

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ABOUT US

Bringing Energy to Life

VISION

A major, integrated energy company, with a strong environment conscience, playing a national role in oil security.

MISSION

To attain leadership in developing, adopting and assimilating state-of-the-art technology competitive advantage.

INTRODUCTION

Lanka IOC believes that Sri Lanka deserves a world-class petroleum industry and is building a healthy and competitive fuel network that will both boost the nation's economy and care for its environment.

The Company is a subsidiary of Indian Oil Corporation Ltd. (IOCL), India's state- owned energy company, which is the country's largest commercial enterprise with operations in eight countries. IOCL is currently metamorphosing from a pure sectoral company with dominance in downstream India to a vertically integrated, transnational energy behemoth. It is already on the way to becoming a major player in petrochemicals by integrating its core refining business with petrochemical activities, besides making large investments in E&P and import/marketing ventures for oil & gas in India and abroad.

Currently, IOCL possesses business interests across the entire hydrocarbon value chain

• from refining, pipeline transportation, and marketing of petroleum products to the exploration & production of crude oil & gas and the marketing of natural gas and petrochemicals.

Thus, LIOC draws synergies and strength from the parent entity's six decades of expertise and experience. It has played a pivotal role in developing the framework, driving innovation, and ensuring environmental sustainability in the energy sector. Navigating through a challenging business landscape, we have been successful in delivering value to our stakeholders.

Over the years, we have demonstrated our continuous commitment to providing the best quality products and superior customer service. By enhancing the value proposition offered to our customers, we have transformed the energy landscape of Sri Lanka. Our LIOC team consists of a workforce of 159 employees who are based at Colombo and Trincomalee offices. We also support the livelihoods of over 5,000 indirect workers who are based at our Retail Outlets across the country.

Lanka IOC PLC, with a corporate history of 22 years, is the leading private-sector auto fuel retailer in Sri Lanka. Over the years, the Company has made a significant impact on the socioeconomic landscape by enabling mobility, economic activity and development. With an island-wide footprint of 249 Retail Outlets the Company services 20% of the country's retail fuel demand.

To provide technology and services through sustained research and development.

To achieve international standards of excellence in all aspect of petroleum with focus on customer delight through value of products and services and cost reduction.

To maximize creation of wealth, value and satisfaction for the stakeholders.

To foster a culture of participation and innovation for employee growth and contribution.

To cultivate high standards of business ethics and total quality management for a strong corporate identity and brand equity.

To help enrich the quality of the life of the community and preserve ecological balance and heritage through a strong environment conscience.

KEY BUSINESS VERTICALS

Automotive Fuels

Positioning

Possess a market share of 20%. Auto fuels are distributed through retail fuel outlets. A range of premium and branded fuels have also been introduced to ensure fuel efficiency and engine performance.

Bunkering

Positioning

Market leader in bunkering serving local and foreign vessels from the Colombo, Trincomalee and Hambantota ports.

Lubricants

Positioning

The second market player in the lubricants sector. The Servo brand of lubricants are used for automotive, marine and industrial applications.

Grease

Positioning

Sri Lanka's 1st Grease plant with 3,000 MT capacity, which will serve the country's entire grease requirement.

Bitumen

Positioning

We are the market leader in the Bitumen business and sell Bitumen for industrial and road construction purposes. We also export Bitumen to neighbouring countries.

Petrochemicals

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HISTORICAL MILESTONES

2007-2008

Commissioned the Lube Blending Plant at

Trincomalee

Started Bunker Operations in Colombo Port

The Turnover of the Company reached 50 Bn

Started sales of Bitumen

2009-2010

Commissioned the first grassroot Retail Outlet

Operations & Accounting shifted to ERP [SAP] system

Commissioned the 150th Retail Outlet

2011-2012

Launch of Euro III

Grade Petrol

Maiden first Dividend of LKR 1 per share distributed

Commissioned

150th Servo Shop

65% increase in Net Profit from LKR 2.91 Bn in FY

2012-13 to LKR 4.81 Bn in FY

2013-14

2014-2015

2015-2016

Lanka IOC assigned Highest Credit Rating - AAA rating by Lanka Rating Agency

Commenced bunkering operations from June 2015 at Trincomalee Port

Prestigious ISO 9001- 2015 accredited to Lube Blending Plant at Trincomalee

for 2015-16 by LMD magazine

Lanka and seven other category awards.

(LTF) for 50 years

Formation of Joint Venture

Company, Trinco Petroleum

Terminalling Pvt Ltd.

A JV between the CPC (51%) and the LIOC (49%) for development & utilization of 61 Tanks at of Upper Tanks Farm

LKR 37.69 Bn

First-ever LSD supply at

Trincomalee

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First Bitumen Export

Lanka IOC Share included in S&P Sri Lanka 20 Index

2019-2020

First physical bunker supplier to import the IMO 2020 compliant Low Sulphur Fuel Oil (LSFO) at Trincomalee

Introduced new product-Wet Brake Oil SERVO MTRAC 30 introduced for first time in Sri Lanka for farmers

2023-2024

Renew retail license another 20 years

Commissioning 250th Retail outlet

Agreement with Ceypetco for marketing of SERVO lubricants at Ceypetco retail outlet