Eti Ar 2011

[ Security and Stability… ]
Edirisinghe Trust Investments Limited

This Edirisinghe Trust Investments Limited …in our profession is born from years of honing talent, skill, knowledge
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| Annual Report 2010/11

www.eti.lk Annual Report 2010/11
[ Our Vision ] [ Our Mission ] [ Our Values ]
“To be the best rated diversified finance “To help realise your dreams by removing • Keeping our ear to the ground
Company and achieve a profit of Rupees the obstacles of money and time through • Going the extra mile, fast
two billion by 2013” our expertise and energy”
• Getting it right, the first time
• Working together as one, and
• Playing it straight, always.
Annual Report 2010/11
[ Reaching Classical heights… ]
...in any profession demands much the same attributes. The dancer starts young; he’ll apply talent and
skill to learn his trade; he’ll practice to make perfect; his surefootedness and complete familiarity with
his routine will allow him to enjoy his art…and impart this joy in full measure to others.
Like ETI…we went the same route; built a responsible, stable and secure enterprise using much the
same attributes – skill, talent, learning and experience. And now, we enjoy a business born of this
surefooted confidence and stability in our trade…which we convey in full measure to our clients.
Page 01
004 - 005 | Financial Highlights
006 - 007 | Operational Highlights
010 - 012 | Chairperson’s Message
014 - 015 | Managing Director’s Message
016 - 021 | Chief Executive Officer’s Review
022 - 025 | Board of Directors
026 - 028 | Corporate Management Team
030 - 031 | Senior Management Team
034 - 035 | Business Performance
036 - 038 | Financial Review
040 - 045 | Product Portfolio and Operating Results
048 - 054 | Sustainability Report

Contents
056 - 060 | Risk Management
062 - 067 | Corporate Governance
070 | Statement of Internal Controls
071 - 113 | Financial Reports
114 | Capital Adequacy
115 | Value Added Statement
116 | Analysis of Loans and Advances
117 | Analysis of Net Interest Margin - Quarterly
118 | Shareholder Information
119 - 121 | 10 Year Summary
122 - 125 | Branch Network
126 | Financial Glossary
127 | Notice of Meeting
Enclosed | Form of Proxy

We are…
ETI is a registered Finance Company with the Monetary Board
of the Central Bank of Sri Lanka under the Finance Companies
Act No. 78 of 1988 and is one of Sri Lanka’s leading finance
companies with an extremely robust record of performance
over its four decade history. Over the years, the Company
has enjoyed singular success and substantial growth across a
comprehensive portfolio consisting of Fixed Deposits, Pawning,
Gold Sales, Leasing, Hire Purchase, Property Development and
Agricultural business.
The Company is founded on a strictly adhered to regime of

best practice and the numerous awards and accolades it has
received over the years stand testimony to the fact - awards
such as the National Business Excellence Award (2008) from
the National Chamber of Commerce, Sri Lanka, a Bronze
Award for the ETI Annual Report of 2008/09 from ARC Awards
International (USA), a Certificate of Recognition for our Annual
Report of 2009/10 from ICASL among many more.
Page 03
Gross Interest Income

Financial Highlights
2010/11 2009/10 Change

Rs. Mn Rs. Mn %
Rs. 2.54 Bn
+20%
Financial Performance
Total Income 2,540 2,126  20
Net Interest Income 971 616  63
Profit before Tax 316 112  182
Profit after Tax 260 64  306
Profit After Tax Return on Equity (%) 15 5  200
Rs. 260 Mn Return on Assets (%) 2 0.5  300
+306% Financial Position

Total Assets 14,692 11,963  22
Deposits 11,412 9,578  19
Total Assets Loans and Advances to Customers 7,437 5,334  40
Rs. 14.692 Bn Shareholders’ Funds 1,679 1,424  18
+22% Information per Ordinary Share (Rs.)

Earnings (Basic) 501 123  306
Net Assets (Basic) 3,229 2,737  18
Earnings Per Share
Rs. 501 Statutory Ratios (%)
+306%
Liquid Assets 12 11  8
Shareholders’ Funds to Deposits 15 15  2
Page 004
Financial Highlights
Page 005
April 2010 August 2010 November 2010

 Conducted annual budget presentations  Conducted a training programme on ETI  Carried out a public auction for
at ETI premises Products and another two programmes unredeemed gold articles
on Employee Orientation
 Carried out annual salary review and  Bandarawela Leasing Business Centre
promotion meetings shifted to a better location; conducted
a business promotion campaign and a
 Property Development Division received September 2010 musical show for the local community
the renewed ISO certificate (9001:2008)
Operational Highlights
 Introduced an on-line system for gold  Head Office employees went on a

purchasing staff-trip
May 2010  Won Mercantile Six-a-Side Cricket  Conducted a training programme on ETI
Tournament Products, a programme on Employee
 Formulated a welfare policy and started
Orientation and another training on First Aid
to raise a fund  Conducted two training programmes on
Employee Orientation
 Property Development Division launched
the new brand ‘ETI Builders’ December 2010
October 2010  Opened a new Pawning Centre in
June 2010  Participated at FHA sports events:

Homagama
won soft-ball cricket cup.  Won ICASL certificate of compliance for

 Conducted two training programmes on
the Annual Report 2009/10
ETI Products  Won BCS certificate (National Best Quality
Software Award) for e-Gold Enterprise
 Held a press conference to announce that
in-house-developed computer system
ETI had reached the Rs. 10 Bn deposit
base  Leasing Division went on staff-trip
 Conducted a training programme on

Employee Orientation and another
July 2010 programme on First Aid
 Leasing staff participated at the get-

together of Leasing Association
 Conducted a training programme on ETI

Products and another programme on
Employee Orientation
Page 006
Operational Highlights
January 2011 March 2011

 Held January 1st celebrations at ETI Head  Started the in-house gold melting process
Office and City Office to increase profitability of Gold Sales
Division
 Donated basic necessities for flood victims
 Leasing Division received the renewed
 Conducted a staff get-together by
ISO certificate (9001:2008)
Pawning and Gold Sales Divisions
 Held a Pirith-Chanting Ceremony prior to
 Recorded the highest monthly turnover
opening of Ambalangoda Pawning Centre
and old-jewellery purchasing by Gold
Sales Division  Opened a Pawning Centre in
Ambalangoda
Products, a programme on Employee  Pawning staff conducted a CSR project in
Orientation and another training on Elpitiya
First Aid
 ETI Head Office conducted a CSR project
at a remote school in Puttalam District
February 2011  Started to play for Division B Mercantile

Cricket Tournament
 Redesigned the Performance Evaluation
 Conducted a training programme on First
Scheme for the next financial year
Aid and another two programmes on
 Recorded the highest monthly net profit Customer Care Services
achievement by Gold Sales Division
 Investment Division went on staff-trip

Products and another programme on
First Aid
Page 007
Page 08
[ Building a Solid Base starts Early ]
His learning begins early. Over the years, his skill base will grow; talent will be sharpened; proficiency
will increase; strength and stamina will build – until the adult dancer is poised at the top of his art…
ETI built its enterprise on a strong foundation; an edifice forged over many years building just such
attributes into a rock solid business that grows stronger by the day.
Page 09
It’s a great pleasure for me to welcome you

all and glad to present the Annual Report for
the financial year 2010/11.
A year of remarkable results; the Company’s role
in promoting national growth; effective execution The performance of the year under
of plans and strategies; strict adherence to review has made remarkable results in
corporate values, policies, procedures and good the Company history, especially after the
economic recession took place in the recent
governance; developing human resource base
past.
Chairperson’s Message
and technology bases such as IT; all business

fundamentals remain strong; espousal of an Role of Your Company in
‘outside-in’ approach aligning Company’s internal Promoting Nation’s Growth
processes with market requirements. As a responsible corporate citizen and one
of the leading finance companies in the
country, we have a huge responsibility
towards strengthening the financial sector
through various measures. In doing so,
our primary task is to manage our own
operations effectively and efficiently by
ensuring the following things:
 Execution of business programmes

based on a proper corporate plan;
 Establishing and following corporate

values, policies and procedures;
 Corporate governance;
 Employee competency development;

and
 Enhancing the operational efficiency

levels of IT systems.
Page 010
In addition to the above development areas Company Business In the last five-year period, regardless of
of internal-focus, we need to continue several unfavourable economic conditions,
our focus placed on economic, social and
Performance ETI was able to register steady growth
environmental development programmes Without ensuring solid bottom-line financial figures in its asset base; and it was recorded
of the nation; and by doing this, we will figures, no contribution at macro-economic in the financial year 2010/11 as Rs. 14.6 Bn
indirectly help the country achieve the level can be made. The figures and trends in with a growth rate of 22%. In comparison to
targets set by the Government. At the financial and related-performance areas of the asset-base, the main liability – the fixed
moment, through various services under your Company show positive results in the deposit base – has increased by 19% up to
our product portfolio and Corporate Social period under review. Rs. 11.4 Bn showing the public confidence
Responsibility (CSR) projects, we have been placed in the Company.
assisting our countrymen by - Compared to the previous financial year, the
total income of the Company has increased In the financial year 2011/12, ETI has
 Providing credit facilities for business by 20% up to Rs. 2.539 Bn whereas the net planned to go for a net profit of
and agricultural purposes, interest income has registered a remarkable Rs. 401 Mn, which is a challenging
 Helping people meet urgent cash/ growth figure of 58% in the year under figure against the net profit of present
fund requirements, review. The main contributor for the above year. Without going for major business
achievement was the pawning income. expansion projects that require huge
 Making contributions to the In the case of operating expenses, the capital expenditure, we have decided
construction industry with high quality expenses before provisioning also have to increase the business volumes of our
inputs, increased by 35% up to Rs. 786 Mn due existing branches through various business
 Engaging resources for green to certain business expansion activities, promotion activities.
revolution of the country, mainly in the Leasing Division. Yet, we
have been able to improve the cost-to-
 Developing critical skills in the
workforce, and
income ratio from 75% to 65% leaving an Strategic Business Decisions
operating profit of Rs. 376 Mn for the period
ETI always follows outside-in approach,
 Helping the poor and other concerned. In the year, we have directly
i.e. reorganising internal processes as
disadvantaged groups in the society. contributed the Government income by
per the requirements of the markets.
paying a corporate tax of Rs. 55 Mn, and
Accordingly, we have been either adding
finally leaving a net profit of Rs. 260 Mn for
new profitable products to or cutting
the shareholders and the future activities of
existing loss-making products from the
the Company.
product portfolio. In the year under review,
Page 011
we discontinued two unproductive products

namely the trade finance loans and sale of
motor vehicles. And, we have also decided
not to invest money in real estate and
property development projects, though they
have shown unpredictable market-boom
situations. Property development staff will
continue with the brand ETI Builders, which
builds houses and other properties on the
lands of customers, where the Company
does not have to invest in.
Appreciations
I make this an opportunity to thank
everybody who has extended their support
to me in various ways in leading ETI towards
its vision and the mission. Here, I must
make a special thank to our shareholders,
Board Members, the Chief Executive Officer
and his team and our valued customers.
Deshabandu, Deshashakthi
Dr. (Mrs.) Soma Edirisinghe
Chairperson
16th September 2011
Page 012
As a responsible corporate citizen and

one of the leading finance companies
in the country, we have a responsibility
towards strengthening the financial
sector through various measures.
We need to continue our focus placed
on economic, social and environmental
development programmes of the nation;
and by doing this, we will indirectly help
the country achieve the targets set by
the Government.
Page 013
Overview
2010/11 reflecting fast recovery from
ETI achieved unprecedented results; PAT up 306%; the setback suffered 2009/10 in Sri
PBT up 185%; results fuelled by tremendous Lankan economy as well as the Banking
and Financial sector. It was a highly
growth of core business line - Pawning; strategic
successful year for Edirisinghe Trust
Managing Director’s Message
re-assessment and alignment of products/services Investments Limited and we would increase

led to close down of Wheels and Trade Finance shareholders, wealth more than ever before.
divisions and curtailment of further investment We were able to achieve our targets more
than what was expected.
in Real estate and Property development opting
instead, in the case of the latter, to promote the
concept Build on Other Land (BOL). Strategies
Our strategies of past enabled us to
maintain major portion of our assets as
income-generating liquid investments such
as pawning, advance leasing and higher
purchase. On the other hand, we closed
down our non-profit making products,
namely Wheels and Trade Finance Divisions.
Due to the economic downturn in 2008/09
and 2009/10, Real Estate and Property
Market also crashed. We curtailed further
investments in Real Estate and Property
Development and decided to move the
product Build on Other Land (BOL).
Performance
Sri Lankan economy has shown
impressive growth during the year. All the
key sectors of the economy demonstrated
a commendable performance. Peaceful
Page 014
Managing Director’s Message
domestic environment improved investor During the year, we expanded further the On behalf the Board of Directors I would
confidence, and your Company has pawning network focusing more on long- like to express our thanks to the Governor
recorded an unprecedented profit after term growth than short. The newly opened and Deputy Governor of the Central Bank of
tax figure of Rs. 260 Mn in the financial pawning centres are located in Homagama Sri Lanka for the co-operation and support
year 2010/11 which is a 306% growth and Ambalangoda. We are now well extended to us. I also wish to record our
against Rs. 64 Mn in the corresponding established in 46 locations in the country. appreciation to the Director and Additional
period of last year. Profit before tax has In addition to our pawning centres, 6 other Directors who together with their officers
increase by 185% from Rs. 111.8 Mn to business centres, mainly dealing with in the department of non-bank financial
Rs. 316 Mn. Pawning advances which is credit business of finance leasing and hire institutions for providing guidance and
the core business of your Company has purchase. Special attention was given for support for the smooth functioning of
been the main contributor towards this training and skill development of staff and the Company.
significant growth. empowerment already have proven itself
worth the effort and resources. I am deeply grateful to all the shareholders,
ETI’s total turnover has risen from depositors, and investors who placed their
Rs. 2.1 Bn in 2009/10 to Rs. 2.5 Bn in The Deposit Division performed well with faith in us.
2010/11 showing an increase of 20%. the favourable economic environment in
Total assets in 2010/11 shown a figure the country and in financial market. Our
of Rs. 14.69 Bn as against Rs. 11.9 Bn deposit-base grew by Rs. 2 Bn to
in the corresponding period of last year, Rs. 11.4 Bn, a growth of 19%.
with a 22% increase. The NPL ratio has Jeewaka Hemal Edirisinghe
been halved to 1.23% from 2.25% in Managing Director
2009/10 showing tremendous growth in Acknowledgement
the quality of earning asset and also total I extended my sincere thanks to the 16th September 2011
loan portfolio shot up to Rs. 7.4 Bn from Chairperson and my fellow members
Rs. 5.3 Bn last year. of the Board for their support and the
encouragement to drive the Company
The main business line - Pawning has towards success. I share the achievement of
shown tremendous growth with general the Company with three Executive Directors,
quality improvement in collateral offer. Non-Executive Directors, Chief Executive
Officer and senior management, whom
I believe will drive this Company towards its
vision. I would like to thank every employee
for their commitment and hard work.
Page 015
The global outlook summary report

ETI - a major player amongst registered finance (2008–12) of the World Bank shows a
favourable trend of real GDP growth from
companies as proven by assessing many financial
2.2% in 2009 to 3.9% in 2010 for the
and non-financial factors; following major world economy. It is expected to maintain
restructure of Company in 2004, ETI posted eight between 3.3% to 3.6% in 2011 and 2012.
Chief Executive Officer’s Review
times greater profitability by 2011 in comparison Compared to the above world GDP growth
figures and many of the industrialised
to the figures of 2004; Total Assets grew from
economies, some developing countries
Rs. 4.14 Bn to Rs. 14.6 Bn at the end of period especially the ones in Asia like China, India
under review; in a volatile economic environment, and Sri Lanka have shown better results.
ETI has effectively managed its affairs vis-à-vis
public confidence through exemplary corporate
Country Economic Outlook
governance and ethical marketing.
In the year 2010, Sri Lankan economy
recorded a remarkable GDP growth rate
of 8%, which was well-above the global
economic growth, and this trend continues.
The socio-political stability after the war and
resettlements, proper fiscal and monetary
policy-implementation by the Government
and the Central Bank, development
target-achievements by the Government
(especially the Government spending on
infrastructure development projects), stock
market growth and stability, investor-
confidence and inflow of capital into the
country are some of the contributory factors
among many, for the positive trends.
The double-figure growth rates achieved by

North and East Provinces made tremendous
contributions to the national growth. Sector-
wise, services accounted for the highest
percentage, which was 57.8% in 2010
where banking and finance industry played
a major role. In a fast developing economy,
as the liquidity-providers, both banks and
finance companies will have enormous
potential for business growth.
Page 016
The unemployment rate has reduced from ETI showed over eight times better results Consistent business operations maintained
5.7% in 2009 to 4.9% (third quarter) in compared to the above comparison year. by Pawning and Leasing Divisions and
2010 showing further stability-factors. From The public confidence reflected by the productivity improvement initiatives taken
global economic perspective, Sri Lanka had growing deposit base regardless of several in the Gold Sales Division considerably
recorded US$ 6.6 Bn worth official foreign industry calamities is another factor that contributed to enhance the income levels
reserves, and it had risen up to US$ 7.1 Bn makes ETI a leader among RFCs. and achieve a net interest income growth of
in the second quarter of 2011. 57.6% registering a remarkable figure of
Rs. 971 Mn in 2010/11.
Financial Review
Industry Analysis Different financial indicators look at different The operating profit, the net value created
In the finance sector, key players come from performance aspects, and they are used for through operational activities, amounted
the sub-sectors of licensed commercial various decisions by stakeholders. to Rs. 376 Mn and it was a commendable
banks (LCBs), licensed specialised banks growth of 139% compared to last financial
(LSBs), registered finance companies year’s figure. After the financial crisis,
Income Generation and Profit ETI was clearly picking up its operational
(RFCs) and specialised leasing companies Earnings
(SLCs). There are over 80 institutions performance as shown in the graph below.
The amount of income generated is In the period under review, the Company
registered with the Central Bank in the
important to maintain assets and operations paid direct taxes worth Rs. 55.9 Mn and
above categories alone. And, there is a vast
of a Company, especially when a Company ended up with a net profit of Rs. 260 Mn,
numbers of unauthorised players who deal
grows to capture the market share and which is a tremendous growth achievement
with financial transactions in the country;
generate high volumes of profits. At the of 306%.
and these activities have become a severe
same time it is important to focus on
threat to the industry and economic stability.
profitability improvement aspect too.
In the economy, about 60% financial assets
Accordingly, it is noted that the total income of Business Growth and Sustainability
amounting to over Rs. 3.8 Tn ( June 2010)
the Company has increased up to Rs. 2.5 Bn Business growth is critical for increased
are managed by the financial institutions
achieving a growth of 20% in 2010/11. market share, increased profit figures and
regulated by the Central Bank. Presently,
The key contributor for the total income long term survival of the business. In the
ETI manages an asset base worth Rs. 14.5 Bn
was the interest and similar income for macroeconomic level, it is also important
which is comparatively a small figure in
which Pawning products contributed with in creating wealth and employment for the
the industry context; and it also gives the
Rs. 1.74 Bn. Interest earned on leasing nation. Both the high volumes of profits
indication about the huge market potential
and hire purchase products registered and the productivity in earning profits are
for the Company with right operational and
the second highest source. Income from essential factors for business sustainability.
marketing strategies.
operational activities such as gold trading Therefore, while monitoring income and
and real estate stood at the third place, and profit figures as mentioned above, business
Among 38 RFCs, ETI is considered to be a
it showed a slight drop compared to the decision makers should focus on other
major player in terms of several financial
previous financial year. Interest expenses areas such as stocks (that directly generates
and non-financial indicators. After the first
had dropped by .04% down to Rs. 1.3 Bn future profits, especially in case of finance
restructuring exercise in 2004, the Company
mainly due to reduced interest rates products), total assets, asset quality and
was able to increase its total assets from
applicable for fixed deposits. customer confidence.
Rs. 4.14 Bn to Rs. 14.6 Bn at the end of
the period under review. Profitability-wise,
Page 017
In the case of stocks, the main contributor When expenses are divided by income, Deposit Mobilisation and
Pawning has increased its stocks from efficiency ratio can be arrived at. It gives an Treasury Function
Rs. 3.7 Bn to Rs. 5.6 Bn with an outstanding indication about income and expenditure
ETI’s two main funding sources are fixed
increment rate of 50%. It is also notable to balance in managing operations.
deposits and borrowings where FD
see the Rs. 92 Mn increase in loans against Accordingly, the present efficiency ratio has
mobilisation plays the major role. This
fixed deposits. In stock figures, though the to be further improved (lowered).
is one of the most critical functions of
leasing figure has decreased, hire purchase
the Company in ensuring fund supply
stock has increased. The 22% asset growth Operating for businesses and maintaining liquidity
up to Rs. 14.69 Bn will be a key strength Expenditure Efficiency
Year (Rs. Mn) Ratio (%) position. To meet these Company
in generating future income. In the case of
requirements and the needs of fixed deposit
Pawning advances, redeeming percentage 2006/07 215 61 customers, the division is equipped with a
had been maintained over 95%; and still the
2007/08 387 62 team of well-trained employees who are
remaining unredeemed stock is disposed
2008/09 612 86 geared to deliver an exceptional customer
without incurring losses. Leasing Division’s
2009/10 586 75 service. The operations are backed by a
NPL (non-performing loan) ratio had been
2010/11 785 65 sophisticated IT system.
maintained at 5.78% whereas its industry
standard at 6%.
FD mobilisation and administration of funds
In the case of financial institutions that run

Work Design and Process are carried out by the central office located
at head office premises, and the entire
businesses mainly through public funds, Management business network is utilised for marketing
public confidence is a critical success factor. Company goals and the needs of key and information dissemination activities.
Managing corporate image and public stakeholders are the primary reference
confidence through corporate governance points when designing work at ETI. Fixed deposit products are branded as
and ethical marketing are prerequisites for Accordingly, the Company has designed its ETI Investments, and the key strengths
balancing fixed deposit in and out flows operational and support-service processes of this product are customer-confidence
as per the requirements of the businesses. in establishing the ‘profit centre’ concept, earned over four decades of operations,
ETI has been doing this function effectively and this is reflected in the organisation outstanding customer care services and
under different economic conditions, where structure. Thereafter, policies and procedures attractive interest rates in comparison to
many competitors failed. applicable for each functional area have market averages. The division also provides
been developed, and now the Company additional services such as FD loans and
Operating Expenses and is in the process of formally documenting privilege packages to its valuable customers.
Efficiency Ratios all processes to get ISO certification for
the entire Company. Company tasks are Under the supervision of Corporate Finance
Operating expenses for the period was
allocated to individuals and teams as Division, Investment Division is responsible
Rs. 786 Mn, which was 65% from net
specific personal duties and responsibilities to operate treasury functions smoothly,
income. Administration and general
at the final stage of work-design. and ensure that the liquidity position
expenses occupied the highest figure – 54%
out of total operating expenses. of the Company is healthy in terms of
Followings are the key operational and facilitating withdrawals, making operational
support functions of the Company: payments and releasing funds for business
development.
Page 018
The total income of the Company has

increased up to Rs. 2.5 Bn achieving
a growth of 20% in 2010/11. The key
contributor for the total income was the
interest and similar income for which
Pawning products contributed with
Rs. 1.74 Bn. Interest earned on leasing
and hire purchase products registered
the second highest source. Income
from operational activities such as
gold trading and real estate stood at
the third place, and it showed a slight
drop compared to the previous financial
year. Interest expenses had marginally
dropped to Rs. 1.3 Bn mainly due to
reduced interest rates applicable for
fixed deposits.
Page 019
Pawning and Gold Sale Businesses hire purchase facilities in selected market with statutory bodies such as Central Bank,
segments, and the trouble-free fast service Inland Revenue and EPF Board.
Pawning business is the backbone of ETI.
is an important factor that the division has
This product is a secure business line that
been capitalising on. It presently operates in Information Technology
has a very good demand in the market
six strategic locations – Borella, Kurunegala,
though the competition is very high. The IT plays an integrated role with all product
Matara, Embilipitiya, Moneragala and
operational and financial performance operations. ETI has an internal team of IT
Bandarawela. The division also provides
recorded over the years was remarkable professionals who represent all important
personal loan facilities at concessionary
in comparison to industry standards and aspects of IT product development and
rates to confirmed employees of ETI.
gains of other products of the Company. The implementation. Most of operational
division’s management was able to deliver software packages have been developed
better results than projections all the time Property Development internally, and their quality standards have
due to several success factors. They can be In an environment of high growth rate in the been tested by independent IT Auditors in
recognised as: country, property development businesses addition to on-development quality assurance
will have tremendous opportunities. Yet, this practices. The division also gets the services
l Correctly identifying the needs of
market has just started to recover after the of an external IT Consultant who spends
customers in the selected segment,
recession, and therefore, ETI is not presently two full-working days a week at Company
l Equipping employees with outstanding making major investments. Instead, it further premises. Both pawning and gold sales
technical and soft skills, focuses on stock disposal and maintaining its software packages won BCS certificates. All
market position through other products that the software and networks are operated
l Development and implementation of
does not require major capital investments. using latest high capacity servers.
a BCS certified sophisticated IT system,
ETI Builders is a specific brand developed to
and
meet the above purpose.
Human Resources
l Management’s dedication for
Any system can be copied by any
employee-motivation and continuous Accounting and Finance organisation; but no competitor can easily
improvements.
Based on the profit centre concept, all copy the competitive advantages gained
product divisions have their accounting through employee competencies – attitudes,
Gold sale operation, which has many sections that prepare budgets, record knowledge and skills. Human Resources
operational links to Pawning function, is transactions and produce reports for making make the differences of performance in
also managed as a profitable venture by decisions. The divisional accounting staffs organisations.
the same division management team. This carry out their duties as per the general
operation too is supported by an award- and industry specific accounting standards, ETI focuses on sourcing competent staff
winning software developed internally. guidelines provided by the Corporate especially at entry level as per the standards
Finance Division and deadlines set. In of Company recruitment and selection
Credit Operations addition to accounting for common business policy, and then mold them to meet
During last five years, Leasing Division transactions, Corporate Finance Division the future challenges of the Company
has shown incremental performance, co-ordinate the function of preparing and achieve their career success. The
and presently it has reached a number of corporate accounts, preparing annual training and development programmes,
Company targets and industry standards. budgets, updating the corporate plan, performance evaluation scheme and reward
Leasing Division provides leasing and preparation of Annual Reports and dealing schemes target at improving performance of
employees at every level in the hierarchy.
Page 020
The top management and senior From the quality-improvement perspective,

management of the Company always the Company is focusing on obtaining
take decisions to motivate employees and ISO certification for the entire company,
enhance their satisfaction level so that all introduce new manual and electronic record
stakeholders are benefited. management practices and restart its
Five S initiates. A comprehensive training
programme and the redesigned performance
Future Outlook evaluation scheme will provide additional
As predicted in the previous financial year, fuel for the developments expected.
ETI has achieved its revenue and operating
profit targets plus many other objectives. As ETI has demonstrated its strengths in
Similarly, the priority is given to achieve building a stable and sustainable business
budgetary targets this time too. organisation with its past performance, the
well-thought and designed plans will ensure
The external environment in the local the achievement of its vision and mission.
and global contexts look favourable for all
businesses and industries, and therefore,
the demand for finances will be higher in Word of Appreciation and
the market. The stable socioeconomic and Remembrance
political environment is a good playing field I take this opportunity to convey my sincere
for businesses, and ETI is quite ready with its gratitude to the Board of Directors for their
employees and other resources to grab the guidance and my staff for outstanding
opportunities. support extended to me in driving this
organisation in the proper direction. And,
Even though the Pawning, Gold Sales and I also express our heartfelt sympathy to the
Leasing Divisions have not planned for family of Mr. Kithsiri Siriwansa, Manager –
major branch expansion projects in the year Real Estate, for his sudden death.
2011/12, they all are trying to maximise the
resource utilisation and improve business
levels. Property development business will run
small until that market will be fully-recovered. Mahendra de Silva
Chief Executive Officer
16th September 2011
Page 021
Deshabandu Mr. Jeewaka Hemal Mrs. Anjalee Deepa

Deshashakthi Edirisinghe Edirisinghe
Chairperson/ Managing Director/ Executive Directress
Non-Executive Directress Executive Director
Dr. (Mrs.) Soma Edirisinghe has been Mr. Jeewaka Hemal Edirisinghe has Mrs. Anjalee Deepa Edirisinghe has
the Chairperson of Edirisinghe Trust been the Managing Director of been the Executive Directress of
Investments Limited since 1984. Edirisinghe Trust Investments Edirisinghe Trust Investments Limited
She is also the Chairperson of Limited since 1986. He is the Deputy since 1986. She is also the Executive
Swarnamahal Financial Services PLC, Chairman of Swarnamahal Financial Directress of Swarnamahal Financial
Swarnamahal Jewellers (Pvt) Ltd., Services PLC, Swarnamahal Services PLC, Swarnamahal Jewellers
EAP Films and Theatres (Pvt) Ltd., Jewellers (Pvt) Ltd., Executive (Pvt) Ltd., EAP Films and Theatres
EAP Security Services (Pvt) Ltd., Director of EAP Films and Theatres (Pvt) Ltd., EAP Security Services (Pvt)
EAP Property Developers (Pvt) Ltd., (Pvt) Ltd., EAP Security Services (Pvt) Ltd., EAP Property Developers (Pvt)
Board of Directors
EAP Net Works (Pvt) Ltd. and Ltd., EAP Property Developers (Pvt) Ltd., EAP Net Works (Pvt) Ltd. and
Colombo Communications (Pvt) Ltd. Ltd., EAP Net Works (Pvt) Ltd. and Colombo Communications (Pvt) Ltd.
Colombo Communications (Pvt) Ltd.
She is the Founder of the Janasarana, She has a wide experience in Finance
an independent non-profit making He counts an extensive experience in and Management.
organisation to reach humanity in the fields of Gold Jewellary, Finance,
the country. She was a dynamic and Electronic Media and Management. She is the President of the Past
active member of the Lions Club of He is a former Director of State Pupils, Association of St. Bridget’s
Thimbirigasyaya District 306 C. Held Trading (General) Corporation. Convent, Colombo 07 and Secretary of
key posts in the club and finally the Lions Club of Colombo Region and
ended as the District Governor of the Treasurer of the Janasarana Fund.
Lions Club International District 306 C.
She holds a Doctorate in

Entrepreneurship and Social Service
from the Open University of Sri Lanka.
Page 022
Board of Directors
Mr. Nalaka Premal Dr. Damian Sunil Mr. Asanka Srimal

Edirisinghe Abeyratna Edirisinghe
Executive Director Non-Executive Director Non-Executive Director
Mr. Nalaka Premal Edirisinghe has Mr. Damian Sunil Abeyratna was Mr. Asanka Srimal Edirisinghe was
been the Executive Director of appointed to the Board of Edirisinghe appointed to the Board of Edirisinghe
Edirisinghe Trust Investments Limited Trust Investments Limited as a Trust Investments Limited as a
since 1991. He is also the Executive Non-Executive Director on 1st October Non- Executive Director on
Director of Swarnamahal Financial 1991. He is also an Independent 27th November 2007. He is also the
Services PLC, Swarnamahal Non-Executive Director of Executive Director of Swarnamahal
Jewellers (Pvt) Ltd., EAP Films and Swarnamahal Financial Services PLC. Financial Services PLC, Swarnamahal
Theatres (Pvt) Ltd., EAP Security Jewellers (Pvt) Ltd., EAP Films and
Services (Pvt) Ltd., EAP Property He is a Financial Professional with Theatres (Pvt) Ltd., EAP Security
Developers (Pvt) Ltd., EAP Net over 36 years post-qualifying Services (Pvt) Ltd., EAP Property
Works (Pvt) Ltd. and Colombo experience. He has held senior Developers (Pvt) Ltd., EAP Net
Communications (Pvt) Ltd. positions as a Financial Consultant/ Works (Pvt) Ltd. and Colombo
Advisor to leading Multinational Communications (Pvt) Ltd.
He has an expert knowledge in and Private Companies. He is the
Gold and Other Precious Metal and President/Partner of the Abeyratna He is a passed Finalist of the
Precious Stones. He counts a wide and Company, Chartered Accountants Chartered Institute of Management
experience in Information Technology, (An independent member firm of Accountants (UK), and also a
Finance and Management. He is the AGN International), and a Board Member of the Film Exhibitors’
Vice-President of the Association of Member of the AGN International. He Association.
Gem and Jewellery Industry, Sri Lanka, was past president of the Mercantile
and an Executive Committee Member Cricket Association, and a Fellow
of the Gem and Jewellery Institute. He Member of The Institute of Chartered
has performed a major role and given Accountants of Sri Lanka. He also
leadership in bringing ETI to the holds a Doctorate from the University
current position. of Honolulu, USA.
Page 023
Board of Directors
Mr. Sumathipala Mr. Sujith Daminda

Kariyawasam Jayawardena
Independent Independent
Non-Executive Director Non-Executive Director
Mr. Sumathipala Kariyawasam was Management from the University of Mr. Sujith Jayawardena was
appointed to the Board of Edirisinghe Sri Jayewardenepura. He also holds appointed to the Board of Edirisinghe
Trust Investments Limited as an a Postgraduate Diploma in Advance Trust Investments Limited as an
Independent Non-Executive Director Management from the Asian Institute Independent Non-Executive Director
on 16th May 2011. of Management, Manila, Philippines on 16th May 2011.
and a Postgraduate Diploma in
He is a Banker with over 30 years Development Finance from the He has 20 years Financial and
experience and also possesses National Institute of Bank Management expertise in
experience in Credit and Risk Management, Pune, India. Manufacturing, Construction, Trading,
Management, Human Resource Hotels, Finance Trade in the areas
Management and Deposit Portfolio He was a member of the Board of of Strategic Planning, Financial
Management. He has held positions Directors of People’s Leasing and Reporting and Advising, Financial and
such as Senior Manager, Regional also represented People’s Bank as a BP Restructuring, Forecasting and
Manager, Assistant General Manager, Director in Board Southern Regional Budgeting, Project Evaluation and
Deputy General Manager and CEO/ Development Bank. Feasibilities, Business and Productivity
General Manager in the Banking Enhancement, Due Diligence,
Sector. Treasury and Risk Management, ERP/
Technology Implementation, Financial
He is a member of the AIB Association Systems and Internal Controls,
of Bankers in Sri Lanka and FBA, Taxation, Cost Control Programmes,
Professional Bankers Association of Team Leadership, Factory and General
Sri Lanka. He holds a BA (Arts) from Administration and Comprehensive
the University of Peradeniya, LLB from Auditing.
the Open University of Sri Lanka and a
Postgraduate Diploma in
Page 024
Board of Directors
Mr. Ravi Jayawardena
Independent
Non-Executive Director
He has held positions such as Mr. Ravi Jayawardena was appointed Mr. Ravi Jayawardena holds an
Accountant, Group Management to the Board of Edirisinghe Trust MBA from the University of
Accountant, Head of Finance, Financial Investments Limited as an Sri Jayewardenepura and a Diploma
Controller, Group Finance Director and Independent Non-Executive Director from the Chartered Institute of
Director/Management Consultant in on 16th May 2011. Marketing (UK). He is currently
leading companies. reading for a Phd at the University of
He has experience in multiple Colombo. He has conducted
He is an Associate Member of The industries (FMCG and manufacturing) training programmes on Sales and
Institute of Chartered Accountants of and multiple categories such as Marketing through Glendenning
Sri Lanka (ACA) and a Fellow Member Home and Personal Care, Food and Consultancy for Unilever (Malaysia),
of the Society of Certified Beverages and multiple channels British Petroleum (India) and Unilever
Management Accountants of such as Hypermarket, Supermarket, (Bangladesh). He has been lecturing
Sri Lanka (FSCMA). He is also a Finalist Pharmacy, General Trade Kiosk and at the Chartered Institute of Marketing
at Chartered Institute of Management Hotels. He also has experience on (UK) for the last 12 years and was a
Accountants (UK). Distributor and Wholesaler routes to Senior Marketing Lecturer for the MBA
Market, Field Sales - General Trade, at the University of Wales (UK) and
Key Account Management, Industrial Manipal, India.
Marketing and Selling Brand and
Category Management. He had held
positions such as Brand Manager,
Senior Accounts Manager, Customer
Category Manager, Head of Modern
Trade and Director - Sales. He is
currently the CEO - Sales & Marketing
of Maliban Biscuit & Milk
Manufactures.
Page 025
N.G.M. De Silva D.S. Pushpakumara P.B. Ranjan Perera

Chief Executive Officer General Manager - General Manager -
Finance and Administration Property Development
N.G. Mahendra De Silva is a Chartered D.S. Pushpakumara is an P.B. Ranjan Perera is a qualified
Accountant by profession, and a Fellow Associate Member of The Institute of Draughtsman and has completed the
Member of The Institute of Chartered Chartered Accountants of Sri Lanka National Certificate of Technology
Accountants of Sri Lanka (FCA). He has (ACA), and also an Associate in Quantity Surveying (QS) at Junior
also obtained the memberships and Member of the Institute of Chartered Technical College. He has 7 years
qualified as a Certified Management Management Accountants of Sri Lanka. of experience in serving the current
Accountant, Sri Lanka (FCMA) and He has 3 years experience in serving position at ETI, and a total of 25 years
Corporate Management Team
Certified Management Accountant the current position at ETI, 7 years experience in the Construction and
(CMA), Australia. He earned an MBA experience in the Finance Sector and Property Development Sector.
from the Postgraduate Institute 16 years of Mercantile experience.
of Management, University of
Sri Jayewardenepura in 2001 and he
has over 30 years experience in the
Corporate Sector, covering a number
of corporate bodies including two
multinational Companies – Ceylon
Tobacco and James Finlays. He worked
in the capacities of Accountant, Chief
Internal Auditor, General Manager –
Finance and Administration and held
several Directorships in the Finance
Sector prior to joining ETI. De Silva has
7 years working experience at ETI in his
current position.
Page 026
O.W. Sahabandu D.S. Kumarasiri R.M.C. Rajaguru

General Manager - General Manager - Assistant General Manager -
Leasing Pawning and Gold Sales Investments
O.W. Sahabandu has completed D.S. Kumarasiri holds a B.Sc. Business R.M.C. Rajaguru holds a
Stage 1 of the Chartered Institute of Administration (Special) Degree from BB Management Accountancy
Marketing, UK and holds an MBA in the University of Sri Jayewardenepura. (Special) Degree from the University
Sales Management. He has 5 years He counts 10 years work experience of Kelaniya, and Diploma in Treasury,
experience in serving at the current at ETI, and he is presently performing Investments and Risk Management
position at ETI and a total of 20 years a major role in operational and from the Institute of Bankers of
experience in credit and leasing in the marketing activities in the Pawning Sri Lanka. He counts 13 years
Finance Sector. and Gold Sales Division. experience in the Finance Sector and
7 years work experience at ETI, and
he is presently heading the Treasury
Division of the Company.
Page 027
M.A.A.M. Saman Kumara E.S.G. Nanayakkara K.M.D. Liyanage

Assistant General Manager - Chief Internal Auditor Manager - Agro
Human Resources and
Quality Assurance
M.A.A.M. Saman Kumara holds a E.S.G. Nanayakkara holds an K.M.D. Liyanage is holding a
B.Sc. Business Administration (Special) MBA from Postgraduate Institute B.Sc. Agriculture 2nd Class Honours
Degree from the University of of Management, University of from the university of Peradeniya.
Sri Jayewardenepura and an MBA in Sri Jayewardenepura, and is an He has 3 years of working experience
Human Resource Management (PIM). Associate Member of Chartered in serving at ETI as the Manager -
He has 3 years work experience in Institute of Management Accountants Agro and nearly 30 years of
serving the current position at ETI and of UK (CIMA); and has 6 years work Management and Marketing
over 10 years experience in Human experience in serving the current experience in semi-government
Resources and Administration. position at ETI. He counts for over 30 organisation as well as leading
years experience in the Finance Sector. multinational Agro Companies.
Page 028
Guiding an enterprise to success in
a consistent and sustainable manner
within often volatile parameters, is no
easy task. The stewardship of the affairs
of ETI is in the best possible hands. The
collective competencies, capacities and
years of experience found amongst
members of the Board of Directors,
Corporate Management and Senior
Management is an invaluable asset
in charting a successful course for the
Company. Their ability to enthuse and
motivate every employee at ETI to work
to strategy, achieve goals and share
in the rewards of success is equally
invaluable.
P.A.C.D.C.N.P. Jayawardane W.I. Sudusinghe Pavithra Liyanage

Manager - Marketing Manager - Information Technology Manageress - Legal
Senior Management Team
Jagath Wijayarathne S. Manjula Perera K.M. Chandana Dassanayake

Manager - Leasing Manger - Credit Branch Manager - Kurunegala
D.M.S.B. Dissanayake K.S. Sampath Silva P.K.M.K. Dayarathne

Manager - Property Development Manager - Projects Manager - Gold Sales
Page 030
Senior Management Team
M.D. Senanayake U.L. Sarath Thilakarathne S.D. Sarath Kumarasiri

Manager - Pawning Manager - Welfare Accountant - Credit & Leasing
T.A.I. Perera K.A.D.H.S. Kodippiliarachchi W.M. Mahesh Amaradasa

Accountant - Pawning Manager - Property Development Management Accountant
Thilan Nalinda Premathilake K.M. Piyal Suranga H.P. Ajantha Lakmal

Branch Manager - Bandarawela Branch Manager - Moneragala Manager - Recovery
Page 031
Page 032
[ A Portfolio of Great Variety ]
The great variety of dance forms weaves a rich tapestry of form and movement across this branch of
the arts…it’s a variety we understand well as it mirrors the varied offerings that repose within our own
portfolio. As with dance, where the greater the variety the greater the experience, ETI’s varied portfolio
has helped build a strong customer base and business stability.
Page 033
Country Economic and By 2010, the unemployment rate (excluding Assets growth of RFCs
the Northern and Eastern Provinces), which
Business Climate was 8.8% in 2002 and declined to 4.9%
In 2010/09, the total assets stood at
In 2010, the Sri Lankan economy recorded Rs. 234 Bn, showing a growth of 26%
reflecting the increased availability of
an impressive growth of 8.00%, the highest compared to the marginal 6% growth
employment opportunities alongside the
annual rate of growth reported in the last reported in 2009/10. Hire purchase finance
enhanced economic activities in the country.
three decades. lease and pawning were the major sources
of accommodation accounting for 35%, 30%
Rising stock prices resulting in higher
This remarkable performance was supported and 10% respectively. the growth of total
capital gains, declining interest rates/yield
Business Performance
by the restoration of permanent peace, accommodations was 38%.

rates and an appreciation of the Rupee
which created an environment conducive against the Dollar with greater stability in
for the expansion in economic activity, the exchange rate were the key market
the strong macroeconomic environment, outcomes.
Liability Growth of RFCs
increased domestic demand, the The increase in the growth of deposits
development of infrastructure facilities, Rising stock prices resulting in higher from 16% in 2009/10 to 22% in 2010/11
and improved external demand with the capital gains declining interest rates/yield reflected the improved depositor trust in the
gradual recovery in the global economy and rates and a Dollar with greater stability in RFC sector. Deposits were the major source
favourable domestic weather conditions. The the exchange rate were the key market of financing representing 63% of the total
improved performance in all key sectors of outcomes. liabilities.
the economy contributed towards the high
economic growth in 2010.
Financial Sector Performance Profitability of RFCs
The services sector, which contributed Benefitting from the decline in interest rated
Finance companies (RFCs) gradually
59.3% of the GDP, grew at an encouraging in 2010/11 and improved economic activity,
recovered in 2010/11 after experiencing
8%, compared to 3.3% in 2009. The profitability of the RFC sector re-emerged in
liquidity problems since 2009/10. The
banking, finance, insurance and real estate 2010/11 with the sector posting a before-
growth of accommodations and deposits,
sub sector expanded with increased income turn profit of Rs. 2.2 Bn compared to loss
improved credit quality and increased profits
from investments and lending activities, of Rs 1.2 Bn in 2009/10. A considerable
were the favourable indicators. With regard
foreign exchange operations and widened increase in net interest income mainly
to financial institutions, the expansion
financial services through the expansion of contributed to the increase in profits.
of business operations supported by the
bank branches and other services outlets.
recovery in credit/accommodation, improved
profitability, enhanced capital adequacy and
Inflation continued to remain low at mid-
the reduced non-performing loan position
single digit levels. Consumer price inflation
with increased loan loss provision point to
continued to remain at 5.9% and Colombo
their better performance.
Consumers Price Index continued to remain
at 6.9%, by end 2010.
Page 034
Business Perfomance
ETI’s Performance in Relation to Industry

With favourable macroeconomic conditions and the recovery in economic activity, the key
opportunities identified for the ETI business have been summarised as follows:
Opportunities ETI Response
Demand growth in hire purchase, - Two new pawning centres were opened in Homagama
finance lease and pawning. and Ambalangoda.
- Modified the city office in Cotta Road (Leasing and Hire
Purchase Centre) in order to offer better services and
double the current target of leasing and hire purchase
advances.
- Offering competitive rates to customers
- Planned to open another fully-fledged branch in
Dambulla.
Demand is created for value- - Offering guaranteed certificates for jewellery quality.
added products
- Pawning advances - Repairing damaged gold jewellery articles.
- Gold jewellery sales - Offering loan facilities for classic vehicles (old vehicles)
- Leasing and hire purchases - Offering pawning advances for diamond and gem items
The size of the market, growth rate in non-banking sector and ETI’s growth rate in the year
under review are presented a follows:
Pawning Leasing Hire Purchase
Market size (Rs. Bn) 14,235 40,290 101,675

Market growth (%) 10 30 35
ETI growth (%) 49 (-21) 15
ETI’s Stand in the Industry

Real strength of the stability can be seen in the last three decades with showed positive
business growth. We proud say, we are the market leader of pawning business among
non-banking sector. Also the business strategy, operational performance and customer
service-wise, we are among the best.
Page 035
The objective of financial review and

analysis is to help various decisions of
stakeholders, including shareholders,
managers and depositors of Edirisinghe Trust
Investments Ltd. and to better understand
the financial position and operating activities
for the year ended 31st March 2011.
This financial review and analysis is given

meaningful conclusions about the operating
performance, financial strength and stability.
Financial Review
Income
The ETI’s income is derived from interest
income of Pawning, Leasing, Hire Purchase,
other loan and non-interest income.
Pawning income is the main source of
income.
The ETI’s income reported for the financial

year was Rs. 2.53 Bn. This is an increase of
Operating Expenses Provision for Bad and
Rs. 413 Mn (19%), compared to the previous
year. The Pawning income contribution The operating expenses before provisioning Doubtful Debts
towards the total income for the year has increased by 35% over the period under Provision for loan losses have come down
stood at Rs. 1.74 Bn and it represent 65% review from Rs. 582.7 Mn to Rs. 786.1 Mn. by 48% during the year as a result of
of total income. Other income witnessed This has been led by the expansion of the improvement in recovery of non-performing
improvement in financial year 2010/11 of ETI’s branch network in addition, additional and performing loans and better assess the
Rs. 216 Mn compare to the last year. This is staffs were recruited to Leasing Division credit worthiness and repayment ability
mainly due to gains arising from changes in and some administrative areas to meet the of the customer at the point of granting a
fair value of biological assets. demands of expanded businesses. Operating leasing facility.
expenses have been kept low through a
Overall the net income of the Company concerted effort by the ETI to implement
grew by 54% in 2010/11 in the financial more stringent cost controls and eliminate Taxation
year compared to the previous year, while unnecessary costs. The increase in operating
The ETI’s corporate tax expenses for the
improving the non-interest income to net expenses has been less than proportional
year 2010/11 financial year was Rs. 55.9 Mn
income ratio from 20% to 36%. This was to the increase in income; hence the cost
against Rs. 47.7 Mn for the previous year.
mainly due to increasing the investments of income ratio has improved to 65% in
Accordingly, the effectively corporate tax
in leading portfolio and while reduction of 2010/11 financial year compare to the
rate reduced to 18% in 2010/11 compared
borrowing cost by .04%. previous financial year 75%.
to a high 42% in 2009/10 financial year.
Page 036
Financial Review
Profitability Leasing and Hire Purchase had maintained

a modest growth and therefore, in the
The net profit before and after tax stood
asset composition, Pawning advance has
respectively at Rs. 316 Mn and Rs. 260 Mn
been making a distinctive improvement as
recording highest growth of 306% in the
mentioned in the following chart:
history of 41 years of the ETI against
Rs. 64 Mn correspond in prior year. This
is mainly due to the ETI enjoying a high
interest income from pawning advances.
Earnings Per Share (EPS) increase by 306%
from Rs. 123/- in 2009/10 to Rs. 501 in
2010/11 due to comprehensive performance
of the Company.
Shareholders’ Funds
Shareholders’ funds of ETI grew by 18%
to Rs. 1.68 Bn in the financial year. This is
mainly due to high result of retained profits
during the year.
Liability Growth
The ETI recorded 19% growth in the total
deposit base during 2010/11 financial year
to Rs. 11.4 Bn. For the growth of deposit
liability, the main factor is ETI has been
reflecting its stability to the public and won
Assets Growth the confidence of its valuable customers
The ETI managed to maintain steady growth over the years.
of assets base by 22% during the year to
Rs. 14.69 Bn for the growth of assets, the
main contributor was the Pawning business.
In comparison to the growth of Pawning
stock, the other contribution - mainly
Page 037
Financial Review
Capital Adequacy Future Outlook

ETI has maintained its capital well above On 2011/12, the financial outlook for the ETI
the minimum limits as set out by CBSL with budgeted profit before tax 401 Mn and it is
regard to core capital and total capital for an improvement compared to the 2010/11
the year ended 31st March 2011. The ETI’s financial year.
capital adequacy ratios remained healthy
with Tier 1 and total ratios at 14.54% and To reach above challenging figure, ETI
14.89% respectively as at 31st March 2011. intends to expand its Pawning, Leasing and
HP business centres network to a total of 60
in view of the expected economic growth of
the country the resulting demand for debt
financial and to provide better services to
its existing potential customers. in addition,
ETI is planning to list on the Colombo Stock
Exchange and funds raised thrown the issue,
would be utilised to partly finance loan
disbursements of the Company.
ETI has already obtained approval from

the CBSL to upgrade five business centres
to fully-fledged branches in order to offer
better service and more convenience to
our existing and potential fixed depositors
in 2011/12 financial year. With all these
targets ETI 100% committed towards
sustainable growth.
Return on Average Assets

The return on average assets stood at
1.79% and return on average equity at 16%
in 2010/11 financial year.
The performance of the overall loan and

advance and product portfolio improved in
2010/11, leading to a strengthening of the
stability of Edirisinghe Trust Investments
Limited.
Page 038
If the product portfolio is to be
effectively managed, it is important to
operate only the required products in
terms of present and future profitability.
The right operational capacities and
timely distribution of each product are
obvious factors when this function is
handled efficiently. Following these
management principles, the Company
had taken measures to divert the major
portion of its investments into the
products of Pawning, Gold Sales,
Leasing and Hire Purchase.
Page 039
Management of product portfolio in Pawning Focus on customer care services is another
an effective and efficient manner is differentiating factor at ETI. The ability to
The demand for pawning loans has been
a core business function that leads to complete a transaction in three minutes
increasing in the recent past, and it had
Product Portfolio and Operating Results
the attainment of primary goals of the is a winning formula of technical skills of

recorded a 28% growth in the banking
organisation. If the product portfolio is gold assessors, efficient IT systems and
industry alone in the first three quarters
effectively managed, it is important to positive attitudes of all staff members. The
of 2010. In that period, many banks
operate only the required products in terms annual knowledge and attitude transfer
aggressively entered into the market
of present and future profitability. The right programmes targeted at developing
creating a very competitive environment
operational capacities and timely distribution customer care skills in all employees have
for existing payers in the industry. Yet,
of each product are obvious factors delivered outstanding results to the bottom
regardless of severe competition, ETI
when this function is handled efficiently. line; and these programmes are conducted
was able to exceed its revenue targets
Following these management principles, by veterans in the field.
throughout.
the Company has taken measures to divert
the major portion of its investments into the EAP Pawning Specialists prime intention is
ETI pawning products are marketed under
products of Pawning, Gold Sales, Leasing to help its customers redeem their articles,
the brand name EAP Pawning Specialists a
and Hire Purchase. Property development and thereby, ensure that the customers will
name associated with technical expertise,
products will be run small, without major not loose their security, which can be used
customer care services and security for
investments, with the intention of capturing to obtain future financial facilities. ETI has
articles pawned.
future market potentials. As a key strategic strong physical safe-locker systems and
decision, ETI decided to discontinue two reliable security procedures to protect the
Technical expertise is a critical factor in
product lines namely ETI Wheels and ETI goods of customers.
pawning that generates benefits both to
Trade Finance in the financial year 2010/11.
the customer and the Company. When gold
To manage the business portfolio The key characteristic of the customers in
assessors are equipped with a high level
productively and contribute to the bottom the market segment of EAP Pawning is that
of technical capability, they can assess
line of the Company, to ensure long-term they are very time and service conscious.
the quality of gold/jewellery and decide
survival and stability, there are prerequisites Income-wise, people from upper middle
the highest amount of advance that can
to be fulfilled. Among many, the following class to lower levels in the economy come
be offered to the customer within a very
factors are critically important: to ETI for pawning transactions. Pawning
short period of time while ensuring that no
loans are taken by customers for both
 Assessment of market size, needs, damages are made to jewellery articles. On
consumable and business purposes.
behaviour-patterns and profitability- the other hand, the Company can increase
levels, its sales revenue without exposing itself into
Operating and financial performance of
unwanted risks i.e. acceptance of dud-articles
 Product design/redesign to accentuate Pawning Division have been outstanding all
and increasing unredeemed stocks.
the Unique Selling Proposition (USP), the time irrespective of different economic
scenarios. In the last five years, pawning
 Product branding, positioning and
advances (sales) increased from Rs. 2.6 Bn
delivery, and
to Rs. 15.1 Bn which is an exceptional
 Strengthening the support systems.
Page 040
Year on Year (YOY) growth of 480%. In the Gold Sales

financial year 2006/07, pawning income
The international gold market has recorded
recorded as Rs. 409 Mn and it tremendously
steady growth figures except few short-term
increased up to Rs. 1.7 Bn in the last
downturns in price. Removal of import taxes
financial year (2010/11). The pawning
and related levies on gold-imports effective
stock is a key stability-factor that generates
from March 2010 positively contributed
income and profits. It was a very healthy
towards the gold jewellery industry. On the
figure throughout and recorded as Rs. 1.1 Bn
other hand, circulation of gold jewellery
in 2006/07 and Rs. 5.6 Bn in 2010/11. The
and other gold products boost the business
following graphs show the steady and sharp
volumes of pawning industry too.
growth figures of pawning business.
Gold Sales Division markets its jewellery

products as ETI Gold, a name associated
with quality jewellery sold at affordable
prices. It maintains the quality standards of
all jewellery articles coming into showrooms
by employing a team of technical experts
The key enabler for the above achievements who check the details of each and every
was the human resource factor backed article. According to ETI gold pricing policy,
by the sophisticated IT system which was jewellery items are set with low prices
correctly identified and handled by the by excluding labour charges; and this
management. The pawning staff cadre has become feasible due to the benefits
increased from 122 in March 2004 to 348 associated with jewellery sourcing strategy
in March 2011. During the same period of the Company. The division presently
pawning branch network expanded from runs with 05 jewellery showrooms and
20 to 46 reaching many major cities of 02 jewellery selling outlets attached to
the country such as Galle, Matara, Badulla, pawning branches, and they operate in a
Bandarawela, Ampara and Ratnapura. In the niche market. In the period under review,
financial year 2011/12, two more branches ETI closed down 06 non-profitable gold
will be opened to meet the increased profit sale outlets, and concentrated all its efforts
and other targets. All the pawning branches on the selected gold sale centres while
are networked using a sophisticated IT maintaining its bottom line figures.
system backed by a high-performance IBM
server. The employees of the division not
only do businesses well but they actively
involve in organising common functions and
CSR projects of the Company.
Page 041
Financial and Manpower Highlights cadre and closing down of six gold sale market shares. The double-digit growth rate
– Gold Sales outlets. And the total assets have increased in the North and the East and the over 7.5%
by a remarkable percentage of fifty (50). overall GDP growth in the country caused
2010/11 2009/10 Change
Criterion (Rs. Mn.)* (Rs. Mn.)* % The excess staffs were transferred from by expanded economic activities created
Gold Sales Division to Pawning Division to many opportunities for both large and small
Turnover 691 613 13 fill their vacancies. These results provide scale operators to expand their businesses,
Gross Profit 292 219 33 clear evidences about the productivity which in turn positively affected the leasing
Total Assets 732 489 50 improvement measures taken by the and hire purchase industry. Growth of
Number of Company. tourism industry, transportation sector and
Employees 35 44 -20 agro businesses together with import tax
* For financial criteria In addition to selling jewellery, ETI Gold reduction on motor vehicles boosted the
provides the services of jewellery repairing, industry performance in the period under
re-polishing, valuation, exchange and review. The availability of reliable online
astrological guidance on gemstones. All staff credit information through Credit Information
members of the division have been properly Bureau (CRIB) is another positive factor that
trained in gold technical skills and customer assists fast credit approvals and avoidance
care services to create a winning product. of future non-performing loans.
The gold-sale operation too is backed by
another sophisticated IT system that won a ETI Leasing started its operations in 2004,
BCS (British Computer Society) Certificate like and the division has developed a leasing
the pawning IT system. Both EAP Pawning and Hire Purchase (HP) stock worth
and ETI Gold products which have been Rs. 1.6 Bn at the end of the financial
in the market for over four decades are year 2010/11. Over the last four financial
administratively and operationally handled years, the leasing and HP stock has been
by one General Manager, and this decision maintained at a similar level, but it has
has lead to gain a number of economic and been generating incremental income
other benefits to the Company. figures during the same period. During last
five years, even though the stock value
has not increased drastically, ETI Leasing
Leasing and Hire Purchase (HP) has increased the number of contracts
Vehicle leasing and HP industry like the minimising the risk-factor on individual-
pawning industry is very competitive, defaults, and increasing the division profit
and presently, over 70 players from the figures. For the period under review, it
Compared to the previous financial year, segments of specialised leasing companies, recorded a profit figure of Rs. 91 Mn,
the division has recorded 13% growth in finance companies and commercial banks which is a remarkable achievement for the
turnover and 33% growth in the gross profit aggressively compete to increase their own division. The following graphs show the
regardless of 20% decrease in employee movements in the number of leasing/HP
contracts, the total stock and the income
generation.
Page 042
ETI Leasing has been building its brand material prices, environment regulations
image as a leasing provider with flexibility, and so on. Real estate and property
speed and customer service; and its motto development products are demanded both
is to help its customers grow with the for consumable and investment purposes.
developments of the Company. ETI Leasing In present Sri Lankan context, investors’
is at the moment operating in the motor- attitudes over property development
vehicle industry and provides its services products need improvements compared to
to a range of customers who want to buy movements in developed countries. These
various types of motor vehicles. To carry products are more secure instruments
out its operations smoothly according to compared to certain financial products;
certified ISO Standards, they employ a team and this proposition should be clearly
of qualified and trained professionals and communicated to potential local and foreign
staff in six prominent business locations - investors by all the players in the industry.
Colombo (Borella), Kurunegala, Matara,
Bandarawela, Moneragala and Embilipitiya. According to several economic reports,
In addition to its two main products – country’s construction industry and housing
leasing and HP – it provides personal market has grown strongly in 2011, mainly
loan facilities to the staff of ETI. And, due to Government’s infrastructure projects
presently the division conducts some and resettlement programmes, compared
feasibility studies on new products such as to the downturn trends in 2008 and 2009.
microfinance and operating leases. In the year 2010, disbursement of loans for
construction of houses, commercial buildings
and other properties has grown by about
Property Development and 40% compared to the previous year. This
Real Estate trend has to further move into the area of
semi-luxury to luxury housing market too.
There is a direct link between the growth
of property development industry and the
The above two divisions under the brand
economic growth of a country in many
names ETI Homes and ETI Lands were
respects. In general real estate businesses
recording remarkable performances
and total construction industry develop
especially before the financial crisis
when the economy grows, but the rate of
occurred in Sri Lanka in 2008. ETI Homes
development is determined by the factors
has obtained ISO Certification for its
such as demand for particular products
processes, and maintained its high quality
(e.g. demand for houses against commercial
standards over the years in all its products.
buildings), inflation, disposable income
of people, availability of skilled labour,
Page 043
In addition to selling its architecturally Fixed deposit products of the Company are
designed modern quality homes, they also branded as ETI Investments which always
undertake businesses to build new houses ensure to give strong product offerings
on the lands owned by customers; and to its valuable customers who have been
this product is marketed as ETI Builders. investing in the Company over several
The same quality standards of ETI Homes decades. Majority of the customers transact
are maintained at ETI Builders’ projects too. with ETI over a long period of time because
This new concept has expanded market of its stability factors – financial strength
opportunities of the division without major backed by a solid asset base, investing
financial commitments from the Company. depositors’ money in carefully selected
The following pictures are from some of the high-return products, efficient and effective
successfully completed projects: Fixed Deposits product portfolio management to ensure
Fixed Deposit (FD) is one of the highly short-term liquidity requirements and
and badly affected financial products in long-term investment returns, business
the recent years, especially due to crises planning and management of operations
occurred in financial institutions. This is one handled by a team of qualified professionals,
of the main instruments that all financial and an unmatched flexible and customer
institutions including banks use to manage care services to all the customers. The
investment portfolios; and its supply is following graph that shows the growth
highly affected by the trust-factor of the of the deposit base gives the evidence
general public. Recent reduction in interest for the customer confidence earned by
rates for FDs has affected the earning the Company regardless of several recent
capacities of FD investors, and it has some calamities in the industry.
impact for the inflow of deposits to finance
companies. In the recent future this product
will have to face competition from other
investment instruments in the share market,
property industry etc.
Page 044
ETI always ensures that its fixed deposit

customers will get the maximum possible
returns without creating unhealthy
conditions for the operations and
long-term sustainability of the Company. In
addition to different types of fixed deposit
products, ETI Investments also provides
FD loans to its customers, especially to
meet their short-term money requirements
without compromising the total amount
of benefits of their investments. The
entire operations are fully centralised and
computerised using the latest ICT practices
to ensure an efficient and trustworthy
service to customers. All the staff members
engaged in both front and back office
operations are trained in customer care
services, efficient use of systems, language
skills and so on.
Page 045
Page 046
[ Giving Life to Enterprise ]
It is the energy and life force of the dancer that makes for a sublime performance. At ETI, strategy and
blueprint would remain inanimate without the life force generated by our people. The competence
and capacities of our staff from top management to office aide is what drives our business to achieve
exemplary success.
Page 047
Organisation stability and sustainability meeting stakeholder expectations without Economic Development
focuses on balanced development both compromising the well-being of future
Success depends on proper planning and
at macro and micro level economic generations. In addition to adhering to
effective implementation of actions. At
operations, and it concentrates on three statutory compliance standards, firms are
ETI, all from top to bottom are educated
important aspects, namely economic expected to contribute towards the above
and trained to think and act strategically,
development, environmental protection three aspects in an outstanding manner.
keeping the end results in mind. The well-
and social contributions to ensure the Accordingly, ETI adopts the following model
thought vision, mission, goals and short-
endurance-capacity of the organisation. In in planning and executing its operations in a
term objectives of the Company provide
this context, organisations should look at responsible way.
right direction and energy for all employees
Sustainability Report
achievement of organisational goals and

to execute their duties and responsibilities
productively. The business results recorded
in product portfolio analysis and other
achievements highlighted below show
evidence that the Company has selected the
right approach.
Strategic Thinking and

Social Decision Making
Needs A captain who knows where to go in the
safest and fastest way always uses his map
and the compass to keep the ship in the
right direction and at the correct speed.
Bearable
In the same way, a good General always
Equitable
Actions Decisions works with his strategic plan to combat
enemies and win his mission. Similarly,
the top management headed by the
Sustainability Chairperson and the senior management
headed by the Chief Executive Officer of ETI
jointly share the management philosophy
Continuation that an effective strategic thinking and
Environment Viable of Economic decision-making process always leads to
Protection Projects Activity the achievement of desired results. The
following management philosophic model
helps ETI Management think strategically
and formulate plans.
Page 048
Working with
Government bodies,
general public and other
stakeholders on various
concerns
Understanding
Continuously shareholder expectations
assessing and meeting and taking every possible
customer expectations: measure to increase
focus on factors that shareholder value: focus
determine unique selling on key performance
propositions indicators
ETI
Vision
Mission
Goals and Objectives
Business Strategies
Business Values and
Determining
Corporate Culture
employee competency
requirements (knowledge,
Educating suppliers
skills and attitudes) with respect
and other key business
to business strategies,
partners about customer and
and shaping employee
process requirements and setting
competencies accordingly;
standards: focus on quality
and looking after
standards and continuous
their needs
flow of inputs
Continuous
improvement of policies,
procedures and systems to
ensure compliance,
effectiveness
and efficiency
Meeting Stakeholder Needs: increased its profitability and attained high Based on the market-survey information
Economic and Customer Aspect growth figures with respect to its asset-base and customer-responses, the Company has
in a remarkable manner as shown in the introduced new products and discontinued
Shareholders are mainly concerned about
details below. non-profitable ones. And, its existing
the Return on Investment (ROI) in terms of
products, especially the pawning business,
profitability and value of net assets of the
have entered into new geographic regions
Company. In the last ten-year period, ETI has
Page 049
under business expansion projects. ETI is In promoting the concept of going-concern,

presently serving over 450,000 customers the Directors and senior management
annually, and to meet that challenge have taken a number of measures such
successfully, the Company has taken as preparation and use of a corporate
measures such as equipping sales and plan, application of corporate-governance
customer care staff with necessary skills practices and encouraging transparency
through training and IT systems. through publication of financial and other
information using accepted media such as
Leasing Division while maintaining its paper notices and annual reports.
stock levels has increased the number of
customer-contracts; and this has helped the Employee Statistics
division reduce per-contract risk level and
Employee statistics communicates
improve NPL ratios.
information on different dimensions of
management. Growth of employee cadre
ETI considers those who transact with
has to have a correlation with business
Investment Division both as investors and
growth, and it gives an indication about
customers. As investors, they come to ETI to
the creation of employment to the nation.
get better returns while ensuring the safety
Gender analysis tells how we have given
for their money. Managing this expectation,
opportunities to female candidates while
especially in an environment where public
meeting specific job requirements of
had lost confidence on many institutions, has
the Company. Statistics related to the
become a real challenge for all players in the
composition of staff grades shows the
industry. ETI’s successful approach and actions
balance of the organisational structure while
are reflected by the growth of its fixed
the analysis of employee-services (number
deposit base. On the other hand, in addition
of years of experience) helps understand the
to securing better returns and safety for their
cumulative experiences against utilisation of
money, the Company has taken all possible
young energy.
measures to provide outstanding services to
all its fixed deposit customers. ETI, with the
participation of its Chairperson and Managing
Director, has started several programmes
to offer additional benefits to its different
customer groups. In one of the recent
initiatives, ETI appreciated its customers by
holding a customer-cocktail party conducted
at Waters Edge, Battaramulla in April 2011.
The Company is in the process of planning
various other services to other customer
groups that didn’t participate in the events
organized in the recent past.
Page 050
Social Contributions
Organisations can address social issues
and provide solutions both internally and
externally; ideally, they should start with
internal initiatives focusing on employee
development and welfare. Presently, ETI has
put more energy on providing internal
social benefits.
An Induction Programme
Meeting Stakeholder Needs:
Social Aspect
When the Company recruits candidates, it
does not look at the candidate just against
a vacancy. ETI recruits people for careers.
From the point of the selection interview,
managers communicate to all potential
candidates about the importance of having
a career ambition, and encourage them
to think in the right direction. All new
comers to the Company have to attend the
A Customer-Care Training
mandatory Induction Programme in which
they are provided with valuable career
guidance tips in addition to the general
corporate and industry information that are
needed for successful job performance.
First Aid Training at a Site
The organisation-wide Product Awareness,

Customer Care and Language training
programmes conducted by experts in their
fields not only help employees perform
in their present jobs effectively but such
training help them equip with right
Page 051
attitudes and skills needed for future career

advancements too. Training in the areas
of Health and Safety such as First Aid and
Fire-Fighting provides benefits to those
within and outside the Company. The skills
gained through training, work experience
and company extra-curricular activities are
highly considered at promotion and salary
increment decisions as a Company policy.
CSR Project Conducted by Pawning Staff Donations to Flood-Affected People
ETI believes engaged and happy employees

are productive and tend to retain in the
Company. Employees’ voluntary participation
to organise welfare events such as get-
togethers and sport-tournaments and
corporate social responsibility projects
such as annual blood donation campaign
and school development projects can
be highly appreciated. The team spirit
developed and benefits to them and the CSR Project - a School in Puttalam
society are tremendous.
In the period under review, ETI formalised

its welfare function by establishing a
welfare fund and developing a welfare
administration policy. All employees are
entitled to get a number of welfare benefits
from the scheme, in addition to the
January First Celebrations common benefits such as medical insurance.
The annual employee satisfaction survey
conducted in February each year provided
favourable feedback regarding the human
Winning Spirit at Sport Events
resource climate of the Company. Employee
(B Division Mercantile Cricket)
retention rate has always been maintained
above 98% which is within the industry
standard.
Page 052
Over and above internal development and  Provisions for best house-keeping and many other important documents,
welfare initiatives and external CSR projects, principles (e.g., garbage disposal), printing work is carried using certified paper
ETI assists Janasarana Foundation - the forms like FSC (coming from well-managed
 Growing new plants to make the
charity organisation founded and managed forests and other controlled sources),
environment green, and
by Dr. (Mrs.) Soma Edirisinghe to serve the and documents are printed with VOC-free
disadvantaged in the society. Apart from  Enhancing the aesthetic appearance of vegetable oil bases.
providing financial assistance to Janasarana premises and surroundings.
fund, ETI employees help the foundation
carry out many of its charity projects.
Further, the Property Development Division
Compliance with Laws and
has initiated to develop and promote Regulations
real estate projects for which high levels Statutory regulations are set up to
Environment Protection of values are added through agricultural protect the rights of people in society,
The third facet of sustainability, one of the projects. These projects make the safeguard environment and strengthen
key global concerns today, is environment environment greener and wet in addition to the continuation of economic activities.
protection which is directly affected by their economic value additions. Therefore, ETI is with the strong belief that
the activities of all firms and individuals to compliance to those regulations leads to
different degrees. In the area of energy saving, ETI has taken sustainability.
several measures to reduce the electricity
Operations, especially property development and fuel consumption. The decision to The Company has prepared all policies and
and construction, directly affect the close administrative offices on Saturday procedures, and designed operational and
environment. ETI always honours the by covering the same workload during reporting systems in compliance with those
regulations of Central Environment Authority weekdays, reducing the usage-time of the established laws and regulations. Special
and plan its projects accordingly. Designing central A/C and using energy-saving lights committees such as Audit Committee and
environmentally viable projects is a key are some examples. Company’s vehicle and Risk Management Committee look into
responsibility for all project managers who motorbike fleet is maintained with proper compliance-related matters. In Corporate
should focus on the following areas: maintenance schedules ensuring their Governance report, additional information
 Avoiding disturbances to natural cycles efficient usage. on compliant-actions to the Directions issued
and flows (e.g., natural water-flowing by the Central Bank of Sri Lanka is provided.
systems), Senior management team has already
taken a decision to stop printing several
 Effective land and other resource
documents, and alternatively to use such
utilisation,
documents in electronic form. At the head
 Construction according to international office, some paper-recycling companies
standards that ensure safety and have placed their collecting bins to gather
environment protection, waste papers. In Company’s Annual Reports
Page 053
 Winning Division B Mercantile Cricket

Important Achievements in
Tournament in 2011,
Sustainability Path
 Obtaining ISO certifications for ETI Homes
As per the ten-year performance summary of
and ETI Leasing,
the Company, ETI has been showing positive
trends in many aspects. In the last five  Development of number IT Systems
years, the Company faced both positive and (Pawning and Gold Sales systems
negative economic consequences emerged have won BCS certificates), which
locally and globally; and it successfully were backed by an IBM P series high
passed all those key milestones. performing server,
The following achievements in the last ten-
 Winning the internationally recognised
year period are important to be considered in
projecting the future success of the Company: Bronze ARC Award for the Annual Report
2008/09, and
 The growth of total assets from
Rs. 704.9 Mn to Rs. 14.69 Bn,  Winning a recognition Award from ICASL
for the annual report 2009/10.
 The growth of net assets from
Rs. 23.5 Mn to Rs. 1.6 Bn.
 The increase of profits (before income Future Initiatives

tax) from Rs. – 20.7 Mn to Rs. 316.5 Mn, While continuing the on-going and regular
 The growth of fixed deposit base from operations and projects mentioned above
Rs. 649 Mn to Rs. 11.4 Bn, in three aspects affecting sustainability,
the Company has paid its attention to few
 Expanding the branch network from more new areas. Further strengthening
20 to 50, of organisation structure, policies and
 Increasing the staff strength from 279 procedures to achieve Corporate Plan targets
(in 2003) to 700 permanent employees, to reach expected growth figures is in the
priority list. To improve efficiency levels
 Preparation of the five-year rolling-out in process and document management,
Corporate Plan in 2008, several projects such as ISO, Five S and an
 Enhancing the business competency and electronic record management system are
literacy levels of employees, to be introduced. While, further streamlining
the human resource development area and
 Winning National Business Excellence upgrading welfare facilities to employees,
Gold Award of NCCSL in 2007, the Company is looking at conducting
 Qualifying from Division G to Division B regular CSR projects in the areas of children’s
in Mercantile Cricket, health and education, blood donations and
planting trees.
 Winning ‘Open Mercantile Six-a-Side
Cricket Tournament’ in 2010,
Page 054
ETI risk management focuses on
identifying what could go wrong,
evaluating which risks should be dealt
with and implementing strategies to
deal with those risks.
We have several committees in place to

mitigate the risk consisting of members
of the Board, Senior Managements and
industry expert who bring in wide range
of knowledge in the best practices of
risk management. Committees are
Integrated Risk Management Committee,
Audit Committee and Credit Committee.
Page 055
Definition of Risk Risk Faced by ETI 3. Default Risk: Is an investor’s risk of loss
arising from a borrower who does not
Risk is the potential that a chosen action ETI as a registered finance Company
make payments as promised. Such an
or activity (including the choice of inaction) operating in Sri Lanka face to many risks and
event is called a default. Another term
will lead to a loss (an undesirable outcome). that is mainly Business Risk and Financial
for credit risk is default risk.
The notion implies that a choice having an Risk. The risk associated the finance activity
ETI has implemented better customer
influence on the outcome exists (or existed). may broadly be categorised as -
evaluation systems to minimise this
Potential losses themselves may also be 1. Interest Rate Risk: The risk that a risk. Our Credit Committee would
called “risks”. Almost any human endeavour movement in interest rates would evaluate the credit worthiness of
carries some risk, but some are much more have an adverse effect on the value customer, guarantor and ensure that
risky than others.
Risk Management
of assets and liabilities or would affect sufficient collaterals is obtaining before

interest cash flows. This risk is highly granting a facility to a client.
Definition of Risk Management venerable to the finance Companies
and due to a greater level of exposure 4. Reputational Risk: Often called
Risk management is a set of strategies for
to this risk we are compelled to carry reputation risk, is a type of risk related
analysing potential risks and instituting
out different and effective mitigation to the trustworthiness of business.
policies and procedures to deal with them.
strategies to address this risk. We Damage to a firm’s reputation can
The work of assessing the possibilities,
are always analysing the past and result in lost revenue or destruction
setting priorities, and finding cost-effective
future interest trends and forecasting of shareholder value, even if the
solutions is also described as business
the future interest trends and try Company is not found guilty of a
continuity planning.
keeping our interest rate margins with crime. ETI has successfully maintained
reasonable gaps. the public confidence without any
In a business environment, some risks,
damages in the past few years even
such as economic pressures or technology 2. Liquidity Risk: The risk that a given with the financial crises in 2009. That
meltdowns are universal while others are security or asset cannot be traded is why our public deposits base has
unique to a particular venture or physical quickly enough in the market to grown rapidly in the past few years.
location. prevent a loss (or make the required
profit) and shortage of cash or cash 5. Legal and Documentary Risk: The
Most of the Companies may use a equivalent to meet the obligation of risk that contracts are documented
combination of strategies to manage the Company on time. Our Company incorrectly or are not legally
risk, including buying insurance, creating investments and treasury division enforceable in the relevant jurisdiction
redundant systems, diversifying physical ensure that the ETI is in the healthy in which the contracts are to be
locations or core businesses, and position in term of liquid cash to enforced or where the counterparties
establishing other hedges. meet the obligations and that there operate. This can include the risk that
is sufficient liquid assets to meet assets will turn out to be worthless
For an individual investor, risk can be the working capital requirement and or liabilities will turn out to be
managed in several ways: insuring at least thus ensuring a smooth run in daily greater than expected because of
a portion of your portfolio, allocating your operation as well as Company inadequate or incorrect legal advice or
assets across classes, diversifying your long-term profitability. documentation. In addition, existing
holdings, and hedging with derivative laws may fail to resolve legal issues
products.
Page 056
Risk Management
involving the Company; a court case 6. Operational Risk: An operational risk perform the particular job assigned
involving a particular company may is, as the name suggests, a risk arising to them. Further ETI human resources
have wider implications for the entity’s from execution of company’s business department has given well-defined job
business and involve costs to it. To functions. It is a very broad concept profiles which clearly communicate the
address this risk, ETI has prepared which focuses on the risks arising from role and responsibility to all employees.
operational manuals for each division the systems, procedure, processes and It has implemented clear authority
which are complied with all the legal failure of the employees to comply levels within the organisation. Further,
and regulatory requirements and all our with the set of rules and regulations ETI continuously doing the product
documentations meets the standards or through the human error. As a training programmes to all employees
set by the regulatory bodies and its mitigation strategy ETI trained all the to acquire knowledge about each
compulsory to do the operations employees including minor staff that product which is marketed by ETI.
according to the operational manuals ensuring they have comprehensive
and all the divisional heads are knowledge and skills required to
responsible to comply with the same.
THREAT
DETERRENT CORRECTIVE
CONTROL CONTROL
Creates
Reduces
Likelihhod of
ATTACK Exploits
Discovers
DETECTIVE
VULNERABILITY
CONTROL
Protects
Triggers
Results in
PREVENTATIVE IMPACT Decreases

CONTROL
Reduces
Page 057
Risk Management
7. Economic Risk: The possibility that an ETI risk management focuses on identifying
economic downturn will negatively what could go wrong, evaluating which risks
impact on an investment and to the should be dealt with and implementing
current business growth. For example, strategies to deal with those risks.
launching a luxury product immediately Businesses that have identified the risks will
before or during a recession carries a be better prepared and have a more
great deal of economic risk. On the cost-effective way of dealing with them.
other hand a debtor capability to meet
the obligation as well as potential We have several committees in place to
borrower’s ability to borrow would get mitigate the risk consisting of members
adversely affected due to changes in of the Board, Senior Managements and
the state of economy. ETI is always alert industry experts who bring in wide range
about the changes in the economic of knowledge in the best practices of risk
environment and change the business management. Committees are in place-
strategy in order to mitigate the risk.
Integrated Risk Management Committee
Audit Committee
Managing Risk
Credit Committee
Every business faces risks that could
present threats to its success. According
to our previous definition risk is defined
as the probability of an event and its
consequences. Risk management is the
practice of using processes, methods and
tools for managing these risks.
Page 058
Risk Management
The following table provides a summary of some selected and important mitigation actions taken by the Company on Risk Management.
Risk Category Description Risk Rating Risk Mitigating Strategies
Interest Rate Risk Interest rate risk is incurred due to mismatches in Moderate - ETI is more focusing on mix of fixed and floating
the variables pertaining to assets/liabilities interest rate debts.
- ETI match the maturity mix to avoid too much of
debt becoming repayable within a short period of
finalise.
Liability Risk Liquidity risk for a finance company is the risk that Moderate - ETI maintained sufficient reserves, in form of cash,
it will be unable to meet its obligations as they Treasury Bills and bank placements.
become due.
- ETI’s cash flow managed properly by the Company
Treasury Division.
- ETI has implemented proper monitoring systems to
monitor the money market and economic trends in
micro and macro economics environment.
- Contingency plans arrangement according to
different stress scenarios to forecasted market
condition.
Credit Risk Credit default risk occurs when borrowers ignoring Moderate - The ETI in order to reduce credit risk setting up a
to pay rentals on due dates or when they are maximum credit limits.
mainly default.
- Conducting stringent credit evaluation and
segregation risk examination tasks.
- In order to minimise the credit risk ETI has
strengthen the credit evaluation procedure.
- ETI has limited the loan exposure to a single
customer and limit the loan granted to high value
motor vehicles.
Loss of Key The ETI’s profitability and going forward is Low - ETI has placed importance in seeing to the well
Employees Risk dependent on the performance of key employees. being and satisfaction of its employees by ensuring
If the key employees leave the organisation, the goal human resource initiatives including relevant
Company would have difficulties at least in the training, attractive remuneration.
short run in the day-to-day operations of the
- Welfare schemes and fringe benefits.
Company.
Page 059
Risk Management
Risk Category Description Risk Rating Risk Mitigating Strategies
Operational Risk Operational risk includes inadequate or failed Low - All properties covered by insurance, established
internal processes, people, systems or from processes with internal control, initiated internal
external events and failures to comply with audit department.
applicable regulatory requirements.
- Maintain off-site data backups as per disaster
recovery plan requirement.
- Regular review on compliance with statutory
requirements and CBSL requirements.
Risk of Changes in The ETI business operations and profitability are Low - ETI is maintaining proper planning activities in
Tax Legislation subject to tax application. Any increase in the rates accordance with the tax legislation.
of additional taxes would reduce shareholders
wealth.
Goodwill Related The Company may face reputation risk due to the Low - ETI advertise well-thought advertising to build and
Risk inability to maintain good relationship and trust maintain ETI image.
with lenders and borrowers.
Business Expansion Business expansion plans of ETI would push-up Low - ETI increase number of disbursement of leasing
Risk against bigger competitors. This may adversely and Hire-purchase facilities in existing markets.
impact the lending portfolio growth and hence the
profitability of ETI.
Page 060
As a responsible entity, ETI is fully

committed to adopt the best corporate
governance practices to enhance
wealth of Stakeholders including
shareholders, management, employees,
customers, lenders and the society
at large. ETI corporate governance
principles are based on business
integrity, transparency, accounting and
compliance with statutory and regulatory
requirements. In addition the governance
structure of ETI is subject to constant
review by the Board.
Page 061
As a responsible corporate entity, ETI is Mrs. Anjalee Deepa Edirisinghe -  Reviewing the adequacy and the
fully committed to adopt the best corporate Executive Director integrity of the internal control system
governance practices to enhance wealth Mr. Nalaka Premal Edirisinghe - and management information system.
of Stakeholders including shareholders, Executive Director  Periodically assessing the effectiveness
management, employees, customers,
Mr. Asanka Srimal Edirisinghe - of its governance practices, including -
lenders and the society at the large.
Non-Executive Director The selection, nomination and election
ETI corporate governance principles are
based on business integrity, transparency, Dr. Damian Sunil Abeyratna - of Directors and appointment of Key
accountability and compliance with statutory Independent Non-Executive Director Management Personnel.
Corporate Governance
and regulatory requirements. In addition, the The management of conflicts of interest.

governance structure of the ETI is subject to There are no any financial, businesses,
family or other material/relevant relationship  Ensuring that the Company has an
constant review by the Board.
between the Chairperson and the Chief appropriate succession plan for
Executive Officer. Key Management Personnel.
Compliance with CBSL  Understanding the importance of

Directions Broadly the Activities of the
adhering to regulatory requirements.
The functions of the Chairperson and Chief

Executive Officer are separated and handled
Board include the following;
by two separate individuals. This is as  Approving and overseeing the strategic The Board and Board
per the provision of Finance Companies objectives and corporate values Subcommittees
(Corporate Governance) Direction, No. 03 of recommended by the management. The Board had twenty-three (23) meetings
2008. The Chairperson ensures that good  Ensuring the decision and investments are during the financial year under review. The
governance is practiced throughout the consistent with long-term strategic goals. attendance of the Committee Members for
entire organisation; that there is a balance of meetings is as follows.
power on the Board and both Executive and
Non-Executive Directors have opportunities
for effective participation. She also ensures
Integrated
that the Board has full knowledge of the Board Audit Risk Management
ETI’s affairs and is in complete control and Director Classification Meetings Committee Committee
facilitates effective communication with all
Dr. (Mrs.) Soma Edirisinghe Non-Executive 6 N/A N/A
of the ETI’s stakeholders.
Mr. Jeewaka Hemal Edirisinghe Executive 10 N/A N/A
Mrs. Anjalee Deepa Edirisinghe Executive 10 5 N/A
Mr. Nalaka Premal Edirisinghe Executive 10 5 4
Directorate Mr. Asanka Srimal Edirisinghe Non-Executive 6 5 N/A
The following were Directors during the Dr. Damian Sunil Abeyratna Independent 8 5 N/A
year under review: Non-Executive
Dr. (Mrs.) Soma Edirisinghe -
Non-Executive Chairperson
Mr. Jeewaka Hemal Edirisinghe -
Executive Managing Director
Page 062
In compliance with the Direction on The Audit Committee, which has written  Assessment of the independence and
Corporate Governance issued by the Central terms of reference approved by the Board, performance of the entity’s External
Bank of Sri Lanka (CBSL), the Company has reviews the following: Auditors in accordance with applicable
formed an Audit Committee, Integrated  Reviewing the processes to ensure that standards and best practices.
Risk Management Committee and Credit the entity’s internal controls and risk
 Overseeing and reviewing the quality,
Committee, the details of which are management are adequate.
cost and scope of internal audit functions.
set out below.
 Reviewing of the preparation,
 To make recommendations to the
presentation and adequacy of disclosures
Board pertaining to appointment,
in the Financial Statements of the
Audit Committee reappointment and removal of the
Company, in accordance with Sri Lanka
The Audit Committee is appointed by the External Auditor.
Accounting Standards.
Board of Directors and its overall objective
is to monitor and review operational and  Reviewing of entity’s compliance
financial risk by maintaining healthy financial with financial reporting requirements,
reporting process of the Company. The Audit information requirements of the
Committee comprises one Independent Companies Act and other relevant
Non-Executive Director, one Non-Executive financial reporting related regulations Dr. D.S. Abeyratna
Director and two Executive Directors. and requirements. Chairman/Audit Committee
The members of the Audit Committee 16th September 2011

consist of the following:
Name Classification Position
Dr. Damian Sunil Abeyratna Independent

Non- Executive Director Chairman
Mr. Asanka Srimal Edirisinghe Non-Executive Director Member
Mr. Nalaka Premal Edirisinghe Executive Director Member
Mrs. Anjalee Deepa Edirisinghe Executive Director Member
The Committee Chairman is Fellow member

of The Institute of Chartered Accountants
of Sri Lanka, with extensive experience in
accounting and auditing.
The Chief Financial Officer, the Head of

Finance and External Auditors attended
theses meetings of the Committee by
invitation. The Head of Internal Audit
functions as the Secretary to the Committee.
Page 063
Integrated Risk Management Role and Scope of the Committee  The Committee shall take prompt
corrective action to mitigate the effect
Committee  Assess all risks pertaining to the
of specific risks whenever they risk
business environment of ETI such as
The Integrated Risk Management Committee beyond the prudent levels defined by
Credit, Liquidity, Market, Operational and
is appointed by the Board of Directors and the Committee on the basis of ETI’s
Strategic Risk on a continuous basis using
its objective is to assess all risks including policies and regulatory and supervisory
appropriate systems and indicators.
Credit, Market, Liquidity, Operational and requirements.
Strategic Risk faced by the ETI through  Review the adequacy and effectiveness
appropriate risk indicators and management  The Committee shall submit a Risk
of all management level Committees
functions. And also the Committee takes Assessment Report after each meeting
such as the Credit Committee and
mitigating steps or processes as required to the Board seeking the Board’s views,
Audit Committee to address specific
and helps develop a comprehensive risk concurrence and/or specific directions.
risks and to manage those risks within
management strategy. quantitative and qualitative risk limits as  The Committee shall establish
specified by the Committee. a compliance function to assess
The Members of the Committee consist of compliance with laws, regulations,
the following: directions, rules, regulatory guidelines,
Name Position internal controls and approved policies
on all areas of business operations.
Mr. Nalaka Premal Edirisinghe Executive Director Chairman
Mr. N.G.M. De Silva Chief Executive Officer Member
Mr. D. Sisira Pushpakumara Member
Mr. D. Sandun Kumarasiri Member
Mr. E.S.G. Nanayakkara Member
The other senior management staff

members are invited to attend the meetings
when their presence is required.
The head of finance and administration

functions as the Secretary to the Committee.
Page 064
Credit Committee
The Credit Committee’s overall objective
is to monitor credit appraisal and approval
procedures, assessment of major credit
facilities and conducting post-credit approval
reviews.
The members of the Credit Committee

consist of the followings:
Name Classification Position
Mr. N.G.M. De Silva Chief Executive Officer Chairman

Mr. D.S. Pushpakumara Head - Finance Member
Mr. O.W. Sahabandu GM - Credit Member
Mr. D.S. Kumarasiri GM - Pawning Member
Mr. Saman Kumara AGM - Human Resources Member
Mr. Sarath Nanayakkara Chief Internal Auditor Member
The Committee meets when a requirement

arises.
Donations
During the year the Company made
donations of Rs. 3,755,357/-.
Page 065
Extent of Company’s compliance to the Directions issued by the Central Bank of Sri Lanka is given below:
Direction Summary Remarks
No. 15 of 1991 - Accrued Interest No finance company shall take into account as income, any accrued interest Complied
on a loan, credit facility or any type of financial accommodation on which
interest and or capital repayments are in arrears for six months or more
No. (16) of 1991 - Audited Accounts A finance company shall appoint an Auditor to audit the Balance Sheet as at Complied
last working day of each financial year and profit & loss account in respect
of such year.
No. (1) of 2003 - Capital Funds A finance company shall maintain capital funds which shall not at any time Complied
be less than 10% of its total deposits liabilities. Every finance company shall
maintain a reserve fund, and transfer to such reserve fund out of the net
profits of each year.
No. (1) of 2005 - Deposits A finance company shall furnish to every depositor a certificate in respect of Complied
each deposit. In the case of renewal of time deposit, a renewal notice shall
be issued to the depositor. Every such certificate or renewal shall be signed
by two officers. Every finance company shall maintain a record of deposits
holders. Every finance company shall submit to the Director a statement
within three months after the end of every financial year.
No. (1) of 2006 - Minimum Core Capital Every finance Company shall maintain a minimum core capital of Rs. 200 Mn. Complied
No. (2) of 2006 - Risk-Weighted A finance company shall maintain its capital at a level not less than 10% Complied
Capital Adequacy Ratio of its risk-weighted assets with the core capital constituting not less than
- Core Capital Ratio 5% of its risk-weighted assets, computed as per instructions issued by the
- Total Risk-Weighted Capital Ratio Director. Every finance company shall furnish to the Director a return in
respect of each quarter, on the format given within 30 days from the end
of each quarter. A return based on the audited Balance Sheet as at the end
of each financial year, on the same format given for the quarterly return,
within six months from the end of each financial year.
No. (3) of 2006 - Provision for Bad & If the arrears is 6-12 months and more than 12 months, 50% and 100% Complied
Doubtful Debts of the net outstanding to be provided as bad debts respectively. For
repossessed vehicles 80% of the valuation and for lands if the arrears
are 6-36 months, 36-60 months and 60-120 months, 100%, 80%, 50%
respectively can be considered as collateral.
Page 066
Direction Summary Remarks
No. (7) of 2006 - Investments Investment in the issued ordinary share capital shall not exceed 5% of the Complied
capital funds, 40% of issued share capital, and 25% of the capital funds of
the finance company. A finance company that has a core capital over
Rs. 200 Mn as shown in the last audited Balance Sheet may, with approval
of the Monetary Board, form a subsidiary company or acquire shares in a
company exceeding 50% issued share capital of such company.
No. (4) of 2006 - Single Borrower Limit An individual borrower shall not exceed 15% of the capital funds, and for Complied
- Single Institution group borrowers or from subsidiary company or associate company shall not
exceed 20% of capital funds as shown in the audited Balance Sheet.
No. (1) of 2009 - Liquid Assets A finance company shall maintain a minimum holding of liquid assets, Complied
- Liquid Assets 10% of the outstanding value of the time deposits, and the face value of
- Treasury Bills Requirement Certificate of Deposits. Shall maintain Treasury Bills equivalent to 7.5% of
average month end deposits liabilities.
No. (1) of 2007 - Lending No finance company shall grant any accommodation - to a Director or Complied
relative of a Director, to its holding company on the security of its own
shares, to purchase of its own shares, on the guarantee or indemnity
of a Director of the finance company. A finance company may grant
accommodation to its subsidiary company or associate company subject to
the limits specified in the Direction No. 4 of 2006. No finance company shall
recover on any accommodation, other than interest in excess of 5% of the
principle amount granted.
No. (3) of 2008 - Corporate Governance The responsibilities/meetings/composition/fitness and propriety of Directors Complied
and the role of Chairman/CEO and functions of the Committees were stated.
No. (5) of 2009 - Reporting Requirement The Direction states the reports to be submitted Weekly/Monthly/Annually. Complied
No. (2) of 2010 - Insurance of Deposit All registered finance companies shall insure their deposit liabilities in the Complied
Liabilities deposit insurance scheme operated by the Monetary Board in terms of
Sri Lanka deposit insurance scheme regulations.
No. (1) of 2010 - Interest The deposits interest rates shall not exceed 4% points for yield applicable to Complied
364 day Treasury Bills maturity less than 1 year and 5% points for maturity
more than one year. The maximum annual rate if into which may be paid
by a finance Company on any savings deposits during any quarter shall
not exceed the weighted average yield applicable to 91-day Treasury Bills
issued during the immediate preceding quarter.
Page 067
Page 068
[ Great Supporting Actors ]
It’s the dancer who enthrals as he twirls, spins and pirouettes…yet the support base as provided by
the rhythmic dynamism of the drummer is indispensable to the performance. ETI’s branch network is
an integral and indispensable strength to the Company’s enterprise.
Page 069
The Board of Directors has overall Within this framework, each head of function The Company presents the financial results
responsibility for the Company’s system has the responsibility for establishing and to its shareholders annually.
of internal control and reviewing the operating detailed control procedures within
effectiveness of it. The Board has their functions. A checklist of key controls is
established the tone from the top and available for each department. This checklist Statement of Internal Controls
ensures that the importance of internal provides fundamental controls that are The Board has delegated the process of
Statement of Internal Controls
controls is understood and the correct essential to maintain in each division. reviewing the effectiveness of the internal
resource allocations are made. controls to the Audit Committee, whose
The principal components of the Company’s functions we described in the Corporate
ETI has inculcated the right culture for system of internal controls are as follows: Governance Report. Audit Committee
a better control-environment through The management identifies key risks facing met five times during 2010/11. To ensure
application of the business principles. the business on an ongoing basis and complete independence, the External
determines the appropriate control response Auditors and the Internal Auditors have
To be effective, we ensure that our internal with the results being reviewed by the full and free access to the members of
controls are: Executive Committee. Audit Committee to discuss any matters of
 Embedded within the organisation, substance.
 Capable of responding to change, and The internal control system is monitored by
Internal Audit Department which provides a The External Auditors attend Audit
 Supported with immediate reports of
responsible assurance that the operational, Committee meetings by invitation. Audit
major weaknesses.
financial and procedural controls are issues on completion of statutory audits are
effectively and consistently followed. Further, presented at one of these meetings. The
Control activities include a comprehensive
it assesses management action in dealing functional heads are required to make their
list of policies and procedures which ensures
with control issues. However, there are observations and comments on these issues,
that the management directives are carried
inherent limitations that should be recognised including corrective action where necessary.
out and the necessary actions are taken
in weighing the assurances provided by any
to minimise the risk of failing to meet
system of internal controls and accounting.
objectives. The policies and procedures are
The head of the Internal Audit Division
established throughout the organisation and
reports to the Audit Committee of ETI.
continuously reviewed for adequacy and
improvement.
Business plans covering a five-year time N.P. Edirisinghe
period are developed and approved by the Executive Director
The framework is designed to provide
Board. A detailed annual budget is also
reasonable assurance of:
prepared. Targets are set for key finance and
 Efficiency and effectiveness of
non-finance factors that are critical to achieve
operations,
the plan. The performance is monitored
 Protection of assets of the Company against the target, the previous year and Mahendra de Silva
against unauthorised use or disposition, other benchmarks through monthly reporting. Chief Executive Officer
 Reliability of financial and other
management information, Business oriented and appropriate 16th September 2011
 The prevention of fraud, and authorisation processes enable the Board
to exercise better control over the strategic,
 Compliance with relevant national and
financial, investment and organisational
Company regulations.
issues.
Page 070
Financial Reports
Annual Report of the Board of Directors on the Affairs of the Company…73
Statement of Directors’ Responsibility…76
Independent Auditor’s Report…77
Income Statement…78
Balance Sheet…79
Statement of Changes in Equity…80
Cash Flow Statement…81
Notes to the Financial Statements…82
Page 071
Annual Report of the Board of Directors

on the Affairs of the Company
The Board of Directors has pleasure in Stated Capital Events After the
presenting to the stakeholders their Annual
There were no changes in the Company’s Balance Sheet Date
Report on the Affairs of the Company. The
stated capital during the year under review. In The Company subdivided each of its existing
audited Financial Statements of the Company
terms of the Companies Act No. 07 of 2007 issued and fully-paid Ordinary Share into ten
for the financial year ended 31st march
the issued capital of the Company stood at (10) Ordinary Shares on 31st May 2011, and
2011 and the Report of the Auditors thereon
Rs. 52,000,000/- as at 31st March 2011. on 10th June 2011, it further subdivided each
are also included in this Annual Report. The
existing issued and fully-paid Ordinary Share
Financial Statements were approved by the
into twenty (20) Ordinary Shares, resulting in
Board of Directors on 16th September 2011.
Significant Accounting Policies the 520,000 issued and fully-paid Ordinary
The significant accounting policies adopted Shares that existed as at 20th May 2011
Principal Activities of the by the Company in the preparation of being increased to 104,000,000 Ordinary
the Financial Statements and the impact Shares. This subdividing process of the
Company
of changes in the Sri Lanka Accounting Ordinary Shares did not cause any increase in
 Acceptance of Deposits
Standards made during the year, are given on the Stated Capital of the Company.
 Pawn Broking pages 82 to 90.
 Leasing and Hire Purchase Other than above Post-Balance Sheet event,
 Gold and Jewellery Sales
there have been no events subsequent to
Income, Profit and the Balance Sheet date that would have any
 Real Estate
Appropriations material effect on the Company, which would
 Property Development require adjustment to or disclosure in the
Given below is a summary of the financial
 Agriculture Activities results of the Company for the year ended Financial Statements.
31st March 2011.

Review of Business 2011 2010
Property and Equipment
The Reports on Business Performance, Rs. Mn Rs. Mn Details relating to Property and Equipment
Financial Performance and Product Portfolio are disclosed in Note 27 to the Financial
Income 2,539 2,126
and Operating Results contain detailed Statements on page 104 in this Annual Report.
Operating Profit
descriptions of Company performance. before Taxation 316.5 111.8
Messages and Review of Chairperson Taxation 55.9 47.7
(Page 10), Managing Director (Page 14) and Operating Profit Taxation
Chief Executive Officer provide summarised after Taxation 260.6 64.1 The Company is liable for income tax at the
information about the Company and overall Dividends Paid 5.2 – rate of 35% and financial VAT 20% from
situation (Page 16). 1st April 2010 to 31st December 2010 and
12% balance period of the financial year.
Page 073

Statutory Payments The Board of Directors Emoluments of Directors

The Board of Directors confirms that to the The Board of Directors of the Company as at Emoluments paid in the form of salaries,
best of their knowledge and belief, statutory 30th May 2011: bonuses and/or profit-sharing payments
payments to all relevant regulatory and Dr. (Mrs.) Soma Edirisinghe (Chairperson) - to the Directors during the Financial Year
statutory authorities have been paid by the Non-Executive Chairperson 2010/11 amounted to Rs. 46 Mn.
Company.
Mr. Jeewaka Hemal Edirisinghe -
Managing Director
Directors’ Interest in Assets
Reserves Mrs. Anjalee Deepa Edirisinghe -
and Contracts
Executive Director
Total reserves of the Company and its The Directors of ETI hold no interest in any
composition are stated in Statement of Mr. Nalaka Premal Edirisinghe -
assets acquired, disposed or leased by the
Changes in Equity on page 80. Executive Director
Company during the year under review.
Mr. Asanka Srimal Edirisinghe - Furthermore, it is not proposed that the
Non-Executive Director Directors will hold any interest in assets to be
Donations Dr. Damian Sunil Abeyratna - acquired, disposed, or leased by the Company.
Charitable donations amounting to Rs. 3.75 Mn Independent Non-Executive Director
were made by the Company during the year Mr. Sumathipala Kariyawasam -
under review. Independent Non-Executive Director
Directors’ Responsibility for
Mr. Sujith Daminda Jayawardena -
Financial Reporting
Independent Non-Executive Director The Directors are responsible for the
Going Concern preparation of the Financial Statements of the
After considering the financial position, Mr. Ravi Jayawardena -
Company to reflect a true and fair view of its
operating results, regulatory and other factors Independent Non-Executive Director
state of affairs. The Directors are of the view
and such matters, required to be addressed in that these Financial Statements have been
terms of the Corporate Governance Direction Brief profiles of Board of Directors are given
prepared in conformity with the requirements
No. 04 of 2009 issued by the Central Bank on pages 22 to 25.
of Sri Lanka Accounting Standards and
of Sri Lanka, the Directors have a reasonable Companies Act No. 07 of 2007. The Statement
expectation that the Company possesses of Directors’ Responsibilities given on page 76
adequate resources to continue operation for
Appointments of Directors
forms an integral part of this Annual Report of
the foreseeable future. For this reason, they Mr. Sumathipala Kariyawasam, Mr. Sujith
the Board of Directors.
continue to adopt the going concern basis in Daminda Jayawardena and Mr. Ravi
preparing the Financial Statements. Jayawardena were appointed to the
Board with effect from 16th May 2011 in
compliance with the provision set out in the
Listing Rules of the CSE.
Page 074

Related Party Transactions reappoint them as Auditors and to authorise

the Directors to fix their remuneration will be
The Directors have also disclosed the
proposed at the forthcoming Annual General
transactions, if any, that could be classified
Meeting.
as related party transactions in terms of
Sri Lanka Accounting Standard 30 - ‘Related
The Board has approved a sum of
Party Disclosures’, which is adopted in the
Rs. 1,500,000/- as Audit fees and for other
preparation of the Financial Statements.
professional services for the year 2010/11 on
Those transactions disclosed by the Directors
the recommendation of the Audit Committee.
are given in Note 40 to the Financial
Rs. 1,020,000/- was paid as Audit fees and
Statements forming part of this Annual Report
for other services for the year 2009/10.
of the Board.
Employment Annual General Meeting

The Annual General Meeting will be held on
There were 692 persons in employment as at
the 28th September 2011. The Notice of the
31st March 2011
Meeting is given on page 127.
This Annual Report is signed for and on behalf

of the Board of Directors by:
In the management of the Company, the
Directors have placed emphasis in conforming
to the best corporate governance practices
and procedures. Accordingly, systems
Deshabandu Deshashakthi
and structures have been introduced/
improved from time to time to enhance
Chairperson
risk management measures and to improve
accountability, transparency and financial
discipline. The Company’s status of compliance
with these rules is stated in the Corporate
J.H. Edirisinghe
Governance Report on Pages 62 to 67.
Managing Director
Auditors
Company Secretaries (Pvt) Ltd.
The retiring Auditors, Messrs SJMS Associates, Secretaries
Chartered Accountants are willing to continue
as Auditors of the Company. A Resolution to 16th September 2011
Page 075
Statement of Directors’ Responsibility
The responsibility of the Directors in relation The Directors have also ensured that the The Directors are of the view that they have
to the Financial Statements is set out in Company has adequate resources to continue discharged these responsibilities as set out in
the following statement. The responsibility in operation to justify applying the going this statement.
of the Auditors, in relation to the Financial concern basis in preparing these Financial
Statements, is set out in the Report of the Statements.
Auditors on page 77 of this Report. Compliance Report
Further, the Directors have a responsibility to The Directors confirm that to the best of
As per the provisions of the Companies Act ensure that the Company maintains sufficient their knowledge, all taxes, duties and levies
No. 07 of 2007, the Directors are required accounting records to disclose, with reasonable payable by the Company and all contributions,
to prepare for each financial year and accuracy the financial position of the Company, levies and taxes payable on behalf of and in
place before a general meeting, Financial and to ensure that the Financial Statements respect of the employees of the Company
Statements, which comprise: presented comply with the requirements of and all other known statutory dues as were
the Companies Act No. 07 of 2007 and Finance due and payable by the Company as at the
I. A Statement of Income, which presents a
Companies Act No. 78 of 1988. Balance Sheet date have been paid or, where
true and fair view of the profit or loss of
relevant provided for.
the Company for financial year; and
The Directors are also responsible for taking
II. A Balance Sheet which presents a fair reasonable steps to safeguard assets of
and true view of the state of affairs of the the Company and in this regard to give By order of the Board,
Company at the end of the financial year proper consideration to the establishment of
and which comply with the Requirements appropriate internal control systems with a (Sgd.)
of the Act. view to preventing and detecting fraud and Company Secretaries (Pvt) Ltd.
other irregularities. Secretaries
The Directors have ensured that in preparing
these Financial Statements: The Directors are required to prepare the 16th September 2011
Financial Statements and to provide the
I. The appropriate Accounting Polices have
Auditors with every opportunity to take
been selected and applied in consistent
whatever steps and undertake whatever
manner, material departures, if any have
inspections they may consider to be
been disclosed and explained.
appropriate to enable them to give their audit
II. All applicable Sri Lanka Accounting opinion in accordance with Sri Lanka Auditing
Standards as relevant have been followed. Standards.
III. Judgments and estimates have been

made which are reasonable and prudent.
Page 076
Independent Auditor’s Report
To the Shareholders of Scope of Audit and Basis of Opinion 31st March 2011 and the financial statements
give a true and fair view of the Company’s
Edirisinghe Trust Investments Our responsibility is to express an opinion
state of affairs as at 31st March 2011 and its
Limited on these financial statements based on our
profit and cash flows for the year then ended in
audit. We conducted our audit in accordance
Report on the Financial Statements with Sri Lanka Auditing Standards. Those
accordance with Sri Lanka Accounting Standards.
We have audited the accompanying financial standards require that we plan and perform
statements of Edirisinghe Trust Investments the audit to obtain reasonable assurance Report on Other Legal and
Limited, which comprise the balance sheet whether the financial statements are free Regulatory Requirements
as at 31st March 2011, and the income from material misstatement. The company has not obtained approval from
statement, statement of changes in equity and the Monetary Board of the Central Bank of
cash flow statement for the year then ended, An audit includes examining, on a test Sri Lanka prior to commencing its agricultural
and a summary of significant accounting basis, evidence supporting the amounts and business activity as required by the Finance
policies and other explanatory notes. disclosures in the financial statements. An Companies direction No. 5 of 2005.
audit also includes assessing the accounting
Management’s Responsibility for the principles used and significant estimates The company has not complied with sections
Financial Statements made by management, as well as evaluating 26, 27 & 28 of the Pawnbrokers’ Ordinance
Management is responsible for the the overall financial statement presentation. No. 13 of 1942.
preparation and fair presentation of
these financial statements in accordance We have obtained all the information These financial statements also comply with
with Sri Lanka Accounting Standards. and explanations which to the best of our the requirements of section 151 (2) of the
This responsibility includes: designing, knowledge and belief were necessary for the Companies Act No. 7 of 2007.
implementing and maintaining internal purposes of our audit. We therefore believe
control relevant to the preparation and fair that our audit provides a reasonable basis for
presentation of financial statements that are our opinion.
free from material misstatement, whether SJMS ASSOCIATES
due to fraud or error; selecting and applying Opinion Chartered Accountants
appropriate accounting policies; and making In our opinion, so far as appears from our
accounting estimates that are reasonable in 16th September 2011
examination, the Company maintained proper
the circumstances. Colombo
accounting records for the year ended
Page 077
Income Statement
Note For the year ended 31st March 2010/11 2009/10

Rs. Rs.
6 Income 2,561,206,512 2,126,014,104

7 Interest income 2,322,119,745 1,968,309,763
8 Less: Interest expense (1,351,037,667) (1,352,046,895)
Net interest income 971,082,077 616,262,868
9 Other operating income 139,854,427 145,860,868

10 Other income 77,875,226 11,843,473
1,188,811,730 773,967,210
Less: Operating expenses

Personnel expenses (309,108,973) (245,544,783)
Provision for staff retirement benefits (50,390,747) (36,061,235)
Administration and general expenses (426,692,565) (301,063,722)
(786,192,286) (582,669,740)
Profit before loan losses and provisions 402,619,445 191,297,470

11 Less: Loan losses and provisions (26,321,775) (33,797,777)
Operating profit before VAT on financial services and income tax 376,297,670 157,499,693
Less: VAT on financial services (59,716,706) (45,664,003)

12 Profit before income tax 316,580,964 111,835,689
13 Less: Income tax expense (55,916,179) (47,793,241)
Profit for the year 260,664,785 64,042,449
14 Earnings per share basic/diluted 501.28 123.16
The Accounting Policies and Notes on pages 82 to 113 form an integral part of these Financial Statements.
Page 078
Balance Sheet
Note As at 31st March 2010/11 2009/10

Rs. Rs.
Assets
15 Cash and bank balances 382,586,781 199,096,409
16 Investment in Government Securities 881,375,158 803,617,388
17 Investment Securities 23,622,164 21,379,858
18 Placements with banks and financial institutions 1,000,000 54,445,844
19 Loans and advances to customers 7,437,373,289 5,334,713,917
20 Trade and debtors receivables 675,370,510 531,860,978
21 Inventories 2,599,354,163 2,838,752,637
22 Housing project - Madiwela 778,292,219 387,777,298
23 Investment property 1,041,765,000 1,041,765,000
24 Other receivable and prepayments 152,945,980 114,135,680
31 Deferred tax assets 40,689,994 30,019,424
25 Intangible assets 3,385,163 875,600
26 Biological and plantation assets 105,100,203 32,355,328
27 Property and equipment 568,775,211 572,735,830
Total assets 14,691,635,834 11,963,531,190
Liabilities
28 Deposits from customers 11,411,893,419 9,578,484,453
29 Interest-bearing loans and borrowings 727,907,286 276,559,237
30 Warranty provisions 3,382,377 249,418
32 Retirement benefit obligations 47,769,431 31,892,375
13 Current income tax liabilities 19,166,823 16,128,793
33 Other liabilities 802,435,930 636,601,130
Total liabilities 13,012,555,265 10,539,915,406
Shareholders’ Equity
34 Stated capital 64,714,000 64,714,000
35 Capital reserves 25,170,768 25,347,948
36 Statutory reserve fund 176,961,453 124,828,496
37 Revenue reserves 1,412,234,348 1,208,725,340
Total shareholders’ equity 1,679,080,569 1,423,615,784
Total liabilities and shareholders’ equity 14,691,635,834 11,963,531,190
We certify that the Financial Statements comply with the requirements of the Companies Act No. 07 of 2007.
D.S. Pushpakumara N.G.M. De Silva

Head of Finance Chief Executive Officer
The Board of Directors is responsible for the preparation and presentation of these Financial Statements.
Signed for and on behalf of the Board of Directors by the following on 16th September 2011.
Nalaka Premal Edirisinghe Jeewaka Hemal Edirisinghe

Executive Director Managing Director
Page 079
Statement of Changes in Equity
Note For the year ended 31st March 2011 Stated General Reserve Revaluation Retained Total
capital reserve fund reserve earnings
Rs. Rs. Rs. Rs. Rs. Rs.
Balance as at 1st April 2009 64,714,000 25,000,000 112,020,006 25,525,127 1,132,314,202 1,359,573,335
Profit for the year – – – – 64,042,449 64,042,449
36 Transfers (to)/from during the year – – 12,808,490 – (12,808,490) –
Depreciation transfer – – – (177,179) 177,179 –
Balance as at 1st April 2010 64,714,000 25,000,000 124,828,496 25,347,948 1,183,725,340 1,423,615,784
Profit for the year – – – – 260,664,785 260,664,785
36 Transfers (to)/from during the year – – 52,132,957 – 52,132,957 –
Depreciation transfer – – – (177,179) 177,179 –
Payment of dividends – – – – (5,200,000) (5,200,000)
Balance as at 31st March 2011 64,714,000 25,000,000 176,961,453 25,170,768 1,387,234,348 1,679,080,569
Page 080
Cash Flow Statement
Note For the year ended 31st March 2010/11 2009/10

Rs. Rs.
Cash Flows from Operating Activities

Profit before tax 316,580,964 111,835,689
Adjustments for-
Profit on disposal of property and equipment (5,012,694) (3,286,646)
Gains from fair value adjustments (49,833,267) –
Profit on disposal of repossessed assets – (150,000)
Impairment charges and other credit provisions 26,321,775 33,797,777
Provision recognised on retirement benefit obligations 17,392,608 9,248,486
Depreciation and amortisation 76,912,294 63,207,191
Transfer from/(to) contingency fund – 12,890
Dividend income (232,650) (98,335)
Profit from operations before working capital changes 382,129,030 214,567,052
Changes in Operating Assets and Liabilities

Net increase in loans and advances to customers (2,133,999,747) (1,050,716,226)
Net increase in inventories 239,398,474 (646,347,362)
Net (increase)/decrease in other assets (548,988) 91,493,010
Net (increase)/decrease - trade and other receivables (113,466,148) –
Net increase in amounts due to customers 1,833,982,744 2,467,571,080
Net increase in provisions 3,332,959 (101,850)
Net (decrease) in other liabilities 54,069,784 34,857,980
Net cash from operations 264,898,107 1,111,323,684
Gratuity paid (1,521,500) (2,038,376)

Net cash from operating activities before income tax 263,376,607 1,109,285,308
Income taxes paid (89,206,081) (40,291,836)
Net cash inflow from operating activities 174,170,525 1,068,993,473
Cash Flows from Investment Activities
Payments to joint ventures (252,598,471) (237,921,946)
Purchase of property and equipment (74,506,237) (304,919,982)
Gain from sale of property and equipment 5,012,694 3,436,646
Purchase of intangible assets (3,166,203) –
Purchase of Investment Securities (3,529,443) –
(Investment)/Sale of Government Securities (101,495,418) (411,438,140)
Dividend received from investment in shares 232,650 98,335
Net cash from/(used in) investment activities (430,050,428) (950,745,087)
Cash Flows from Financing Activities

Proceeds of borrowings 605,000,000 105,000,000
Repayments of borrowings (168,448,896) (320,065,483)
Dividends paid (5,200,000) –
Net cash from/(used in) financing activities 431,351,104 (215,065,483)
Net increase/(decrease) in cash and cash equivalents 175,471,201 (96,817,096)

Cash and cash equivalents at beginning of the year 61,530,473 158,347,569
38 Cash and cash equivalents at end of the year 237,001,674 61,530,473
Page 081
Notes to the Financial Statements
1. General and use assumptions in measuring the items 2.2 Going Concern
reported in the Financial Statements. These
Corporate Information In preparing Financial Statements, the
estimates are based on management’s
Directors of the Company have made an
Edirisinghe Trust Investments Limited is knowledge of current facts and circumstances;
assessment of the ability of the constituents
an unquoted limited liability Company and assumptions based on such knowledge
of the Company to continue as a going
incorporated and domiciled in Sri Lanka. and expectations of future events. Actual
concern in the foreseeable future, and they
The registered office and the principal place results may always differ from such estimates.
do not foresee a need for liquidation or
of business of the Company are located at
cessation of trading, taking into account all
No. 114, Ward Place, Colombo 07. The estimates and underlying assumptions are
available information about the future.
reviewed on an ongoing basis. Revisions to
The Company is a registered finance accounting estimates are recognised in the
company under the Finance Companies period in which the estimate is revised or in 3. Preparation of
Act No. 78 of 1988. the period of the revision and future periods, Financial Statements
only if the revision affects both current and
1.1 Principal Activities and future periods. 3.1 Statement of Compliance
Nature of Operations The Financial Statements of the Company
The principal activities of the Company are 2.1 Key Sources of Estimation comprise the Balance Sheet, Statements of
pawn broking, leasing, hire purchase financing, Uncertainty Income, Changes in Equity and Cash Flows
providing mortgage loans and accepting fixed together with the Accounting Policies and
The followings are the key assumptions
deposits. The Company is also engaged in land Notes to the Financial Statements.
concerning the future and other key
sales, property developments, gold jewellery sources of estimation uncertainty, that
trading and agricultural activities. The Financial Statements have been prepared
have a significant risk of causing a material
in accordance with the Sri Lanka Accounting
adjustment to the carrying amounts of assets
Standards laid down by The Institute of
1.2 Approval of the Financial and liabilities within the next financial year.
Chartered Accountants of Sri Lanka, except for
Statements by Board of Directors The followings are those items that the
the biological assets of the Company which
The Financial Statements for the year ended Directors consider particularly susceptible to
are measured and recognised in accordance
31st March 2011 were authorised for issue on changes in estimates and assumptions:
with International Accounting Standards 41 -
25th August 2011. Item Note ‘Agriculture’, which is applicable for agricultural
Employee retirement gratuity 4.12 activities and comply with the requirements
of the Companies Act No. 07 of 2007 and the
2. Critical Judgments and Depreciation 4.4
Provision for loan losses 4.13 Finance Companies Act No. 78 of 1988.
Key Sources of Estimation
Repossessed assets 4.2
Uncertainty
Biological assets
In the selection and application of the (agriculture activities) 4.3
Company’s Accounting Policies, which are Impairment of tangible and
described in Notes 3 and 4, the Directors are intangible assets 4.7.2
required to make judgments and assumptions
Page 082
3.2 Basis of Preparation 3.5 Events After the 4.1.1 Leasing
The Financial Statements are prepared in Balance Sheet Date Leases are classified as finance leases
accordance with historical cost basis except All material events after the Balance Sheet whenever the terms of the lease transfer
for the revaluation of land and buildings, date are considered and where appropriate substantially all the risks and rewards of
investment securities which are stated at adjustments to/or disclosures in the ownership to the lessee. All other leases are
market value and biological assets at fair values. respective Notes to the Financial Statements classified as operating leases.
have been made.
3.3 Functional and (a) Finance Leases
Presentation Currency Assets held under finance leases are initially
4. Significant Accounting recognised as assets of the Company at their
The Financial Statements of the Company are
presented in Sri Lankan Rupees, which is also
Policies fair value at the inception of the lease or, if
lower, at the present value of the minimum
the Company’s functional currency. 4.1 Loans and Advances to
lease payments. The corresponding liability to
Customers
the lessor is included in the Balance Sheet as
All transactions in currencies other than the Loans and advances to customers are stated
a finance lease obligation.
functional currency are recorded in Sri Lankan in the Balance Sheet net of provision for
Rupees, using the exchange rates prevailing bad and doubtful loans and interests are
Lease payments are apportioned between
at the time the transactions were affected. At not accrued to revenue in the case of non-
finance charges and reduction of the lease
each Balance Sheet date, monetary assets and performing loans and advances.
obligation so as to achieve a constant rate of
liabilities denominated in foreign currencies
interest on the remaining balance of the liability.
are retranslated to Sri Lankan Rupee Provision for possible loan losses are made on
Finance charges are charged directly to profit
equivalents at the exchange rate prevailing the basis of continuous review of all advances
or loss, unless they are directly attributable
on the Balance Sheet date. Non-monetary to customers in accordance with Sri Lanka
to qualifying assets, in which case they are
assets and liabilities denominated in foreign Accounting Standard 33 - ‘Revenue Recognition
capitalised in accordance with the Company’s
currencies are not retranslated. Exchange and Disclosures in the Financial Statements
general policy on borrowing costs. Contingent
differences arising on settlement of monetary of Finance Companies’ and the requirement
rentals are recognised as expenses in the
items and retranslation of monetary items, are as given by the Central Bank of Sri Lanka
periods in which they are incurred.
recognised in profit or loss in the year in which (Direction No. 3 of 2006) based on an age

they arise. classification of advances as follows:
4.2 Inventories
Period Outstanding Provision Required
3.4 Comparative Information Inventories are valued at the lower of cost
6 - 12 Months 50% and net realisable value. Net realisable
The Accounting Policies applied by the
Over 12 Months 100% value is the price at which inventories can
Company are consistent with those of
be sold in the ordinary course of business
the prior year, and the prior year figures and
In addition, general provisions are made less estimated costs of completion and
phrases have been rearranged wherever
wherever necessary based on past experience
necessary to conform to the current year’s
and judgment taking into account risks
presentation.
inherent in any portfolio of the Company.
Page 083
estimated costs necessary to make the sale. In accounting for these activities it adopted
Repossessed Repossessed motor
Costs incurred in bringing inventories to their the International Accounting Standards (IAS)
Assets vehicles are initially
present condition and location are determined 41- ‘Agriculture’, under which plants are
recognised at the carrying
as follows: treated as biological assets.
amount of the related
Real Estate Stock Real estate stock loan principal and interest
The biological assets are stated at its fair
comprises all costs receivable, net of provision
value less estimated cost sale, and changes
of purchase, cost of for loan losses. The
in fair value less estimated cost to sell of
conversion and other costs Company’s repossessed
biological assets during a period and reported
incurred in bringing the assets are reviewed
in the Income Statement. All costs related
real estate to its saleable at each Balance Sheet
to biological assets that are measured at fair
condition. date by management
value and recognised as expenses which
Property Construction of housing to assess whether they
incurred, other than cost to purchase of
Developments scheme comprises all are recorded in excess of
biological assets.
costs of purchase, cost their recoverable amount,
of construction and other and if their carrying value
The biological assets are classified as
costs incurred in the exceeds the recoverable
Consumable and Bearer biological assets.
construction of housing amount, the assets
Consumable biological assets are those that
schemes to its saleable are written down. Any
are to be harvested as agricultural produce
condition. impairment loss, being the
or sold as biological assets. Bearer biological
difference between the
Construction of At actual cost of assets are those other than consumable
estimated net recoverable
Housing in maintaining at site. biological assets. Bearer biological assets
amount and the carrying
Others’ Land are not agricultural produce but, rather, are
value, is charged to the
self-regenerating. Maize is considered as
Income Statement.
consumable biological assets and Banana,
Gold - Purchases At actual cost on first in Asparagus, Mango, Grapes and Papaya are
first out basis. considered as Bearer biological assets.
Gold - Seized Gold seized articles are
Articles recognised at the carrying 4.3.1 Nature of Activities
amount of the related Bearer Biological Assets - Banana, Asparagus,
advance principal. Drum Sticks, Grapes, Papaya and Maize
The Company has invested in Banana,

4.3 Valuation of Biological Assets
Asparagus, Drum Sticks, Grapes, Papaya and
The Company is carrying out agricultural
Maize cultivation in the Puttalam District.
activities such as cultivating Banana,
The Company is carrying out fertilizer and
Asparagus, Mango, Drum Sticks, Grapes,
pesticide programmes in addition to watering,
Papaya and Maize on a commercial scale.
in order to reap the expected harvest.
Page 084
Banana are physically verified. The basis used by the Any revaluation increase arising on the
The produce is initially harvested at the valuer is as follows: revaluation of such land and buildings is
end of ten months, and thereafter every six (a) Fair Value of Bearer Biological Assets credited in equity to the properties revaluation
months, continuing for a period of ten years. Value per immature Banana, Asparagus, reserve, except to the extent that it reverses
Mango, Drum Sticks, Grapes and Papaya is a revaluation decrease for the same asset
Asparagus determined by considering the average previously recognised in profit or loss, in which
The produce is initially harvested once every yield expected from the Weighted Average case the increase is credited to profit or loss to
six months, continuing for a period of fifteen Cost of Capital and the market price of the extent of the decrease previously charged.
years. Banana, Asparagus, Mango, Drum Sticks, A decrease in the carrying amount arising on
Grapes and Papaya. the revaluation of such land and buildings is
Drum Sticks charged to profit or loss to the extent that the
The produce is initially harvested at the end (b) Fair Value of Consumable Biological loss exceeds the balance, if any, held in the
of five months, and thereafter every six Assets properties revaluation reserve relating to a
months, continuing for a period of five years. Value per immature Maize is determined by previous revaluation of that asset.
considering the current market price.
Grapes Depreciation on revalued buildings is
The produce is initially harvested at the end of 4.3.3 Perennial Crop - Mango recognised in profit or loss. On the subsequent
one year, and thereafter every three months, sale or retirement of a revalued property, the
The Company has cultivated Mango on third
continuing for a period of three years. attributed revaluation surplus remaining in the
party lands under agreements for a period
properties revaluation reserve is transferred
of ten years on the basis of planting and
Papaya directly to retained earnings. No transfer is
managing the lands with the undertaking of a
The produce is initially harvested at the made from the revaluation reserve to retain
monthly guaranteed minimum return.
end of six months, and thereafter every six except when an asset is depreciated.
months, continuing for a period of two years.
4.4 Property and Equipment Freehold land is not depreciated.
Consumable Biological Assets - Maize Land and buildings held for use in the
life span of consumable biological asset production or supply of goods or services, Furniture and fittings are stated at cost less
(Maize) to maturity is expected to be six or for administrative purposes, are stated accumulated depreciation and accumulated
months from the date of planting. in the Balance Sheet at their revalued impairment losses.
amounts, being the fair value at the date of
4.3.2 Fair Value of Biological Assets revaluation, less any subsequent accumulated Depreciation is charged to profit or loss so as
depreciation and subsequent accumulated to write off the cost or valuation of assets,
Fair Value of biological assets is determined
impairment losses. Revaluations are other than freehold land and properties under
based on a valuation carried out by a
performed with such sufficient regularity that construction, over their estimated useful lives,
qualified valuer in determining the fair value
the carrying amounts do not differ materially using the straight-line method. The estimated
of biological assets, the number of plants
from those that would be determined using useful lives, residual values and depreciation
fair values at the Balance Sheet date. method are reviewed at each year-end, with
the effect of any changes in such estimates
accounted for prospectively.
Page 085
Assets held under finance leases are 4.7 Intangible Assets Acquired indication exists, the recoverable amount of
depreciated over their expected useful lives the asset is estimated in order to determine
Intangible assets acquired separately are
on the same basis as owned assets or, where the extent of the possible impairment loss.
measured on initial recognition at cost.
shorter, the term of the relevant lease. Where it is not possible to estimate the
Following initial recognition, intangible assets
recoverable amount of an individual asset,
are carried at cost less any accumulated
The estimated useful lives of depreciable the Company estimates the recoverable
amortisation and any accumulated
assets are as follows: amount of the cash-generating unit to which
impairment losses.
Assets Years the asset belongs. Where a reasonable and
consistent basis of allocation can be identified,
Buildings 10-50 Intangible assets with finite lives are amortised
corporate assets are also allocated to individual
Furniture & fittings 10 over the useful economic life and assessed for
cash-generating units, or otherwise they are
Partitions & moveable 10 impairment, whenever there is an indication
allocated to the smallest group of cash-
Motor vehicles 4 that the intangible asset may be impaired.
generating units for which a reasonable and
Computers 3 The amortisation period and the amortisation
consistent allocation basis can be identified.
Machinery & equipment 10 method for an intangible asset with a finite
Jewellery storage units 10 useful life are reviewed at least at each financial
year end. Changes in the expected useful life or 4.8 Cash and Cash Equivalents
Agricultural land improvements 33
the expected pattern of consumption of future Cash and cash equivalents comprise cash in
economic benefits embodied in the assets is hand, demand deposits and short-term highly
4.5 Agricultural Land Improvements
accounted for by changing the amortisation liquid investments, readily convertible to
Permanent land development costs are
period or method, as appropriate, and treated known amounts of cash and are subject to an
those costs incurred to make major changes
as changes in accounting estimates. The insignificant risk of changes in value.
to lands coming under major infrastructure
amortisation expense on intangible assets
developments. Such expenditure on leasehold
with finite lives is recognised in the Income For the purpose of Cash Flow Statement, cash
lands has been capitalised and depreciated
Statement in the expense category consistent and cash equivalents consist of cash in hand
over the remaining lease period.
with the function of the intangible asset. and deposits in banks net of outstanding
bank overdrafts. Investments with short
4.6 Investment Property 4.7.1 Computer Software maturities, i.e., three months or less from the
Investment property, which is held to earn Computer software is amortised over 4 years date of acquisition are also treated as cash
rentals and/or for capital appreciation, is from the month of acquisition. equivalents.
measured initially at its cost, including
transaction costs. Subsequent to initial 4.7.2 Impairment of Tangible and 4.9 Investments in
recognition, investment property is measured Intangible Assets Government Securities
at fair value, which reflects market conditions At each reporting date, the Company reviews Investments in Treasury Bills, Treasury Bonds,
at the Balance Sheet date. Gains or losses the carrying amounts of its tangible and and Repurchase Agreements are stated
arising from changes in the fair value of intangible assets to determine whether at cost and any interest accrued up to the
investment property are included in profit or there is any indication that those assets have Balance Sheet date.
loss for the period in which they arise. suffered an impairment loss. If any such
Page 086
4.10 Investments Securities bases used in the computation of taxable Deferred income tax assets and liabilities are
profit. Deferred tax liabilities are generally offset when there is a legally enforceable right
(a) Quoted Equities Instruments
recognised for all taxable temporary to set off current tax assets against current
Investments in Shares that are quoted and
differences. Deferred tax assets are generally liabilities and when they relate to income
intended to be held for short terms are stated
recognised for all deductible temporary taxes levied by the same taxation authority
at their market values.
differences to the extent that it is probable and intends to settle them on a net basis.
that taxable profits will be available against
Investments in Shares, that are quoted
which those deductible temporary differences 4.12 Employee Retirement Benefits
and intended to be held for long terms are
can be utilised. Such deferred tax assets and
stated at the lower of cost and market value (a) Defined Benefit Plan - Gratuity
liabilities are not recognised if the temporary
determined on a portfolio basis. The cost of an The Company is liable to pay gratuity in terms
difference arises from goodwill or from the
investment is the cost of acquisition inclusive of the Payment of Gratuity Act No. 12 of
initial recognition (other than in a business
of brokerage, duties and bank charges. 1983, according to which an obligation to pay
combination) of other assets and liabilities in
gratuity arises only on completion of 5 years of
a transaction that affects neither the taxable
(b) Unquoted Equities Instruments continued service.
profit nor the accounting profit.
Unquoted Shares are held on a long-term
basis and stated at cost less provision for any A provision for the Company’s obligations
The carrying amount of deferred income tax
non-temporary diminution in value. under this Act is determined based on an
assets is reviewed at each Balance Sheet date
actuarial valuation, using the Projected Unit
and reduced to the extent that it is no longer
Credit Method, carried out by a professional
4.11 Income Taxes probable that sufficient taxable profit will be
actuary as at each Balance Sheet date.
(a) Current Taxes available to allow all or part of the deferred
Actuarial gains and losses that exceed 10%
income tax asset to be utilised. Income tax
The tax currently payable is based on taxable of the greater of the present value of defined
relating to items recognised directly in equity
profit for the year. Taxable profit differs from benefit obligations are amortised over the
is recognised in equity.
profit as reported in the Income Statement expected average remaining working lives of
because of items of income or expense that the employees. This liability is not externally
Deferred income tax assets and liabilities are
are taxable or deductible on other years and funded.
measured at the tax rates that are expected
items that are never taxable or deductible.
to apply in the period in which the liability
The Company’s liability for current tax is (b) Defined Contribution Plan - Employees’
is settled or the asset realised, based on tax
calculated using tax rates that have been Provident Fund and Employees’ Trust Fund
rates (and tax laws), that have been enacted
enacted or substantively enacted by the end Employees are eligible for Employees’
or substantially enacted by the Balance
of the reporting period. Provident Fund contributions and Employees’
Sheet date. The measurement of deferred
Trust Fund contributions in line with the
tax liabilities and assets reflects the tax
(b) Deferred Taxes respective statutes and regulations. The
consequences that would follow from the
Deferred tax is recognised on temporary Company contributes the defined percentages
manner in which the Company expects at the
difference between the carrying amounts of gross emoluments of employees to an
end of the reporting period to recover or
of assets and liabilities in the Financial approved Employees’ Provident Fund and to
settle the carrying amount of its assets and
Statements and the corresponding tax the Employees’ Trust Fund respectively, which
liabilities.
are externally funded.
Page 087
4.13 Provisions 4.14.1 Interest Income from 4.14.2 Trading Income

Loans and Advances
Provisions are recognised when the Company (a) Sale of Goods
(a) Leasing and Hire Purchase Contracts Revenue from the sale of goods is recognised
has a present obligation (legal or constructive)
Income from finance leases is recognised when all the following conditions are
as a result of a past event; it is probable that
on the basis of the financing method. The satisfied:
the Company will be required to settle the
excess of aggregate rental receivable over
obligation, and a reliable estimate can be (i) The Company has transferred significant
the cost of the leased assets constitutes the
made of the amount of the obligation. risks and rewards of ownership of the
total unearned income at the commencement
goods to the buyer.
of the contract. The earned income is taken
The amount recognised as a provision is the
into revenue over the term of the lease, (ii) The Company retaining, neither a
best estimate of the consideration required to
commencing from the month in which continuing managerial involvement
settle the present obligation at the Balance
the lease is executed, in proportion to the to the degree usually associated with
Sheet date, taking into account the risks and
declining receivable balance of the lease. ownership, nor an effective control over
uncertainties surrounding the obligation.
the goods sold.
Where a provision is measured using the
Income arising from the residual interest (iii) The amount of revenue can be
cash flows estimated to settle the present
in hire purchase agreements is credited to measured reliably and it is probable that
obligation, its carrying amount is the present
the profit and loss account as it accrues in the economic benefits associated with
value of those cash flows.
proportion to the declining receivable balance the transaction will flow to the entity.
of the agreement.
When some or all of the economic benefits (iv) The costs incurred or to be incurred
required to settle a provision are expected to in respect of the transaction can be
However, accrual of income both from leases
be recovered from a third party, the receivable measured reliably.
and hire purchase agreements ceases when
is recognised as an asset if it is virtually certain
the account is overdue for more than six
that, reimbursement will be received and the
months in compliance with Central Bank (b) Real Estate Sales
amount of the receivable can be measured
Direction No. 15 of 1991 (Accrued Interest) Revenue is recognised when properties are
reliably.
and thereafter recognised on a cash basis. sold and the buyer has taken possession
of such properties. However, when there is
4.14 Revenue insufficient assurance as to the receipt of the
(b) Other Loans and Advances
Revenue is recognised to the extent that it Interest income from other loans and total consideration, income is accounted for on a
is probable that the economic benefits will advances is recognised on an accrual basis. cash received basis.
flow to the Company and the revenue and However, income from other loans and
associated costs incurred or to be incurred can advances ceases when the account is overdue (c) Revenue from Construction of
be reliably measured. Revenue is measured for more than six months in compliance with Housing Scheme
at the fair value of the consideration received Direction No. 15 of 1991 (Accrued Interest) Where the outcome of a construction contract
or receivable net of trade discounts and sales and thereafter recognised on a cash basis. can be estimated reliably, revenue and costs
taxes. The following specific criteria are used are recognised by reference to the stage of
for the purpose of recognition of revenue. completion of the contract activity at the

Page 088
Balance Sheet date, measured based on and asset management, custody and (e) Other Income
the proportion of contract costs incurred other management and advisory fees. Other income is recognised on an accrual
for work performed to date relative to the (ii) Fee income from providing transaction basis.
estimated total contract costs, except where services
this would not be representative of the stage (f) Agricultural Income
Fees arising from negotiating or
of completion. Variations in contract work, Agricultural income will be recognised when
participating in the negotiation of a
claims and incentive payments are included the harvesting will occur.
transaction for a third party, such as the
to the extent that they have been agreed
arrangement of the acquisition of shares
with the customer. 4.14.4 Gains and Losses
or other securities or the purchase
or sale of businesses, are recognised Net gains and losses of a revenue nature
Where the outcome of a construction contract arising from the disposal of Property and
on completion of the underlying
cannot be estimated reliably, contract revenue Equipment and other non-current assets,
transaction. Fees or components of fees
is recognised to the extent of contract costs including investments, are accounted for in the
that are linked to a certain performance
incurred that it is probable of recovering. Income Statement, after deducting from the
are recognised after fulfilling the
Contract costs are recognised as expenses in proceeds on disposal, the carrying amount of
corresponding criteria.
the period in which they are incurred. such assets and the related selling expenses.
When it is probable that total contract costs (b) Rental Income

Gains and losses, arising from activities
will exceed total contract revenue, the Rental income from investment properties is
incidental to the main revenue generating
expected loss is recognised as an expense recognised on a straight-line basis over the
activities or those arising from a group of
immediately. term of the relevant lease.
similar transactions which are not material,
are aggregated, reported and presented on a
4.14.3 Others (c) Interest Income from Other Sources
net basis.
Interest income from Government of
(a) Fee and Commission Income
Sri Lanka Treasury Bills is recognised on a
The Company earns fee and commission 4.15 Expenditure Recognition
time proportion basis, and discounts
income from a diverse range of services it
on purchase are amortised to income Expenses are recognised in the Income
provides to its customers. Fee income can be
on a straight-line basis over periods Statement on the basis of a direct association
divided into the following two categories:
to maturity. between the cost incurred and the earning
(i) Fee income on transactions conducted of specific items of income. All expenditure
or from services provided over a period Income from all other interest-bearing incurred in running the business and in
of time investments is recognised as revenue on an maintaining Property and Equipment in a
Fee income is recognised when the accrual basis. state of efficiency has been charged to the
transaction is completed or on accrual Income Statement.
basis when the service is provided over (d) Dividend Income
a period of time. These fees mainly Dividend income is recognised when the For the purpose of presentation of the Income
include fee income on settlement and Company’s right to receive the payment is Statement, the ‘nature of expenses’ method
clearing business, commission income established. has been adopted, on the basis that it
presents fairly the elements of the Company’s
performance.
Page 089
4.15.1 Borrowing Costs 5. Segment Information

Borrowing costs directly attributable to
5.1 Reporting Segments
the acquisition, construction or production
The Company’s internal processes and
of a qualifying asset that normally take a
management functions are structured based
substantial period of time to get ready for
on individual products and services which
their intended use or sale, are added to
are similar in nature, and where the risks and
the cost of those assets, until such time as
returns are similar. The primary segments
the assets are substantially ready for their
represent this business structure.
intended use or sale. Income earned from
temporarily investing specific borrowings
The activities of each of the reported
pending their expenditure on a qualifying
business segments of the Company are
asset is deducted from the borrowing costs
listed in Note 44.
eligible to be added to the carrying amount.
The Weighted Average Cost of Capital rate is
used to capitalise the borrowing cost.
All other borrowing costs are recognised in

profit or loss in the year in which they are
incurred.
Page 090
For the year ended 31st March 2011 2010

Rs. Rs.
6. Income
Interest income (Note 7) 2,322,119,745 1,968,309,763
Other operating income (Note 9) 139,854,427 145,860,868
Other income (Note 10) 77,875,226 11,843,473
2,539,849,398 2,126,014,104
7. Interest Income
Interest on pawning 1,737,209,367 1,370,536,897
Income on leasing and hire purchases 372,991,696 369,485,754
Government securities and deposits with banks 70,376,450 148,849,305
Loans, advances and others 99,383,377 46,856,738
Handling charges and default interest 42,158,854 32,581,070
2,322,119,745 1,968,309,763
8. Interest Expense
Deposits 1,294,003,095 1,318,217,202
Interest on overdrafts and bank loans 43,048,468 19,551,212
Interest on leases 3,274,801 4,791,061
Other finance costs 10,711,303 9,487,420
1,351,037,667 1,352,046,895
9. Other Operating Income

Insurance agency commission 5,142,944 5,403,924
Finance lease and hire purchase agency commission 9,621,511 7,046,556
Other fees 605,993 9,354
Income from gold trading (Note 9.1) 58,876,517 104,342,505
Income from property development (787,487) 8,729,068
Income from real estate 39,417,075 13,007,876
Income from motor vehicle trading 7,174,916 7,321,585
Local sales income - Banana 17,337,082 –
Local sales income - Asparagus 2,380,981 –
Local sales income Grapes 84,895 –
139,854,427 145,860,868
Page 091

Rs. Rs.
9.1 Income from Gold Trading

Sale of gold 147,045,741 293,789,935
Less: Cost of sales 88,169,224 189,447,430
58,876,517 104,342,505
10. Other Income

Rent income from investment properties 1,920,000 1,920,000
Sundry income 14,742,122 6,388,492
Gain on disposal of property and equipment 5,012,694 3,286,646
Dividend income 232,650 98,335
Gain arising from changes in fair value of
biological assets (Note 10.1) 49,833,267 –
Share trading income (Other companies) 4,134,493 –
Management services income 2,000,000 150,000
77,875,226 11,843,473
10.1 Gain arising from Changes in Fair Value of Biological Assets

Rs. Rs.
Banana 58,671,371 –
Asparagus (19,830,196) –
Grapes (1,019,225) –
Mango (2,107,994) –
Orange (1,300,927) –
Papaya (194,029) –
Drum Sticks 15,614,267 –
49,833,267 –
Page 092
For the year ended 31st March 2010/11 2009/10

Rs. Rs.
11. Loan Losses and Provisions

Loans and advances to customers (Note 19.1) 24,126,807 33,861,615
Investment securities (Note 17) 1,287,137 (68,838)
Jewellery articles stolen 907,831 5,000
26,321,775 33,797,777
12. Profit Before Tax

Profit before tax has been arrived at after charging/(crediting):
Depreciation and amortisation expenses 76,912,294 63,207,191
Audit fees 1,230,200 1,020,000
Directors’ emoluments 41,461,500 36,000,000
Employee benefit expense (Note 12.1) 50,390,747 36,061,235
12.1 Employee Benefit Expense

Defined contribution plans 32,998,139 26,812,748
Defined benefit plans 17,392,608 9,248,486
50,390,747 36,061,235

Rs. Rs.
13. Income Tax Expense

13.1 Income Tax Recognised in Profit or Loss
Tax expense comprises:
Current Tax
Charge for the year 66,586,749 56,419,780
66,586,749 56,419,780
Deferred Tax
Origination and (reversal) of temporary differences in the current year (10,670,570) (8,626,539)
Adjustment in respect of prior years – –
Income tax expense 55,916,179 47,793,241
Page 093
The total charge for the year can be reconciled to the accounting profit as follows:

Rs. Rs.
Profit from operations 316,580,964 111,835,689

Income tax expense calculated at 35% 110,803,337 39,142,491
Effect of revenue that is exempt from taxation (118,803,244) (39,517,427)
Effect of expenses that are not deductible in determining taxable profit 62,793,483 50,479,632
Effect of unused tax losses and tax offsets not recognised as deferred tax assets – –
Others 1,122,603 (2,311,456)
Income tax expense recognised in profit or loss 55,916,179 47,793,241
13.2 Current Tax Assets and Liabilities

Rs. Rs.
Current Tax Assets

WHT recoverable 18,217,653 10,972,808
Economic Service Charges (ESC) 19,166,943 19,355,138
Self-assessment payment 10,034,482 9,963,890
47,419,077 40,291,836
Current Tax Liabilities

Income Tax 65,595,024 55,585,990
Social responsibility levy (SRL) 990,876 834,638
66,585,900 56,420,628
Net 19,166,823 16,128,793
Page 094
14. Earnings Per Share

Rs. Rs.
Basic/diluted earnings per share 501.28 123.16
Basic Earnings per Share

The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:
Rs. Rs.
Profit for the year attributable to shareholders 260,664,785 64,042,449
Weighted average number of ordinary shares for the purposes of

basic earnings per share (all measures) 520,000 520,000

Rs. Rs.
15. Cash and Bank Balances

Cash in hand 202,106,473 55,879,659
Balances with banks 180,480,309 143,216,750
Included in cash and cash equivalents (Note 38) 382,586,781 199,096,409
16. Investment in Government Securities

Treasury Bills 881,375,158 803,617,388
881,375,158 803,617,388
17. Investment Securities

Equity securities (Note 17.1) 23,587,864 21,345,558
Others 34,300 34,300
Total investment securities 23,622,164 21,379,858
Current 23,587,864 21,345,558
Non-current 34,300 34,300
Page 095
17.1 Equity Securities

As at 31st March 2011 2010
Cost Market Value Cost Market Value
No. of Shares Rs. Rs. No. of Shares Rs. Rs.
(a) Listed
Banks, Finance and Insurance Sectors
Merchant Bank of Sri Lanka PLC 115 23,474 5,313 92 23,474 1,679
Sampath Bank PLC 6,898 199,829 1,988,693 3,110 199,829 709,080
Vanik Incorporation PLC 312 18,535 250 312 18,535 250
Seylan Merchant Bank PLC 6,660 17,361 13,320 666 17,361 586
Ceylinco Securities & Financial Services PLC 300 6,000 3,150 300 6,000 2,625
People’s Merchant Bank PLC 500 10,000 12,500 500 10,000 12,000
DFCC Bank 5,000 952,500 859,000 – – –
Janashakthi Insurance 5,500 83,050 90,750 – – –
Seylan Bank Non-Voting 10,000 618,000 393,000 – – –
1,928,749 3,365,976 275,199 726,220
Food and Beverage Sector

Distilleries Company of Sri Lanka PLC 2,000 22,968 360,000 2,000 22,968 849,500
John Keells Holdings PLC 7,673 254,836 2,191,409 15,423 772,942 2,837,832
277,804 2,551,409 795,910 3,687,332
Trading Sector
Hayleys Exports PLC 3,200 57,932 145,600 3,000 57,932 105,000
Dockyard PLC 3,858 91,000 984,176 3,858 91,000 1,091,814
Carsons Cumberbatch PLC 1,000 15,315 634,800 1,000 15,315 538,500
Environmental Resources Investment PLC 19,000 2,394,000 1,468,700 – – –
2,558,248 3,233,276 164,248 1,735,314
Manufacturing Sector
Kelani Tires PLC 480 13,270 25,248 240 13,270 11,400
Lanka Walltiles PLC 1,050 25,000 178,500 500 25,000 37,500
38,270 203,748 38,270 48,900
Hotels and Travel Sector

Eden Hotel Lanka PLC 500 14,290 25,600 500 14,290 17,000
14,290 25,600 14,290 17,000
Page 096

Cost Market Value Cost Market Value
No. of Shares Rs. Rs. No. of Shares Rs. Rs.
Land and Property Sector

CT Land & Development PLC 1,950 24,433 64,155 1,950 24,433 24,375
The Colombo Fort Land & Building
Company PLC 500 30,111 194,700 500 30,111 8,125
Commercial Development Co. PLC 1,000 35,721 76,300 1,000 35,721 35,750
AHOT Properties PLC 800 18,433 150,320 800 18,433 19,800
108,698 485,475 108,698 88,050
Total 4,926,057 9,865,484 1,396,613 6,302,816
Less: Provision for fall in value (1,338,192) (51,055)
3,587,864 1,345,558

Cost Cost
No. of Shares Rs. No. of Shares Rs.
(b) Unlisted
Magpek Exports Ltd. 500 20,000 500 20,000
Swarnamahal Financial Services (Pvt) Ltd. 2,000,000 20,000,000 2,000,000 20,000,000
20,020,000 20,020,000
Less: Provision for fall in value (20,000) (20,000)
20,000,000 20,000,000
23,587,864 21,345,558

Rs. Rs.
18. Placements with Banks and Financial Institutions

Fixed deposit at Sampath Bank 1,000,000 –
Commercial papers – 54,445,844
1,000,000 54,445,844
Page 097

Rs. Rs.
19. Loans and Advances to Customers

Pawning advances 5,576,691,283 3,720,848,785
Fixed deposit loans 291,473,752 199,347,190
Mortgage loans 1,401,452 2,004,411
Letters of credit loans 25,338,368 16,175,965
Agriculture loans 4,509,072 4,509,072
Personal loans 33,734,030 22,021,165
Land and easy payment loans 26,180,486 20,708,557
Other loans 186,385,241 129,774,792
Finance leases (Note 19.3) 245,840,996 312,926,957
Hire purchases (Note 19.4) 1,231,285,677 1,067,631,888
7,622,840,358 5,495,948,783
Less: Provision for loan losses (Note 19.1) (185,467,070) (161,234,866)
7,437,373,289 5,334,713,917
19.1 Movement in the Provision for Loan Losses

Balance at beginning 161,234,866 127,380,061
Provision for loan losses 24,126,807 33,861,615
Provision reversed during the year 105,397 (6,810)
Balance at ending 185,467,070 161,234,866
19.2 Analysis of Provision for Loan Losses

Leasing and hire purchases 160,671,115 132,901,088
Letters of credit loans 18,570,163 22,423,254
Agricultural loans 4,509,072 4,509,072
Mortgage loans 1,401,452 1,401,452
Missing Pawning Articles 315,267 –
185,467,070 161,234,866
19.3 Finance Leases

Investment in finance lease receivables:
- Not more than one year 115,334,671 111,504,596
- Over one year but not more than five years 140,964,597 209,015,626
- More than five years – –
256,299,268 320,520,222
Future finance income (10,458,272) (7,593,265)
Net investment in finance leases 245,840,996 312,926,957
Page 098

Rs. Rs.
19.4 Hire Purchases

Investment in hire purchase receivables:
- Not more than one year 434,608,691 380,254,581
- Over one year but not more than five years 807,130,426 698,051,978
1,241,739,116 1,078,306,559
Future finance income (10,453,439) (10,674,671)
Net investment in hire purchases 1,231,285,677 1,067,631,888
20. Trade and Other Receivables

Interest receivables 574,383,922 424,791,009
Other income receivables 2,163,037 2,388,858
Debtors 98,823,551 104,681,110
675,370,510 531,860,978
21. Inventories
Construction of real estate (Property development) 2,122,729,901 2,065,716,354
Investments in real estate 223,297,619 349,430,787
Gold stock (Note 21.1) 173,638,136 215,383,137
Motor vehicles – 18,231,770
Repossessed assets 66,107,558 186,316,407
Material - Construction 4,087,628 3,674,181
Agriculture - Gaps 12,305 –
Material - Agriculture base 10,388,848 –
2,600,261,994 2,838,752,637
Less: Provision for losses (907,831) –
2,599,354,163 2,838,752,637
21.1 Gold Stock

Finished gold jewellery 56,267,147 21,787,106
Returned gold stock 2,090,867 8,769,566
Removed stock (Unredeemed) 112,521,325 184,780,604
Gold stock - Imitation jewellery 45,861 45,861
Goods-in-transits - Gold 2,712,935 –
173,638,136 215,383,137
Page 099
22. Housing Project - Madiwela

The Company has signed a Memorandum of Understanding with Lakna Developers (Pvt) Ltd. to construct housing units in Madiwela. The Company is
responsible for construction of housing units, on the land provided by Lakna Developers (Pvt) Ltd. and for marketing of the completed houses.
Freehold title to each unit will be transferred by Lakna Developers (Pvt) Ltd. and Urban Development Authority to customers.
The following balances in the carrying amount comprised:

Rs. Rs.
Refundable deposits 75,000,000 75,000,000

Cost of completed houses 14,625,113 –
Constructions in progress 688,667,106 312,777,298
778,292,219 387,777,298
The following amounts are included in the Income Statements as a result of the construction in progress of Madiwela Housing Project:
Rs. Rs.
Income/(loss) (502,389) –
23. Investment Properties

Rs. Rs.
Balance - Beginning of the year 1,041,765,000 1,041,765,000
The fair value of the Company’s investment property as at 31st March 2009 has been arrived at on the basis of a valuation carried out at that date by Messrs
H.R. De Silva, Independent Valuers that are not related to the Company. Mr. H.R. De Silva is a member of the Royal Institute of Chartered Surveyors - United
Kingdom, and has appropriate qualifications and recent experience in the valuation of properties in the relevant locations. The valuation, which conforms to
the Code of Professional Ethics and Conduct laid down by the Royal Institute of Chartered Surveyors - United Kingdom and modified according to the local
banking requirements, was arrived at by reference to market evidence of transaction prices for similar properties.
The fair value of investment properties of the Company was reviewed by the Board of Directors and there is no impaired of investment properties
and carrying value of investment properties are equal to current market values.
Page 100
All of the Company’s investment properties are held under freehold interests.
Address Extent Value (Rs.)
Land at Hotel Concord

139,141, Galle Road, Dehiwala 1 R 45.71 P 218,000,000
Lodging House
676, Galle Road, Colombo 03 2 R 29.87 P 550,000,000
Roxy Cinema
Wellawatta, Colombo 06 2 R 28.28 P 270,000,000
Cinexpo Cinema
Udawalpola Road, Kurunegala 2 R 12.11 P 3,765,000
24. Other Debtors and Prepayments

Rs. Rs.
Prepayments and advances 70,579,202 60,218,373

Other receivables 29,073,937 11,608,355
Real estate receivables 42,434,281 31,565,326
Receivables from related parties (Note 24.1) 10,582,834 160,793
152,670,254 114,135,681
24.1 Receivables from Related Parties

Rent receivables
- AVR Gold House at Sea Street 950,000 950,000
- Colombo Communications (Pvt) Ltd. 9,282,765 9,282,765
- Hotel Concord - No. 139, Galle Road, Dehiwala 350,068 350,068
10,582,834 10,582,834
25. Intangible Assets

Computer Software
Rs.
Cost
Balance as at 1st April 2009 17,767,761
Additions –
Balance as at 31st March 2010 17,767,761
Additions 3,166,203
Disposals/Transfers –
Page 101
Computer Software
Rs.
Accumulated Amortisation and Impairment

Balance as at 1st April 2010 16,892,161
Amortisation charge for the year 656,640
Carrying Amount
As at 31st March 2010 875,600
As at 31st March 2011 3,385,163
26. Biological and Plantation Assets

Rs. Rs.
At the beginning of the year 32,355,328 –
Error correction (258,789) –

Additions during the year 23,170,397 32,355,328
Gain/(loss) from the change in fair value 49,833,267 –
As at end of the year (Notes 26.1 and 26.2) 105,100,203 32,355,328
26.1 Analysis of Biological Assets

Immature
Banana 65,270,466
Asparagus 16,764,015
Drum Sticks 15,968,266
Grapes -86,078
Mango -1,400,794
Papaya -166,029
Maize -1,286,677
Total 95,063,170
The ETI Mango Cult Project is a land sale project which include cultivated Mango trees in the block of land. The ownership of the Mango trees is held
with ETI, and after 10 years the ownership of these trees will be transferred to customer.
Page 102
26.2 Plantation
Matured Immature 31.03.2010
Initial planting cost - Mango – 7,343,998 1,774,964
Initial planting cost - Drumsticks – 2,693,035 –

Total – 10,037,033 1,774,964
26.3 Biological Assets

The above biological assets of the Company were valued by Mrs. V.D. Nirusha Ayoni (Agriculture Economist), attached to the Department of Agriculture.
26.4 Significant Assumptions Made by the Valuer

Market Value of a Plantation
Market prices of Banana, Asparagus, Grapes, Mango, Orange, Papaya and Drum Sticks is mainly obtained from local market price. The estimated cost
of harvesting and other outgoings have been deducted to obtain the net value of market price.
Discount Rate
Discount rate of 12% is used as the rate of return on the capital. This rate is based on the current accepted rates of returns expected by investors
and general rates used by the valuers.
Maintenance Cost
The ongoing cost of growing plants has been deducted in determining the cash flow and on consistent in real terms.
Page 103
27. Property and Equipment

Freehold Leasehold Buildings Construction Leasehold Land Furniture Partitions Machinery Jewellery Motor Computers Total
Land Land in Progress Building Development and Fittings and and Storage Vehicles
of Building Moveables Equipment Units
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Cost or Valuation
Balance as at
1st April 2010 80,766,500 58,906,250 143,549,909 15,360,521 6,905,108 32,122,120 52,322,950 75,766,881 67,182,848 455,800 134,399,570 54,706,411 722,444,869
Reclassification
(Note 41) – – (39,499,290) – 37,220,219 (181,727) 249,595 – (130,760) – – 130,760 (2,211,202)
Additions – 5,950,000 19,844,077 (15,360,521) – 4,569,260 3,087,019 11,171,845 8,874,270 – 30,977,743 5,392,545 74,506,237
Disposals – – – – – – – – – – (8,429,029) – (8,429,029)
Balance as at
31st March 2011 80,766,500 64,856,250 123,894,696 – 44,125,327 36,509,653 55,659,564 86,938,726 75,926,358 455,800 156,948,284 60,229,716 786,310,875
Accumulated
Depreciation
and Impairment
Balance as at
1st April 2010 – – 23,559,707 – – – 16,479,032 631,391 26,590,081 455,800 44,426,205 37,566,824 149,709,040
Charge for the year – 935,511 2,960,953 – 1,585,929 2,891,118 4,847,467 9,910,546 9,034,577 – 28,564,907 15,524,645 76,255,653
Disposals – – – – – – – – – – (8,429,029) – (8,429,029)
Balance as at
31st March 2011 – 935,511 26,520,660 – 1,585,929 2,891,118 21,326,499 10,541,937 35,624,658 455,800 64,562,083 53,091,469 217,535,664
Carrying Amount
As at
31st March 2010 80,766,500 58,906,250 119,990,203 15,360,521 6,905,108 32,122,120 35,843,918 75,135,491 40,592,766 – 89,973,366 17,139,587 572,735,829
As at
31st March 2011 80,766,500 63,920,739 97,374,036 – 42,539,398 33,618,535 34,333,065 76,396,789 40,301,700 – 92,386,201 7,138,248 568,775,211
(1) There has been no impairment on property and equipment.
28. Deposits from Public Customers

Rs. Rs.
Term deposits 11,411,893,419 9,578,484,453

Current 9,985,818,792 5,794,709,765
Non-current 1,426,074,627 3,783,774,688
Page 104
29. Interest-Bearing Loans and Borrowings

Effective Interest Rate Maturity 31.03.2011 31.03.2010
% Rs. Rs.
Non-Current
Short-term loan PLR+1% 7-Jan-12 1,413,752 5,700,152
Long-term loan PLR+1% 8-Apr-16 90,000,000 7,982,636
Obligations under finance lease contracts 19.22% 31-Mar-12 10,414,970 11,509,904
101,828,722 25,192,692
Current
Short-term loan PLR+1% 30-Sep-12 1,982,636 105,473,200
Reverse Repo PLR+1% 31-Mar-16 470,000,000 –
Bank overdrafts On demand 145,585,107 137,565,936
Obligations under finance lease contracts 19.22% 31-Mar-11 8,510,821 8,327,409
626,078,564 251,366,545
727,907,286 276,559,237
Bank Overdrafts
The overdraft is secured by a primary mortgage over of the Company’s land and buildings with a carrying value of Rs. 150,434,611/- and
Government Securities amounting to Rs. 70,329,250/-.
Short-Term Loan
These loans have been taken from the Commercial Bank of Ceylon. The loans obtained from the Commercial Bank are repayable within 15 months
in monthly instalments of Rs. 357,200/- commencing from the Balance Sheet date.
Long-Term Loan
The loan amount of Rs. 90 Mn is obtained from Sampath Bank PLC by mortgage company’s bare land with a carrying value of Rs. 180,000,000/-
which repayable in 60 monthly instalments of Rs. 1,500,000/- from 30th April 2011 up to 30th April 2016.
Page 105
30. Warranty Provisions

Maintenance Warranties Repair Warranties on Total
for Real Estate Houses Constructed
Rs. Rs. Rs.
As at 1st April 2009 51,268 300,000 351,268

Additional provisions – 200,000 200,000
Over provision Transferred to profit & loss – (112,890) (112,890)
Reductions arising from payments (1,850) (187,110) (188,960)
As at 31st March 2010 49,418 200,000 249,418
Additional provisions – 3,143,459 3,143,459
Over provision Transferred to profit & loss – – –
Reductions arising from payments (10,500) – (10,500)
As at 31st March 2011 38,918 3,343,459 3,382,377
Repair Warranties on Houses Constructed

A provision is recognised for expected repair warranty claims on products sold during the current year based on past experience of the level of
repairs and maintenance. It is expected that these costs will be incurred in the next financial year. Assumptions used to calculate the provision for
maintenance warranties were based on current sales levels and current information available on repairs based on the one-year warranty period for
all products sold.
31. Deferred Income Taxes

Deferred income tax as at 31st March relates to the following:
Balance Sheet Income Statement
As at 31st March 2011 2010 2011 2010
Rs. Rs. Rs. Rs.
Deferred Tax Liability

Depreciable assets 21,736,692 19,048,408 2,688,284 (101,678,715)
Finance leases 18,490,624 18,631,869 (141,245) 18,631,869
Others 1,183,832 – 1,183,832 –
41,411,148 37,680,276 3,730,872 (83,046,846)
Deferred Tax Assets

Post-retirement benefits (64,913,474) (11,162,331) (53,751,143) (2,523,539)
Provision for loan losses (17,187,668) (56,450,072) 39,262,404 (21,816,453)
Finance leases – – – 98,724,652
Others – (87,296) 87,296 35,648
(82,101,142) (67,699,700)
Deferred income tax expense/(income) (10,670,570) (8,626,539)
Deferred tax assets net 40,689,994 30,019,424
Page 106
32. Retirement Benefit Obligations

Rs. Rs.
Present value of obligation as at 1st April 2010 31,892,375 24,682,265

Interest cost 3,508,161 2,961,872
Current service cost 6,390,791 4,279,535
Actuarial (gain)/loss 7,499,604 2,007,079
49,290,931 41,140,861
Payments made during the year (1,521,500) (2,038,376)
Present value of obligation as at 31st March 2011 47,769,431 31,892,375
As at 31st March 2011, the gratuity liability was actuarially valued under the Projected Unit Credit (PUC) method by Mr. R. Kahakachchi of Actuarial &
Management Consultants (Pvt) Ltd. The liability is not externally funded. The valuation is performed on an annual basis.
Principal actuarial assumptions used:

(a) Discount rate (%) 11 12

(b) Salary increase (%) 10 7.5
(c) Incidence of withdrawal (%) 14 13
Mortality Disability
Age Turnover (%) Age Disability (%)
20 0.09 20 0.03
25 0.07 25 0.04
30 0.07 30 0.06
35 0.09 35 0.10
40 0.14 40 0.16
45 0.26 45 0.26
50 0.48 50 0.45
The above rates represent the probabilities of the ‘event’ occurring within one year of the age shown.
Page 107
33. Other Liabilities

Rs. Rs.
Accounts payable 115,753,934 104,520,985

Due to Directors 766,328 766,328
Accruals 547,999,218 531,313,817
Payable to Lakna Developers (Pvt) Ltd. 137,916,450 –
802,435,930 636,601,130
34. Stated Capital

Number of Shares Stated Capital
Rs.
Fully-Paid Ordinary Shares

1st April 2010 520,000 64,714,000
31st March 2011 520,000 64,714,000
35. Capital Reserves

Property Revaluation Reserve
Rs. Rs.
Balance at the beginning of the year 25,347,948 25,525,127

Depreciation transfer (177,179) (177,179)
Balance at the end of the year 25,170,768 25,347,948
36. Statutory Reserve Fund

Rs. Rs.
Balance at the beginning of the year 124,828,496 112,020,006

Transfers during the year 52,132,957 12,808,490
Reserve fund is a capital reserve which contains profit transferred as required by Section 3 (b) (ii) of the Central Bank Direction No. 1 of 2003.
Page 108
37. Revenue Reserves

Rs. Rs.
37.1 General Reserve

37.2 Retained Earnings

Balance at the beginning of the year 1,183,725,340 1,154,474,506
Profit for the year 260,664,785 64,042,449
Depreciation transfer 177,179 177,179
Effect on change in revenue recognition – (26,204,770)
Effect on amortisation correction – 4,044,466
Transfers to reserve fund (52,132,957) (12,808,491)
Dividend paid (5,200,000) –
1,387,234,348 1,183,725,340
1,412,234,348 1,208,725,340
38. Cash and Cash Equivalents

For the purposes of the Cash Flow Statement, cash and cash equivalents comprise of the following balances with maturity of less than three months
from the Balance Sheet date:
Rs. Rs.
Cash and bank balances (Note 15) 382,586,781 199,096,409

Bank overdrafts (Note 29) (145,585,107) (137,565,936)
237,001,674 61,530,473
39. Commitments and Contingencies

Finance Lease Commitments - Company as Lessor
The Company has finance lease contracts for vehicles. These leases have terms of renewal but no purchase options and escalation clauses. Renewals
are at the option of the specific entity that holds the lease. Future minimum lease payments under finance lease contracts are as follows:

Rs. Rs.
Within one year 11,219,108 11,137,526

After one year but not more than five years 12,030,333 13,903,707
Total minimum lease payments 23,249,441 25,041,233
Less: Amounts representing finance charges (4,323,650) (5,203,920)
18,925,791 19,837,313
Page 109
Pending Litigation
The Company has instituted cases against customers within the ordinary course of business, as per the Company’s lawyer, the outcome will not materially
affect the operation of the Company.
There was no material cases against the Company which results to be disclosed as at Balance Sheet date.
Housing Project - Madiwela

The Company is liable to pay Rs. 5,277,850/- to Lakna Developers (Pvt) Ltd. for each housing units sold in the Madiwela housing project, apart from
this, further sum of Rs. 137,916,450/- is due to Lakna Developers (Pvt) Ltd. as at 31st March 2011.
Guarantees
The Company has set up a 10-year warranty programme for constructed houses. The estimate has been made on the basis of historical warranty trends
and may vary as a result of new materials, altered manufacturing processes or other events affecting product quality. Contingencies relating to the
construction amounted to Rs. 3,343,459/- as of 31st March 2011.
40. Related Party Transactions

The Directors of the Company are also the Directors of the following companies other than Dr. D.S. Abeyratna. During the year, the Company entered
into the following transaction with related parties:
Services Provided to Related Parties

2011 2010
Income Earned Receivable at Income Earned Receivable at
in the Year Year end in the Year Year end
Rs. Rs. Rs. Rs.
Concord Ltd. – 350,068 – 350,068

Homes International (Pvt) Ltd. 24,864,676 81,613,145 12,776,979 97,561,979
EAP Networks (Pvt) Ltd. – – – –
Swarnamahal Financial Services Ltd. 4,137,484 – – 841,522
EAP Property Developers (Pvt) Ltd. – – 2,000,000 –
EAP Films & Theatres (Pvt) Ltd. 1,920,000 160,000 1,920,000 160,000
32,922,160 82,123,214 16,696,979 98,913,570
Page 110
Services Provided by Related Parties

2011 2010
Expense Charged Payable at Expense Charged Payable at
in the Year Year end in the Year Year end
Rs. Rs. Rs. Rs.
EAP Security Services (Pvt) Ltd. 26,351,442 2,910,996 25,466,718 –

26,351,442 2,910,996 25,466,718 –
Compensation of Key Management Personnel of the Company

2010/11 2009/10
Rs. Rs.
Salary and other short-term benefits 41,006,375 34,500,000

41,006,375 34,500,000
41. Reclassification of Fixed Assets

The Company has recorded leasehold building Rs. 37,220,219.46 as freehold building and error occurred in the fixed assets clarification of Land
Development (Rs. 181,727/-), Furniture and Fittings (Rs. 249,595/-), Machinery and Equipment (Rs. 130,760/-) and Computers (Rs. 130,760/-).
This error has been identified and corrected during the year.

42. Post-Balance Sheet Events
The Company sub-divided each of its existing issued and fully-paid ordinary share into ten (10) ordinary shares on 31st May 2011, and on 10th June
2011, it further sub-divided each existing issued and fully-paid ordinary share into twenty (20) ordinary shares, resulting in the 520,000 issued and
fully-paid ordinary shares that existed as at 20th May 2011 being increased to 104,000,000 ordinary shares. This sub-dividing process of the ordinary
shares did not cause any increase in the Stated Capital of the Company.
Other than above Post-Balance Sheet event, there have been no events subsequent to the Balance Sheet date that would have any material effect
on the Company, which would require adjustment to or disclosure in the Financial Statements.
Page 111
43. Maturity Analysis

An analysis of the total assets employed and total liabilities at the year end based on the remaining period at the Balance Sheet date to the
respective contractual maturity period is given below:
Up to 12 Months Over 1 to 3 Years Over 3 to 5 Years Over 5 Years Total
Rs. Rs. Rs. Rs. Rs.
Assets
Cash and bank balances 382,586,781 – – – 382,586,781
Investment in Government Securities 881,375,158 – – – 881,375,158
Loans and advances to customers 5,949,898,631 1,115,605,993 371,868,664 – 7,437,373,289
Trade and debtors receivables 675,370,510 – 675,370,510
Inventories 253,326,643 – – – 253,326,643
Housing project - Madiwela 583,719,164 194,573,055 – – 778,292,219
Investments in property development 1,273,637,941 849,091,960 – – 2,122,729,901
Investments in real estate 200,967,857 22,329,762 – – 223,297,619
Investment securities 23,622,164 – – – 23,622,164
Other assets 123,156,784 30,789,196 – – 153,945,980
Investment property – – – 1,041,765,000 1,041,765,000
Property and equipment – – – 568,775,211 568,775,211
Intangible assets – – – 3,385,163 3,385,163
Biological assets – – – 105,100,203 105,100,203
Deferred tax assets 32,551,995 8,137,999 – – 40,689,994
Total assets as at 31.03.2011 10,380,213,628 2,220,527,965 371,868,664 1,613,925,374 14,691,635,834
Percentage as at 31.03.2011 70.6% 15.0% 2.6% 11.1% 100.0%
Total assets as at 31.03.2010 5,988,652,145 3,484,100,436 800,207,087 1,690,571,522 11,963,531,190
Percentage as at 31.03.2010 49.7% 29.1% 6.7% 14.1% 100.0%
Liabilities
Deposits from public 9,985,818,792 1,023,617,783 402,456,844 – 11,411,893,419
Interest-bearing loans and borrowings 626,078,564 65,828,722 36,000,000 – 727,907,286
Provisions 3,382,377 – – – 3,382,377
Other liabilities 320,974,372 481,461,558 – – 802,435,930
Current income tax liabilities 19,166,823 – – – 19,166,823
Retirement benefit obligations – – – 47,769,431 47,769,431
Total liabilities as at 31.03.2011 10,955,420,928 1,570,908,063 438,456,844 47,769,431 13,012,555,266
Percentage as at 31.03.2011 84.7% 11.6% 3.4% 0.4% 100.0%
Total liabilities as at 31.03.2010 6,571,735,476 3,545,637,072 390,650,438 31,892,375 10,539,915,361
Percentage as at 31.03.2010 62.4% 33.6% 3.7% 0.3% 100.0%
Page 112
44. Business Segmental Information
As at 31st March 2011 Pawning Gold Sales Leasing & Land Sales Property Agricultural Corporate/ Company/
Hire Purchase Rs. Development Activities Other Total
Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Revenue
Interest income 1,737,209,367 – 415,150,551 – 24,864,676 – – 2,177,224,593
Other income – 58,876,517 14,764,455 39,417,075 (787,487) 69,636,225 180,718,019 362,624,804
Income from external customers 1,737,209,367 58,876,517 429,915,006 39,417,075 24,077,189 69,636,225 180,718,019 2,539,849,398
Inter–segment income – 228,349,103 – – – – – 228,349,103
Total income 1,737,209,367 287,225,620 429,915,006 39,417,075 24,077,189 69,636,225 180,718,019 2,768,198,500
Expense
Interest expenses 525,255,971 – 202,277,823 58,972,692 346,768,771 14,291,926 203,470,485 1,351,037,667
Administrative expenses and
other expenses 320,513,795 50,182,231 136,266,193 17,356,950 34,004,180 18,348,610 235,842,101 812,514,060
Inter–segment expenses 228,349,103 – – – – – – 228,349,103
Total expenses 1,074,118,868 50,182,231 338,544,017 76,329,641 380,772,951 32,640,537 439,312,586 2,391,900,830
Segment results 663,090,499 237,043,389 91,370,989 (36,912,566) (356,695,762) 36,995,688 (258,594,567) 376,297,670
VAT on financial services – – – – – – – 59,716,706

Income tax expenses – – – – – – – 55,916,179
Profit for the year – – – – – – – 260,664,785
Segment assets 6,557,240,745 735,096,627 3,068,014,649 262,696,021 3,125,021,377 185,770,669 757,795,747 14,691,635,834
Segment liabilities 4,447,224,789 2,945,206 1,363,202,127 18,684,382 3,741,183,177 116,476,360 3,322,839,225 13,012,555,265
Note: During the financial year 2010/11, vehicle import and sale and trade loan divisions were discontinued.
Page 113
Capital Adequacy
Computation of Capital Adequacy Ratios

Year Ended 31st March 2010/11 2009/10
Tier 1
Core Capital
Stated Capital 64,714,000 64,714,000
Capital Reserve 149,828,496 545,776,657
Retained Earnings 950,465,000 137,020,006
Sub Total 1,165,007,496 747,510,663
Deductions
Total Tier 1 Capital 1,165,007,496 747,510,663
Tier 2 Supplementary Capital
Capital Base 1,165,007,496 747,510,663
Total Risk-Weighted Assets 7,953,807,142 7,634,325,016
Core Capital Ratio* 14.54% 9.79%
Total Capital Adequacy Ratio** 14.89% 14.81%
* Minimum 5% stipulated by CBSL for RFCs

** Minimum 10% stipulated by CBSL for RFCs
Rupees million
As at 31st March
Exposure Risk Weightage (%) Balance Risk Adjusted Balance
2010/11 2009/10 2010/11 2009/10
Fixed Assets 100 1,593,004,435 1,442,565,587 1,593,004,435 1,442,565,587

Government Treasury Bills 0 881,375,158 779,879,740 0 0
Investments 100 107,442,236 75,756,864 107,442,236 75,756,864
Gold Pawn Stocks 10 5,588,342,954 3,569,724,019 558,834,295 356,972,402
Inventories 100 3,292,446,776 4,838,276,615 3,292,446,776 4,838,276,615
L.E.P. Stock 50 26,180,486 36,544,512 13,090,243 18,272,291
Other Loan Stock 100 1,709,482,644 0 1,709,482,644 0
Prepayment & Debtors 100 679,554,451 902,481,291 679,554,451 0
F.D. Loan 0 291,473,752 194,094,165 0 0
Staff Loan 0 0 0 0 0
Cash at Bank 0 184,260,601 172,386,509 0 0
Cash in Hand 0 200,203,830 53,476,042 0 0
Total 14,691,635,834 12,065,185,344 7,953,807,142 7,634,325,016
Page 114
Value Added Statement

Rs. Rs.
Value Added
Interest and Related Income 2,322,119,745 1,968,309,763
Cost of Services (1,700,817,937) (1,590,534,817)
Value Added on Financial Services 621,301,808 377,774,946
Other Income 217,729,653 157,704,341
Provision for Losses on Loans and Advances (26,321,775) (33,797,777)
812,709,685 501,681,511
Distribution of Value Added

Value Distributed to Employees
Employees’ Remuneration 359,499,720 281,606,018
Value Distributed to Government

Government Income Tax 55,916,179 47,793,241
VAT on Financial Services 59,716,706 45,664,003
Value Retained for Growth and Expansion

Depreciation 76,912,295 62,575,800
Retained Income 260,664,785 64,042,449
Total 812,709,685 501,681,511
No. of Employees 692 654

Value Added per Employee 519,508 430,590
Page 115
Analysis of Loans and Advances
2010/11 2009/10 2008/09 2007/08 2006/07

As at 31st March Rs. ‘000 Rs. ‘000 Rs. ’000 Rs. ’000 Rs. ‘000
Pawning Gold Jewellery 5,576,691 3,720,848 2,976,435 1,742,398 1,105,598

Hire Purchase - M/V 1,232,486 1,067,631 966,216 847,658 627,258
Leasing 24,943 312,926 506,531 699,822 597,865
Short-term Loans (FD) 291,473 199,347 194,833 120,030 67,245
Other Loans 336,679 33,961 52,473 114,163 167,141
Total Loans and Advances 7,462,272 5,334,713 4,696,488 3,524,071 2,565,107
Page 116
Analysis of Net Interest Margin - Quarterly
March 2011 December 2010 September 2010 June 2010

For the 3 months ended % % % %
Interest on Advances 32.78 33.86 34.20 34.16

Pawning Gold Jewellery 35.06 35.47 35.84 35.53
Loan Against Fixed Deposits 13.67 17.00 17.00 17.00
Leasing 23.23 27.69 28.91 29.89
Hire Purchases - M/V 22.37 23.14 25.53 26.26
Personal Loan 20.01 20.01 20.29 20.12
LC's and L.B.D.'s (Trade Finance) 19.00 28.23 26.19 12.05
Interest Payable for Deposits 11.33 11.47 12.04 11.95

Net Interest Margin 21.45 22.39 22.16 22.21
Page 117
Shareholder Information
Ten Largest Shareholders of the Company

Shareholder’s name As at 31st March 2011 As at 31st March 2010
No. of Shares % No. of Shares %
Mrs. Soma Edirisinghe 127,658 24.55 127,658 24.55

Mr. J.H. Edirisinghe 96,960 18.65 96,960 18.65
Mrs. A.D. Edirisinghe 96,960 18.65 96,960 18.65
Mr. N.P. Edirisinghe 96,960 18.65 96,960 18.65
Mr. A.S. Edirisinghe 96,960 18.65 96,960 18.65
Late Mr. Wakwella 501 0.10 501 0.10
Mr. Lal Edirisinghe 500 0.10 501 0.10
Late Mr. K.A.W. Perera 500 0.10 500 0.10
Mr. S. Nagahawatte 500 0.10 501 0.10
Mrs. K. Wakwella 201 0.04 201 0.04

As at 31st March 2011 As at 31st March 2010

Range of No. of Total No. of Total
Shareholdings Holders Holdings % Holders Holdings %
1 – 200 14 2,300 0.44 14 2,300 0.44

201 – 500 4 1,701 0.33 4 1,701 0.33
501 – 1,000 1 501 0.10 1 501 0.10
1001 – 10,000 – – – – – –
10,001 – 100,000 4 387,840 74.58 4 387,840 74.58
Over 100,000 1 127,658 24.55 1 127,658 24.55
Total 24 520,000 100 24 520,000 100
Page 118
10 Year Summary
As at 31st March 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000
Total Assets
Cash in Hand and Bank Balances 382,587 199,096 387,914 111,108 140,514 177,544 168,179 104,738 104,967 89,333
Deposits in Government Securities 881,375 803,617 392,179 688,528 416,166 307,274 173,609 167,613 167,250 157,064
Placements with Other Banks 1,000 54,446 – – – – – 18,226 7,042 17,929
Loans and Advances 5,960,247 3,954,155 3,326,026 2,044,522 1,369,904 1,087,125 658,206 351,920 384,056 45,924
Taxation – – – – – 15,054 9,623 4,502 2,706 2,575
Deferred Taxation 40,690 30,019 21,393 – 1,136 – – – – –
Stock Out on Hire 1,231,286 1,067,632 931,862 847,657 627,258 308,698 114,830 – – –
Net Investments in Lease 245,841 312,927 438,600 631,892 567,945 380,085 169,526 – – –
Real State Stocks 223,298 349,431 304,959 136,022 82,065 39,160 25,201 – – –
Housing Stock 2,122,730 2,453,493 1,655,128 684,140 767,745 322,463 51,559 – – –
Inventories 253,327 423,606 232,318 159,058 199,102 273,891 476,199 131,412 38,368 348,112
Long–Term Investments 23,622 21,380 1,311 1,314 5,385 4,931 4,211 3,866 3,866 3,700
Investment Properties 1,041,765 1,041,765 1,041,765 826,413 787,063 787,063 – – – –
Other Assets 1,577,177 691,974 598,144 665,752 238,747 282,757 94,198 131,768 23,604 –
Property, Plant and Equipment 568,775 572,736 320,894 259,595 222,392 150,775 102,267 55,564 41,821 40,325
Total Assets 14,691,635 11,976,277 9,652,493 7,056,001 5,425,422 4,136,820 2,047,608 969,609 773,680 704,962
Public Deposits Liabilities 11,411,893 9,578,484 7,110,913 5,164,551 3,558,065 2,632,949 1,687,462 831,110 664,530 649,139
Long–Term Loans 582,322 171,086 510,172 85,753 4,275 138,808 26,915 – – –
Promissory Notes – – 50,000 1,400 19,834 44,061 – – –
Retirement Benefit Obligation 47,769 31,892 24,682 15,921 – 12,202 9,643 2,763 625 517
Deferred Tax – – – 12,812 – 2,800 2,409 1,693 – –
Other Liabilities 802,435 636,851 602,094 453,987 692,927 336,277 147,421 36,193 35,974 29,884
Bank Overdraft 145,585 105,473 – 118,162 133,210 71,947 10,143 3,852 3,055 1,854
Current Income Tax Liabilities 19,166 16,129 22,898 24,881 23,327 – – – – –
Total Liabilities 13,012,555 10,539,915 8,270,759 5,926,067 4,413,204 3,214,817 1,928,054 875,611 704,184 681,394
Net Assets 1,679,081 1,423,616 1,381,734 1,129,934 1,012,218 922,003 119,554 93,998 69,496 23,568
Shareholders’ Funds (Rs.)
Sharer Capital 64,714 64,714 64,714 64,714 64,714 52,000 52,000 52,000 52,000 10,000
Other Reserves 202,132 150,176 162,545 109,762 103,456 124,905 66,860 50,456 46,055 45,662
Retained Profit/Loss 1,412,234 1,208,726 1,154,475 955,457 844,048 745,098 694 (8,458) (28,559) (32,094)
1,679,081 1,423,616 1,381,734 1,129,933 1,012,218 922,003 119,554 93,998 69,496 23,568
Page 119
10 Year Summary
As at 31st March 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000
Income Statement
Interest and Related Income 2,322,120 1,968,310 1,687,719 955,669 705,640 402,433 246,616 152,007 138,101 104,912
Other Income 217,482 157,704 437,147 316,800 172,413 132,727 104,782 32,918 18,302 18,106
Interest Expenses (1,351,038) (1,351,574) (1,171,835) (677,988) (460,342) (281,103) (145,459) (98,472) (110,527) (101,893)
Loan Loss Provision (26,322) (33,798) (49,450) (48,809) (21,717) (4,282) (1,257) (10,000) (1,415) (743)
Profit before Tax 316,581 111,836 287,289 192,948 143,296 47,234 33,523 26,140 3,928 (20,720)
Taxation (55,916) (47,793) (22,490) (63,272) (33,850) 11,317 716 4,130 – –
Profit after Tax 260,665 64,042 264,800 129,676 109,445 35,916 32,807 22,010 3,928 (20,720)
Ratios
Return on Shareholders’, Funds (%) 16 4.50 19.16 11.48 10.81 3.90 27.44 23.42 5.65 (87.92)
Interest Cover (Times) 0.58 1.46 1.24 1.28 1.31 1.09 1.22 1.18 1.04 0.80
Share Information
Net Asset per Share (Rs.) 3,229 2,737.72 2,657.18 2,172.95 1,946.57 1,773.08 229.91 180.77 339.00 235.68
Earning per Share (Rs.) 501 123.16 509.23 249.38 210.47 69.07 63.09 42.33 19.16 (207.20)
Page 120
10 Year Summary
Page 121
Branch Network
Head Office
No. 114, Ward Place,
Colombo 07.
Telephone: 011-5323323
Fax: 011-2674435
E-mail: info@eti.lk
Web: www.eti.lk
City Office
No. 42, Cotta Road, Borella,
Colombo 08.
Telephone: 011-5571571
Fax: 011-5331883
E-mail: etileasing@eti.lk
Web: www.eti.lk
Branch Office 23
1
No. 28, Soorathissa Mawatha,
Kurunegala.
Telephone: 037 2229711 19
Fax: 037 2229713 5

2 1
42
33
30
45 1 5
5 37
17
38
9
11 40
Pawning Centres
Gold Sales One-Stop Shops
Leasing Centres
Page 122
Branch Network
Pawning Centres
Location Address Telephone Manager
01. Ampara No. 103, D.S. Senanayake Street, Ampara. 063 2223473 Mr. Lasitha Peiris
02. Avissawella No. 22, Yatiyantota Road, Avissawella. 036 2232799 Mr. Manjula Pushpakumara
03. Badulla No. 104, Lower Street, Badulla. 055 2225504 Mr. Sujeewa Priyadarshana
04. Bambalapitiya No. 129, Galle Road, Bambalapitiya, Colombo 04. 011 2581706 Mr. Kithsiri Bandara
05. Bandarawela No. 203, Main Street, Bandarawela. 057 2225120 Mr. L.M. Maithripala
06. Battaramulla No. 137, Main Street, Battaramulla. 011 2872080 Ms. P.K. Swarnalatha
07. D.S.S. Borella No. 35, D.S. Senanayke Mawatha, Borella, Colombo 08. 011 2685547 Mr. Sanjeewa Athukorala
08. Dematagoda No. 556, Dematagoda Road, Colombo 09. 011 2676942 Mr. Nishantha Pradeep Kumara
09. Eheliyagoda No. 22, Main Street, Eheliyagoda. 036 2258000 Mr. H.M. Piyasena
10. Embilipitiya No. 112, Main Street, Embilipitiya. 047 2230132 Mr. Gayan Rathnayake
11. Galle No. 18, Mosque Road, Main Street, Galle. 091 2241166 Mr. B. Egodage
12. Gampaha No. 25, Main Street, Gampaha. 033 2233255 Ms. Iresha Liyanage
13. Grandpass No. 342, Grandpass Road, Colombo 14. 011 2440780 Mr. Saman Perera
14. Horana No. 21, Anguruwathota Road, Horana. 034 2265222 Ms. Thushari Illeperuma
15. Kadawatha No. 67/5B, Kandy Road, Kadawatha. 011 2926665 Mr. B.A. Prasanna
16. Kaduwela No. 475, Avissawella Road, Kaduwela. 011 2579477 Mr. Dushan Indika
17. Kalutara No. 236, Main Street, Kalutara. 034 2220505 Ms. Wathsala Edirisooriya
18. Kandana No. 58, Negombo Road, Kandana. 011 2244613 Ms. Niroshani Adikari
19. Kegalle No. 173, Main Street, Kegalle. 035 2222700 Mr. Sarath Rathnayaka
20. Kiribathgoda No. 29, Kandy Road, Kiribathgoda. 011 2905123 Mr. M.M. Pathmabandu
21. Kotahena No. 214, George R. De Silva Mawatha, Kotahena, Colombo 13. 011 2320735 Mr. S. Nadaraja
22. Kottawa No. 32, High Level Road, Kottawa. 011 2783388 Mr. Eranga Lakmal
23. Kurunegala No. 28, Sooratissa Mawatha, Kurunegala. 037 2233633 Mr. Pathum Karunarathna
24. Maharagama No. 78, High Level Road, Maharagama. 011 2844365 Mr. Lal Edirisinghe
25. Malay Street No. 157, Malay Street, Colombo 02. 011 2338824 Ms. Krishanthi Kumuduni
26. 143-Maradana No. 141 & 143, Deans Road, Colombo 10. 011 2685801 Ms. K.L.A. Wasantha
27. 435-Maradana No. 435, Maradana Road, Colombo 10. 011 2673585 Mr. Samal Samararathne
28. Matara No. 55, Anagarika Dharmapala Mawatha, Matara. 041 2234888 Mr. Manoj Samaranayake
29. Mathugama No. 23, Kalutara Road, Mathugama. 034 2243979 Mr. Nirosh Indika
30. Moneragala No. 14, Main Street, Moneragala. 055 2277262 Mr. Dhanushka Bandara Samankula
31. Moratuwa No. 14, Station Road, Moratuwa. 011 2643806 Mr. Dinesh Siriwardana
32. Mount Lavinia No. 36, Galle Road, Mount Lavinia. 011 2712009 Ms. Vishaka Fernando
33. Negombo No. 59, Greens Road, Negombo. 031 2234242 Mr. Janaka Krishantha
Page 123
Branch Network
34. Nugegoda No. 37, Old Kesbewa Road, Nugegoda. 011 2810371 Mr. Ishara Sanjeewa
35. Panadura No. 79, D.S. Senanayake Mawatha, Panadura. 038 2241970 Ms. Ajantha Kalyani
36. Pettah No. M/G/3, Saunders Place, Colombo 12. 011 2445070 Mr. Aruna Niroshan
37. Piliyandala No. 20, Horana Road, Piliyandala. 011 2614891 Mr. Saman Pushpakumara
38. Ratnapura No. 1, Main Street, Ratnapura. 045 2222058 Mr. Ajith Dissanayaka
39. Sea Street No. 178, Sea Street, Colombo 11. 011 2436351 Mr. Muditha Priyantha
40. Tissamaharama No. 15, Main Street, Tissamaharama. 047 2237001 Mr. Sampath Weraduwa
41. Ward Place No. 122, Ward Place, Colombo 07. 011 5323323 Mr. H.W.D. Chandrasiri
42. Welimada No. 58, Badulla Road, Welimada. 057 2244111 Ms. Lakmali Wijesinghe
43. 307-Wellawatta No. 307, Galle Road, Colombo 06. 011 2362548 Mr. Sidath Sanjaya
44. 99-Wellawatta No. 99, Galle Road, Colombo 06. 011 2586574 Mr. Renuke Andradi

Gold Sales Centres

01. Ampara No. 103, D.S. Senanayake Street, Ampara. 063 2223473 Mr. Lasitha Peiris
02. Badulla No. 104, Lower Street, Badulla. 055 2225504 Mr. Sujeewa Priyadarshana
03. Bambalapitiya No. 129, Galle Road, Bambalapitiya, Colombo 04. 011 2581706 Mr. Kithsiri Bandara
04. D.S.S. Borella No. 35, D.S. Senanayake Mawatha, Borella, Colombo 08. 011 2685547 Mr. Sanjeewa Athukorala
05. Eheliyagoda No. 22, Main Street, Eheliyagoda. 036 2258000 Mr. H.M. Piyasena
06. Negombo No. 59, Greens Road, Negombo. 031 2234242 Mr. Janaka Krishantha
07. Sea Street No. 178, Sea Street, Colombo 11. 011 2436351 Mr. Muditha Priyantha
08. Tissamaharama No. 15, Main Street, Tissamaharama. 047 2237001 Mr. Sampath Weraduwa
Page 124
Branch Network
One Stop Gold Shops

01. Avissawella No. 22, Yatiyantota Road, Avissawella. 036 2232799 Mr. Manjula Pushpakumara
02. Bandarawela No. 203, Main Street, Bandarawela. 057 2225120 Mr. L.M. Maithripala
03. Battaramulla No. 137, Main Street, Battaramulla. 011 2872080 Ms. P.K. Swarnalatha
04. Ward Place No. 122, Ward Place, Colombo 07. 011 5323323 Mr. H.W.D. Chandrasiri
05. 101-Wellawatta No. 99, Galle Road, Colombo 06. 011 2586574 Mr. Renuke Andradi
Business Centres
01. Bandarawela No. 249, Main Street, Bandarawela. 057 2224600 Mr. Thilan Premathilake
Fax: 057 2224601
02. Embilipitiya No. 3, Rasika Building, Pallegama, Embilipitiya. 047 2261600 Ms. Lalitha Dissanayaka
Fax: 047 2261602
03. Matara No. 165, Anagarika Dharmapala Mawatha, Matara. 041 2232950 Mr. Kanishka Udahage
Fax: 041 2232953
04. Moneragala Wijaya Hemal Building, Wellawaya Road, Moneragala. 055 2277118 Mr. Priyal Suranga
Fax: 055 2277273
Page 125
Financial Glossary
Accrual Basis Earnings Per Share (EPS) Price Earnings Ratio

Recognising the effects of transactions and other Profits after tax divided by the number of shares Market price of an ordinary share divided by
events when they occur without waiting for receipt issued. Earnings per Share (EPS).
or payment of cash or its equivalent.
EBIT Provision for Bad and Doubtful Debts
Appropriation Earnings Before Interest and Tax. A charge to income, on account of probable losses
Appropriation of annual earnings for committed on advances granted; specific provisions are
Equity
outflows. established to reduce the book value of specific
Ordinary shareholders’ funds.
assets to estimated realisable values. General
Assets
Finance Lease provisions are made for possible losses.
Economic resources owned by a business.
A contract whereby a lessor conveys to the lessee the
Related Party
Borrowing right to use an asset for rent over an agreed period of
An individual, partnership or a company that has the
Liabilities on which interest is paid. time which is sufficient to amortise the capital outlay
ability to control/exercise significant influence over
of the lessor. The lessor retains ownership of the asset
Capital Adequacy Ratio another organisation.
but transfers substantially all the risks and rewards of
The percentage of risk adjusted assets supported by
the ownership to the lessee. Retained Profits
capital as defined under the framework of risk-based
Profits which are retained and may be distributed to
capital standards developed by Bank for International Guarantee
shareholders as dividends.
Settlements (BIS) and as modified to suit local An undertaking made by a third party (guarantor)
requirements by the Central Bank of Sri Lanka. who is not a party to contract between two others, Return on Equity
that the guarantor will be liable if one of the parties Profit after tax, minority interest (if any) and
Capital Reserves
fails to fulfil the contractual obligations. extraordinary items divided by average shareholders’
Reserves identified for specific purpose and
funds.
considered not available for distributions. Interest Cover
Operating profit before interest and tax divided by Revenue Reserves
Cash Equivalent
the total finance cost. Reserves set aside for future distributions and
Short-term highly liquid investments that are readily
investments.
convertible to known amounts of cash and which are Interest Spread
subject to an insignificant risk of changes in value. Represent the difference between the average Segment Reporting
interest rate earned and the average rate paid Segment reporting indicates the contribution to the
Commitments
on funds. revenue derived from business segments such as
Credit facilities approved but not utilised by clients
Credit and Leasing Operations, Real Estate, Property
as at the Balance Sheet date. Liabilities
Development, Treasury Activities, Trade and Services.
Debts or obligations of a business.
Contingent Liabilities
Shareholders’ Funds
Conditions or situations at the Balance Sheet date, Net Assets Per Share
Shareholders’ funds consist of issued and fully-paid
the financial effect of which are to be determined Net assets divided by the number of shares issued.
ordinary share capital plus, capital and revenue
by the future events which may or may not occur.
Net Interest Income reserves.
Corporate Governance The difference between incomes earned from
The process by which corporate entities are interest-earning assets and cost incurred on financial
The section of the Annual Report that focuses on
governed. It is concerned with the way in which instruments/facilities used for funding the interest-
our commitment to the stakeholders, i.e. Corporate
power is exercised over the management and earning assets.
Social Responsibilities (CSR).
direction of entity, the supervision of executive
Non-Performing Advances
actions and accountability to owners and others. Value Added
Leases, loans and other advances that are in arrears
Value added is the wealth created by providing
Deferred Taxation for 6 months or more are classified as non-performing
services less cost of providing such services. The
Sum set aside for tax in the Financial Statements advances. Interest income is recognised on these
value added is allocated among the employees, the
that will become payable in a financial year other loans only on cash basis.
providers of capital, to Government by way of taxes
than the current financial year.
Portfolio and retained for expansion and growth.
Documentary Letters of Credit (L/Cs) A combination of income-generating assets such as
Written undertakings by a bank on behalf of its Loans, Finance Leases, Investments Securities and
customer (typically an Importer) authorising a third Bills discounted.
party (e.g., an Exporter) to draw drafts on the bank
up to a stipulated amount under specific terms and
conditions. Such undertakings are established for the
purpose of facilitating international trade.
Page 126
Notice of Meeting
Notice is hereby given that the 43rd Annual Notes

General Meeting of the shareholders of a. A member is entitled to attend and vote at
Edirisinghe Trust Investments Limited will be the above mentioned meeting is entitled to
held at 3.30 p.m. on 28th September 2011 appoint a Proxy to attend and vote instead
at the Board Room, ETI Head Office, No. 114, of him/her.
Ward Place, Colombo 07 for the following
b. A Proxy need not be a Member of the
purposes:
Company. The Form of Proxy is attached to
1. To receive and consider the Report of this Annual Report.
the Directors and the Statement of
c. The completed Form of Proxy should be
Accounts for the year ended
deposited at the ETI Head Office at No. 114,
31st March 2011 with the Report
Ward Place, Colombo 07 not less than
of the Auditors thereon.
48 hours before the time appointed for the
2. To declare a dividend as recommended holding of the meeting.
by the Directors.
d. Members/Proxies attending the meeting
3. To re-elect Directors in place of are requested to bring their National
those retiring and to determine the Identity Cards.
remuneration payable.
4. To appoint Auditors and to authorise the

Directors to fix their remuneration.
5. To authorise the Directors to determine

donations and charity for the ensuing year.
6. To transact any other business.
By Order of the Board,
Company Secretaries (Pvt) Ltd.

Secretaries
16th September 2011
Page 127
Notes
Page 128
Form of Proxy
I/We .....................................................................................................................................................................................................................................................
...............................................................................................................................................................................................................................................................
of ..........................................................................................................................................................................................................................................................
...............................................................................................................................................................................................................................................................
being a member/s of Edirisinghe Trust Investments Limited, hereby appoint-

Deshabandu/Deshashakthi Dr. (Mrs.) Soma Edirisinghe of Colombo or failing her
Jeewaka Hemal Edirisinghe of Colombo or failing him
Mrs. Anjalee Deepa Edirisinghe of Colombo or failing her
Nalaka Premal Edirisinghe of Colombo or failing him
Dr. Damian Sunil Abeyratna of Colombo or failing him
Asanka Srimal Edirisinghe of Colombo or failing him
Mr. Sumathipala Kariyawasam of Colombo or failing him
Mr. Sujith Daminda Jayawardena of Colombo or failing him
Mr. Ravi Jayawardena of Colombo or failing him
Dr./Mr./Mrs./Miss ..........................................................................................................................................................................................of .................................
....................................................................................................................................................................................... ......................................................................
.................................................................................................................................................. NIC/P.P. No. .......................................................................................
As my/our Proxy to represent me/us and to vote for me/us at the 42nd Annual General Meeting of the Company to be held on 28th September
2011 at 3.30 p.m. at the Board Room, ETI Head Office, No. 114, Ward Place, Colombo 07 and at any adjournment thereof and at every poll which
may be taken consequence thereof.
Signed this .................................................... day of ................................... Two Thousand and Eleven.
................................................ ................................................
NIC/P.P. No. Signature
Instructions as to completion are noted below:
Instructions
1. Kindly perfect the Form of Proxy after filling in legibly your Full Name and Address by signing in the space provided and filling in the date of signature.
2. If the Proxy is signed by an Attorney, the relative Power of Attorney should also accompany the Proxy Form for registration if such Power of Attorney has
not already been registered with the Company.
3. The completed Form of Proxy should be deposited at the ETI Head Office, No. 114, Ward Place, Colombo 07 not later than 48 hours before holding of
the meeting.
[ Corporate Information ]
Name of Company Mr. Sumathipala Kariyawasam
Edirisinghe Trust Investments Limited B.A (Arts) (Peradeniya), LLB (OUSL),
PGIM (Sri Jayewardenepura), PGDM (Phillipine), PGDF (India)
Legal Status (Independent Non-Executive Director)
Incorporated under the Companies Act No. 51 of 1938 Mr. Sujith Daminda Jayawardena
Date of Incorporation: 21-08-1967 ACA, FSCMA, CIMA (UK) (Finalist)
Registered No.: PB 488 (New) PVS 2572 (Old) (Independent Non-Executive Director)
Registered under the Finance Companies Act No. 78 of 1988
Registered under the Finance Leasing Act No. 56 of 2000 Mr. Ravi Jayawardena
MBA (Sri Jayewardenepura), CIM - UK, Ph.D (Col) (Reading)
Registered Office (Independent Non-Executive Director)
114, Ward Place, Colombo 07, Sri Lanka.
Tel: 2694608 Chief Executive Officer
Hotline: 5323323 Mahendra De Silva
Fax: 2674435 FCA (SL), MBA (Sri Jayewardenepura)
e-mail: info@eti.lk FSCMA (SL), CMA (AUST.)
Web: www.eti.lk
Company Secretary
Head Office Company Secretaries (Pvt) Ltd.
114, Ward Place, Colombo 07, Sri Lanka. 810, 2nd Floor, Maradana Road,
Tel: 2694822, 2694824, 2694871 Colombo 08.
Hotline: 5323323
Fax: 2674435 Auditors
e-mail: info@eti.lk SJMS Associates
Web: www.eti.lk Chartered Accountants
No. 02, Castle Lane, Colombo 04, Sri Lanka.
Board of Directors
Deshabandu Deshashakthi Dr. (Mrs.) Soma Edirisinghe Credit Rating
(Chairperson/Non-Executive Directress) The Company has been assigned BB-(lka) by
J.H. Edirisinghe Fitch Ratings Lanka Ltd.
(Managing Director)
Bankers
(Mrs.) A.D. Edirisinghe Commercial Bank of Ceylon PLC
(Executive Directress) 549, Maradana Road, Colombo 10.
N.P. Edirisinghe
(Executive Director) Seylan Bank PLC
1119, Maradana Road, Colombo 08.
Dr. D.S. Abeyratna
PhD (U.H. - USA), FCA (SL), FSCMA (SL), Lawyers
FCMA (UK), CMA (AUST.) Messrs Samararatne Associates
(Non-Executive Director) 810, 2nd Floor, Maradana Road, Colombo 08.
A.S. Edirisinghe
(Non-Executive Director)
[ Security and Stability… ]

This Edirisinghe Trust Investments Limited …in our profession is born from years of honing talent, skill, knowledge
Annual Report has been produced by and experience…just as his is!
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| Annual Report 2010/11

www.eti.lk Annual Report 2010/11

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[ Security and Stability… ]

Edirisinghe Trust Investments Limited

| Annual Report 2010/11

[ Reaching Classical heights… ]

006 - 007 | Operational Highlights

010 - 012 | Chairperson’s Message

014 - 015 | Managing Director’s Message

016 - 021 | Chief Executive Officer’s Review

022 - 025 | Board of Directors

026 - 028 | Corporate Management Team

030 - 031 | Senior Management Team

034 - 035 | Business Performance

036 - 038 | Financial Review

040 - 045 | Product Portfolio and Operating Results

048 - 054 | Sustainability Report

056 - 060 | Risk Management

062 - 067 | Corporate Governance

070 | Statement of Internal Controls

071 - 113 | Financial Reports

114 | Capital Adequacy

115 | Value Added Statement

116 | Analysis of Loans and Advances

117 | Analysis of Net Interest Margin - Quarterly

118 | Shareholder Information

119 - 121 | 10 Year Summary

122 - 125 | Branch Network

126 | Financial Glossary

127 | Notice of Meeting

Enclosed | Form of Proxy

The Company is founded on a strictly adhered to regime of

Gross Interest Income

2010/11 2009/10 Change

+306% Financial Position

+22% Information per Ordinary Share (Rs.)

April 2010 August 2010 November 2010

 Introduced an on-line system for gold  Head Office employees went on a

June 2010  Participated at FHA sports events:

won soft-ball cricket cup.  Won ICASL certificate of compliance for

 Conducted a training programme on

 Leasing staff participated at the get-

 Conducted a training programme on ETI

January 2011 March 2011

February 2011  Started to play for Division B Mercantile

 Investment Division went on staff-trip

 Conducted a training programme on ETI

[ Building a Solid Base starts Early ]

It’s a great pleasure for me to welcome you

and technology bases such as IT; all business

 Execution of business programmes

 Establishing and following corporate

 Employee competency development;

 Enhancing the operational efficiency

we discontinued two unproductive products

16th September 2011

As a responsible corporate citizen and

re-assessment and alignment of products/services Investments Limited and we would increase

Managing Director’s Message

The global outlook summary report

The double-figure growth rates achieved by

Chief Executive Officer’s Review

Chief Executive Officer’s Review

In the case of financial institutions that run

The total income of the Company has