STRATEGIC INITIATIVES DURING THE YEAR

Throughout 2024/25, Teejay Lanka PLC executed various strategic initiatives aimed at reinforcing the Company’s operational strength, market relevance, and future growth. Internationally, our entry into Egypt and Indonesia was a purposeful step towards diversifying our market reach and capturing opportunities in high-potential markets. We further enhanced our presence in Bangladesh, reinforcing our role within a key apparel manufacturing hub.

In line with our nearshoring strategy, we adopted a more solution-driven product and marketing model, allowing us to respond faster to customer requirements and reduce lead times. Internally, we prioritised cost transformation initiatives through productivity enhancements and streamlined operational models, enabling the Company to run optimally even during periods of underutilisation. Our continued investments in renewable energy, including solar and biomass, and enhancements in emission control systems also demonstrate our commitment to aligning operational goals with long-term environmental, social, and governance (ESG) targets.

Although we gained momentum during the year, we also had to manage a difficult and changing business environment. The industry was impacted by rising operational costs, pricing pressures, and shifting customer expectations, which tested our adaptability and resilience. Geopolitical tensions and changing tariff structures added further complexity to the global trade landscape.

In response, we accelerated our cost efficiency programmes, leaned on our diversified manufacturing base, and enhanced our ability to serve customers through more profitable product lines and value-added solutions. Our presence in India allowed us to benefit from the China Plus One strategy, tapping into emerging investment flows and new customer pipelines. Despite these external and internal pressures, our teams remained agile and focused, enabling the Company to maintain stability and deliver consistent results.

EXPANDING OUR GLOBAL FOOTPRINT

Expanding our global footprint was a key strategic priority for our Company during the financial year 2024/25. Our growing global footprint has not only enhanced our market reach but has also played an important role in mitigating risks arising from global macroeconomic shifts, including trade tariffs and geopolitical tensions.

As previously noted, we expanded our presence with successful entries into Egypt and Indonesia, while also strengthening operations in Bangladesh and India. These efforts diversified our revenue base and reinforced supply chain resilience. In addition, the expansion of our India operations has opened doors to more profitable customer segments and new investment opportunities.

COMMITMENT TO A SUSTAINABLE FUTURE

Sustainability remains at the heart of our business. During the year, we made significant progress across multiple sustainability dimensions, guided by our long-term vision under the ABHIVARAH 2030 roadmap. All three of our facilities – Teejay Lanka, Teejay Prints, and Teejay India – achieved a Higg FEM score of above 90%, with Teejay Lanka attaining a near perfect score of 99%, solidifying its position as one of the top performers within the Sustainable Apparel Coalition, alongside Teejay Prints achieving 91%, and Teejay India achieving a score of 97%, thereby affirming our leadership in environmental performance.

Furthermore, during the year under review, Teejay Lanka hosted the inaugural Knitting Sustainability Summit in Colombo in August 2024, in alignment with the ABHIVARAH 2030 vision. This was a first-of-its-kind zero carbon event in Sri Lanka’s textile sector. Convening a diverse group of stakeholders, including industry experts, non-governmental organisations (NGOs), upstream suppliers, government institutions, and professionals from the textile and apparel sector, key discussions during the summit were based on the future of fashion, technological advancements, ESG integration, and sustainable chemical management.

We also achieved a significant milestone in our commitment to sustainable manufacturing by becoming an official Bluesign System Partner, underscoring our commitment to safe chemical usage and reduced environmental impact. Given that this certification process involved a comprehensive evaluation of Teejay’s chemical inputs, production processes, and supply chain controls, it reflects our unwavering commitment to clean and responsible manufacturing practices.

In addition, Teejay’s role as the Patron of the Sustainable Supply Chain Working Group under the United Nations (UN) Global Compact Network Sri Lanka further underscores the Company’s leadership in ethical sourcing, circular economy practices, and sustainable manufacturing. It also aligns with our ABHIVARAH 2030 strategy and commitment to reducing Scope 3 emissions through responsible procurement and supply chain engagement.

DRIVING DIGITAL AND PRODUCT TRANSFORMATION

We have made significant progress in our journey of digital and product transformation during the year under review. As part of our strategic transformation, we continued to invest in digitalisation and technology upgrades, recognising its importance in improving productivity, efficiency, and agility. We implemented Industry 4.0 technologies, including Internet of Things (IoT)-enabled systems, which facilitate online monitoring, thereby providing insights for data-driven decision making across our operations. Additionally, our upgraded enterprise resource planning (ERP) system, powered by SAP, played a crucial role in building a unified, end-to-end digital foundation that enables streamlined processes and real-time insights.

On the product front, transformation and diversification played an important role in capturing new market opportunities and mitigating seasonal fluctuations. Moreover, we shifted our product portfolio towards synthetic-based offerings, in line with emerging global trends and customer expectations. Innovation played a central role in this transformation, as we developed new products and materials that not only catered to evolving customer demand but also supported cost restructuring and efficiency improvements. These efforts also aligned with our strategic priorities for 2024/25, which included product transformation and product excellence as key pillars.

STRENGTHENING GOVERNANCE AND RISK OVERSIGHT

During the year, the Group made significant progress in reinforcing its corporate governance framework and Board oversight mechanisms, reflecting our transparency, accountability, and long-term stakeholder value-creation. These enhancements were guided by evolving regulatory requirements, industry best practices, and emerging risk considerations, particularly regarding data privacy, disclosure obligations, and sustainability oversight.

In alignment with the revised Code of Best Practice on Corporate Governance 2023 issued by CA Sri Lanka, the Board carried out a detailed evaluation of the Group’s governance structure, enhancing its ability to provide strategic direction while ensuring independent and objective oversight of management decisions.

Our dedication to governance excellence was once again recognised, with Teejay maintaining its position as the top-ranked company in Transparency International Sri Lanka’s Transparency in Corporate Reporting (TRAC) assessment for the second consecutive year. Although no new assessment was conducted during the period under review, our most recent ranking remains valid until further evaluation.

The Group also elevated its approach to sustainability governance, aligning sustainability disclosures with global best practices such as the IFRS S1 and S2 standards, which promote transparency in reporting sustainability-related financial information, and climate-related risks and opportunities. The Board further strengthened its ESG oversight through a comprehensive benchmarking exercise, undertaken in collaboration with a reputed advisory firm. This initiative involved detailed mapping of ESG risks and opportunities, conducting materiality assessments, and identifying sector-specific ESG focus areas. The insights gained now guide the Group-level sustainability strategy, performance targets, and future disclosure initiatives.

In response to growing regulatory scrutiny relating to data privacy, Teejay proactively prepared for compliance with the Personal Data Protection Act (PDPA) No. 9 of 2022. Key measures included the formulation of a Group-wide Data Protection Framework, the appointment of a dedicated Data Protection Officer (DPO), and the implementation of privacy policies, consent protocols, and internal control mechanisms aligned with PDPA requirements. To foster a culture of responsible data management, a comprehensive series of awareness and training initiatives was also rolled out across the organisation.

On the risk management front, Teejay significantly strengthened its enterprise risk management (ERM) framework to enhance strategic and operational resilience in alignment with long-term objectives. A bottom-up approach ensured that risk identification, prioritisation, and mitigation efforts were reviewed monthly for relevance and effectiveness. A major advancement was the integration of a dedicated ESG risk register, operating alongside the main enterprise risk register, which sharpened the Group’s ability to assess and address sustainability-related, reputational, and compliance risks.

The ERM framework was systematically cascaded across all subsidiaries, with each entity evaluated for alignment with Group risk appetite, internal control effectiveness, and local risk management maturity. Additionally, a quarterly risk reporting mechanism was introduced for new global ventures, enhancing visibility, accountability, and proactive governance across the Group’s expanding international operations.

A RESPONSIBLE CORPORATE CITIZEN

Teejay’s contribution to national development continues to be significant. We contribute to national development by creating direct and indirect employment opportunities, supporting foreign exchange inflows, and strengthening Sri Lanka’s fabric export industry. Our growing operations in India are creating local employment and strengthening regional supply chains.

We have placed great emphasis on ethical and legal business practices, with zero tolerance for corruption, bribery, and any form of harassment or discrimination in the workplace and beyond. In addition, we strongly believe in a gender-neutral approach when recruiting and promoting employees.

FUTURE OUTLOOK

Looking ahead, Teejay Lanka PLC is taking clear and focused steps to achieve its long-term goal, anchored by the target to achieve a revenue of USD 300 Mn. in the upcoming years. The Company’s future outlook is based on key factors such as innovation, digitalisation, ESG excellence, and market expansions, which are aimed at creating sustainable value for stakeholders. Leveraging our recently expanded presence in Asia, Africa, and key regional markets in Sri Lanka, Teejay is strategically positioned to benefit from evolving global sourcing patterns, including the momentum from the China Plus One strategy.

While the Company remains optimistic, it is mindful of upcoming challenges such as macroeconomic volatility, geopolitical risks, supply chain disruptions, and changing customer expectations. Nevertheless, we believe that our diversified footprint, innovation-led mindset, and stakeholder-centric approach will enable us to overcome these challenges and capitalise on new opportunities.

APPRECIATION

I would like to express my sincere appreciation to our employees, whose dedication and resilience continue to be our greatest strength, to our leadership team for their execution of strategy, and to my colleagues on the Board for their guidance and oversight.

I also extend my gratitude to our shareholders, customers, suppliers, and partners for their enduring trust and support; your confidence in Teejay inspires us to push boundaries and deliver long-term sustainable value.

As we step into our next chapter, we remain focused on building an agile, purpose-driven organisation ready to lead in a dynamic global landscape.

Ajit Gunewardene
Chairman, Independent Non-Executive Director

5 June 2025