Right of reply

Wednesday, 23 February 2011 00:35 -     - {{hitsCtrl.values.hits}}

In response to the article titled ‘Hayleys heads in Board to roll,’ published on the 21 February issue of Daily FT, Hayleys MGT sent the following statement, which we reproduce in full:

Dear Sir,

Apropos Article on Hayleys MGT in the Daily FT of 21 February 2011

We refer to the article titled ‘Hayleys heads in Board to roll’ appearing on the front page of the Daily Financial Times,February 21, 2011. Firstly, we are deeply concerned with the undue sensationalising that you have attempted to cause by the very heading of the article under reference.

The reference to “Hayleys” as opposed to “Hayleys MGT,’ which is in fact the company that the body of the article deals with to say the least, is extremely misleading and reported in a manner to cause confusion in the mind of the reader.

Right of reply

There is no move for any change either in the Directorate of Hayleys PLC or Hayleys MGT. We strongly believe that the manner in which you have reported and published this article is counterproductive and may cause undue alarm and mislead the public and the market and therefore we wish that the details set out hereinafter be placed before your readers.

Secondly, there is no basis for your claim that ‘...the market is abuzz of a move to call for the resignation of its Board of Directors...’ We reiterate that there is no move whatsoever to change the current Board of Directors of Hayleys PLC or Hayleys MGT.

We further wish to advise you that the Board of Directors of Hayleys MGT Knitting Mills PLC has taken all necessary steps to keep the shareholders informed of all material information relating to the company via the Colombo Stock Exchange in accordance with its listing rules.

Mr. Mohan Pandithage was appointed as Chairman and Chief Executive of Hayleys PLC on 1 July 2009. During this time action was initiated to closely scrutinise and monitor the financial statements of sectors by the Board of Directors of the respective companies. Pursuant thereto, Mr. Sarath Ganegoda, Group Finance Director and member of the main Board of Hayleys PLC was appointed to oversee the functions of Hayleys MGT. (Mr. Ganegoda was subsequently appointed as Deputy Chairman on 5 November 2010.) preliminary investigation revealed that Mr. D.B. Weerasinghe has been misrepresenting and misleading the Board ont he performance and operations of the company. Once investigations commenced Mr. Weerasinghe resigned from the company and his resignation was accepted subject to due qualification by the company. We also took steps to appoint Messrs. SJMS Associates, Chartered Accountants to perform a 100% physical verification of inventory and a verification of receivables by Messrs. B.R. de Silva and Company, Chartered Accountants. The physical verification of stocks was completed on 15 December 2010 and the verification of receivables on 24 January 2011. A forensic audit has also been initiated in order to determine the causes for inventory and other discrepancies and the report is expected shortly. The company is awaiting the outcome of the said investigations and shall ensure that all perpetrators will be brought to justice and the interests of the company and its shareholders are safeguarded. It is clearly seen that, what appears to have been a crisis situation arising out of inter alia fraud, wilful misleading of the Board and manipulation of financial statements by its senior management, has since been arrested by the prudent intervention by the new Chairman and the Board of Directors of Hayleys MGT. In fact the said matter has already been referred to the Criminal Investigation Department in January 2011 and necessary action has been initiated. The management team of Hayleys MGT has been strengthened and revamped through the recruitment of highly recognised personnel in the industry, for key positions including Chief Executive Officer and General Manager – Dyeing and Finishing. In addition highly competent personnel have been recruited for the positions of Chief Financial Officer and the General Manager – Human Resources Development, etc.

The company has further upgraded its machinery and fine-tuned its processes and is working closelt with the Hayleys Group Information Technology Division in order to strengthen and re-engineer Management Information Systems, controls and processes.

The stakeholders can be assured that these actions have rendered business as usual and the quick response by the management team has lead to necessary measures being taken to ensure the sustainability and growth of the company. Thus it is evident that the Board of Hayleys MGT has at all times acted in the best interests of the company.

It is hoped that your esteemed paper will publish these facts, according it the same prominence given to the article published by you.

The Board as it lawfully might has apprised the SEC and CSE at all times.

Yours faithfully,

Hayleys MGT Knitting Mills PLC

Mohan Pandithage


Sarath Ganegoda

Deputy Chairman