Brandix Leads The Way With Novel Trial Of New-Concept Chemical Leasing

Sri Lanka — April 26, 2010 — Sri Lanka’s Brandix Group has become the first apparel manufacturer
in the country to trial Chemical Leasing (ChL), a new concept methodology to promote more efficient
and sustainable management of chemicals in manufacturing processes.

The concept, promoted worldwide by the United Nations Industrial Development Organisation
(UNIDO) envisages converting suppliers of chemicals from sellers of products to providers of a
service, whereby they sell the functions performed by their chemicals, and functional units become
the main basis for payment.

This makes efficient consumption of chemicals a priority for their supplier, because the
chemicals consumed become a cost rather than a revenue factor. The end result is a reduction of
excessive use of chemicals that ultimately benefits the environment, the company said.

This initiative will contribute to environmental sustainability initiatives that revolve
around the Group’s pledge to reduce its carbon footprint by as much as 30 per cent by 2012, Iresha
Somarathna, Head of Environmental and Energy Management at Brandix said, pointing out that the
Chemical Leasing concept, though in its early stages, would set an example for other companies
seeking to become more environment-friendly.

The pilot application of Chemical Leasing is to take place at American & Efird (A&E),
the Brandix Group’s world class thread manufacturing company. A Letter of Intent (LoI) under which
UNIDO would provide expert guidance and facilitate the process between the company’s German
supplier of chemicals and A&E was signed in Colombo recently for this purpose.

Elaborating on the concept of Chemical Leasing, Mr. Somarathna said: “Traditionally,
chemicals are sold to customers, who become owners of the substances and therefore responsible for
their use and disposal. Their suppliers have a clear economic interest in increasing the amount of
chemicals sold.”

“Under the Chemical Leasing business model, the customer pays for the benefits obtained from
the chemical, not for the substance itself. As a result, the economic success of the supplier is
not linked with product turnover anymore. Chemical consumption becomes a cost rather than a revenue
factor for the chemicals supplier, who will try to optimise the use of the chemical and improve the
conditions for recycling in order to reduce the amount consumed.”

He said the adoption of the new concept could result in a reduction in chemical consumption
of between 20 and 30 per cent, lowering production costs and delivering a tangible benefit to the
environment. At A&E, the Chemical Leasing concept is expected to be adopted in respect of
chemicals used in the lubrication of thread, dyeing, effluent treatment and water treatment, Mr.
Somarathna disclosed.

Explaining the benefits, he said: “When applying ChL business models, the chemicals supplier
does not just provide the chemical, but also his know-how on how to reduce consumption and how to
optimise the conditions of use. While in the traditional model the responsibility of the supplier
ends with the selling of the chemical, in ChL business models the supplier remains responsible for
the chemical during its whole life cycle, including its use and disposal.”

Internationally acknowledged for its commitment to the environment, the Brandix Group’s
signature Green Plant in Seeduwa was awarded the Energy Globe Award, the world’s most prominent and
prestigious environmental prize in 2009, and is a past winner of the prestigious International
Green Apple Environmental Award. The pioneer of the concept of ‘total solutions’ in Sri Lanka’s
apparel sector, Brandix is a preferred solutions provider to some of the world’s leading apparel
brands, including Gap, Marks & Spencer, Victoria’s Secret, NEXT, Lands’ End, Abercrombie &
Fitch, Old Navy and Tommy Hilfiger.

Posted on May 19, 2010

Press Release Courtesy of Brandix Group