A review of operations from the
Chief Executive Officer, Mr A.G. Pandithage
A.G. Pandithage
Director/Chief Executive Officer
DIMO had a comfortable year. It was not a year for great celebration. Nor was it a year of gloom. It was a year of moderate performance where the Group continued to build on the accomplishments of the past years. It would have been a year of great celebration had we had a more favourable tariff regime for vehicles, but that was not to be. The strategy of spreading our net into other areas ensured that the Group’s overall performance was still a good one.
The macro-economic climate was positive and enabling during 2013. The GDP grew by 7.3%; AWPLR reduced from 13.37% to 8.57%; the rupee remained relatively stable during the financial year and inflation dropped from 7.6% to 6.9% in 2013.
The Group’s operational activities are mainly in transport, construction, power, and healthcare. The transport sector grew by 9.4%; the construction sector by 14.4%; the power sector by 11.3% and government expenditure on healthcare increased from Rs. 99,101 million in 2012 to Rs. 119,530 million in 2013.
Despite these solid indicators the registration of vehicles (excluding three wheelers and motor bicycles) dropped to 128,991 compared to 173,465 the previous year. The registration of ‘commercial vehicles’, which is a significant market for DIMO, dropped by 29% during the year under review.
Tariffs for passenger vehicles remained high during the year. This had an adverse impact on the Group’s overall performance.
DIMO’s performance in the non-automobile sector exceeded expectations. The Marketing & Distribution and Electromechanical, Bio- Medical and Marine Engineering segments of the company’s operations delivered startling results and gave us an inkling of the potential these sectors offer. The construction and material handling sector too performed well capitalizing on the momentum the industry is generating in Sri Lanka.
DIMO continues to focus on responsible value creation. The Group understands the need to create wealth for shareholders and for multiple other stakeholders. The Group’s business model is designed to take this vision into account and its supply chain processes pursue this goal relentlessly.
The Group’s human resource policies, including its approach to innovation, its code of ethics, quality management systems, environmental management systems and performance management systems ensure that the company delivers consistently, and most importantly, responsibly.
The impressive GDP growth rates recorded in the recent past have prompted the company to increase the capacity in every sense. The company has invested in capacity across all business segments. This includes the number of customer interaction points, the number of work bays, the distribution networks, building employee competencies, and expanding the product portfolio.
The new Mercedes DIMO 800 Centre opened in May 2014. This state-of- the art facility on a 621 perch property which has 25,748 square meters of showroom, workshop, office and parking space has put the company ahead of its competition.
The new showroom and workshop facility in Jaffna will be operational soon. This will reach out to a population segment that has been deprived of world class services during several years of war.
The high tariff regime for vehicles continues to have an impact on the company’s performance. The expectation was that the end of the war would have unleashed a lower tax regime.
The company however, continues to innovate by broadening its range of vehicles and by moving into new areas of activity. The company also has to face the challenge of the tariff concessions offered to vehicles assembled locally.
The rapid growth in infrastructure development, construction and power sectors has attracted new players. DIMO is confident that its vintage brand, 75 years heritage, strong relationships with world class principals and its focus on innovation, will help us meet any competitive challenge that the evolving market may offer.
DIMO is upbeat about the opportunities that are unfolding. In 75 years the company has been through a multitude of changes and challenges. It is optimistic about the country’s future and about the company’s future. The Budgets show that the year ahead will be a better one.
A.G. Pandithage
Director/Chief Executive Officer
23rd May 2014
Colombo
