SOCIETY

OUR RELATIONSHIPS WITH REGULATORY AUTHORITIES

The effectiveness of our internal control systems is primarily determined by factors such as the fluidity of implementation of our business model, the clarity and consistency of our Organizational Structure, the adherence to all statutory requirements and the quality of our relationship with public bodies. Any deviations from the norm with regard to the above factors would adversely affect the effectiveness and relevance of our internal controls. Moreover, we are well aware of the adverse effects that deviations from the regulatory framework could have on our risk management system. Therefore it is imperative that we abide by all applicable statutory requirements and ensure that all our employees are aware of the implementation, impact and changes to all applicable rules and regulations.

The sustainability of a long-term business needs institutional stability and this is why Dimo goes to great lengths to partner with and maintain positive relationships with all local authorities that would have any sort of operational impact on our business. The execution of our Management Approach involves the constant training of our employees to stay up-to-date with all regulatory changes affecting our businesses. More specifically, tailormade training programs and workshops are organised to keep our employees aware of tariffs and taxation schemes, local government and environmental regulations, the implications of the national budget, import mechanisms, labour regulations and consumer product safety regulations.

Our internal systems are designed to expedite all statutory payments and tax obligations; the norm being that no such financial obligations be left pending. A strong and positive relationship with the tax authorities is critical to us as it is imperative that we promote transparency and ensure compliance with the corporate governance models we have adopted.

These efforts have ensured that our relationship with the tax department is one of trust and confidence.

During the year under review we have disbursed a total of Rs. 3.24bn (Rs. 2.96bn in FY 2012/13) in taxes to the Government. (Rs. 2.96bn in FY 2012/13)

Every operations centre in our islandwide network is conscious of the need to adhere to environmental regulations, product labelling and safety regulations As a result Dimo is fully compliant in these areas. Additionally, it must be stated that during the year under review, Dimo has been in compliance with all applicable laws and regulations and there have been no penalties levied against us during this period.

Engagement with External Associations

In keeping with our overall objective of operating a sustainable business and delivering the best in products, solutions and service to our customers, it is our practice to build close relationships with external trade associations in order to align ourselves with industry best practices and to be in a position to play a part in the formulation of policy and accompanying legislation. This is because we have identified that such policies and legislation would have a direct operational impact on our business, our employees, our suppliers and our customers. For example, we have contributed towards the devising of taxation policies, based on our membership and participation in trade bodies.

We have membership in the following trade associations and councils, as we view such membership as strategic to our business activities:

1. The American Chamber of Commerce
2. The Automobile Association of Ceylon
3. The Ceylon Chamber of Commerce
4. The National Chamber of Commerce
5. The Chamber of Construction Industry
6. The Sri Lanka - Australia and New Zealand Business Council
7. The Sri Lanka - German Business Council
8. The Ceylon Motor Traders Association
9. The Engine Builders Association
10. The Chamber of Young Lankan Entrepreneurs
11. The Chamber of Construction Industry Sri Lanka
12. The International Integrated Reporting Committee (IIRC)
13. The European Chamber of Commerce of Sri Lanka
14. The Sri Lanka Heritage Foundation
15. The Association of Corporate Lawyers of Sri Lanka
16. The Sri Lanka - Malay Association

Further, we are involved in a research and development project in conjunction with The Sri Lanka Institute of Nano Technology (SLINTEC) for which we provide the necessary funding.

COMPLIANCE

Customer Responsibility

There were no incidents during the past year relating to transgressions of health and safety, product labelling, advertising or customer confidentiality.

Environment

The Group has not been fined or penalized for non-compliance with legislation, including environmental regulations.

Nurturing mutually beneficial relationships with our communities

As a leading corporate citizen the Company strictly conforms to all rules and regulations pertaining to the environment, product standards, tax regulations and all other requirements of our business.

We have not received any penalties or non-monetary reprimands resulting from breaches of any rule or regulation.

Social acceptance and the continuous management of our relationships with the communities within which we operate are critical for the longevity of our business. Staying in touch with stakeholders who are affected by our operations ensures the uninterrupted functionality of our shareholder value creation initiatives.

Our stakeholder engagement mechanisms include independent stakeholder surveys, helping us to understand the expectations of communities directly affected by our operations. These engagement initiatives have brought to our notice the fact that local communities expect us to help provide secondary education facilities and job opportunities. Such stakeholder issues receive attention through our Sustainability Committee where plans are formulated to best serve our stakeholders

Management of Indirect Economic Impacts

As an organization that has an islandwide reach, we are aware of both the positive and negative impacts that we have on the communities associated with us.Staying aware of these issues is important for the development of a sustainable business delivering long-term value to our shareholders. We remain in constant engagement with our stakeholders with a special emphasis on maintaining healthy interactions with the local communities, in order to continue to fulfil their expectations of us as a responsible corporate.

Through our continuous impact identification and assessment mechanisms, we have realized that the establishment of branches island-wide and the expansion of existing business units help in the development of local economies and create a demand for a whole host of players in the supply chain. Not all investments are of a commercial nature, as for example our two technical training schools which provide free technical education to students.

Low income households and rural entrepreneurs are greatly benefited by the fuel efficient and cost-effective small commercial vehicles that we offer.This factor drives entrepreneurship and helps the development of rural economies. We also contribute to landmark projects that foster national economic development through the provision of a variety of customized engineering solutions.

Considering the fact that we operate in the automotive industry, we are very conscious of the fact that our business does have adverse environmental impacts. Dimo has strived to set off these factors through the introduction of fuel-efficient, low-emission vehicles.. We also provide consultancy and engineering services for companies to reduce their power use through the implementation of energy audits that we are authorised to certify.

Our total expenditure on community development and engagement activities for the period of 2013/14 stands at Rs: 43.8 Million (52.25 Million 2012/13).

The management of our relationships with the local communities broadly revolves around the following areas:

a. Supporting technical and vocational education of youth.
b. Developing the social and physical infrastructure of the community.
c. Enhancing the quality of life of the local community.

a. Supporting technical and vocational education of youth

DIMO Automobile Training School (DATS)

The DIMO Automobile Training Schools providing free technical education at Siyambalape and Jaffna remain flagship projects. The overall objective of these initiatives is to support the technical and vocational education of young people by giving them first hand experience in dealing with global brands. Our long-term objectives include contributing to the nation’s future (through the development of skilled labour), the production of future recruits for DIMO and the empowerment of the female mechanic in the automobile sector.

Our total expenditure for the operation of these two technical schools in 2013/14 is Rs: 22,923,324.00

Additional Initiatives to further technical education

1. Holding technical training programs in the use of agricultural machinery and the dissemination of knowledge and technical know-how on the best practices in vehicle repair and maintenance.
2. Holding regular career guidance workshops in collaboration with the Universities of Sri Jayewardenepura and Moratuwa on meeting employer expectations.
3. Regular provision of school material, stationery and food items to disabled and poverty stricken students across various parts of the country.

Partnership with GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit) to provide mobile career guidance counselling to rural youth about NVQ qualification systems. Islandwide counselling will be done from a 1956 registered, fully refurbished MB bus. This was initiated to commemorate 60 years of Sri Lanka - German Cooperation.

Students from the following institutions received vocational training at DIMO:

1. NAITA (National Apprentice & Industrial Training Authority
2. The Ceylon German Technical Training Institute
3. The University of Moratuwa
4. The University of Peradeniya
5. The University of Sri Jayawardenapura
6. The University of Kelaniya
7. The Vocational Training Authority of Sri Lanka
8. The Automobile Engineering Training Institute
9. The Ministry of Vocational & Technical Training
10. The Open University of Sri Lanka
11. The CETRAC ( Construction Equipment Training Centre)
12. The Asian Aviation Centre (Pvt) Ltd

b. Developing the social and physical infrastructure of the community

Investments in community infrastructure play an important role in relationship building. Last year trainees from the DIMO Automobile Training School helped in the renovation and development of the Kalotuwawa Primary School in Dedunupitiya. The water supply system at the iconic Athugala Samadhi Temple in the Kurunegala District was strengthened for the benefit of the thousands who flock there every year. The company also opened the state-of-the-art DIMO Technical Institute in Sooriyawewa, equipped with state-of-the art driver and technical training facilities.

c. Enhancing the quality of life of the local community.

In order to realise our goal of being an active partner in the development and enrichment of the livelihoods of local communities and to improve our engagement with the local communities, a host of projects of the following types were carried out:

1. Providing aid to differently-abled and handicapped children.
2. Dissemination of knowledge on and the implementation of best practices for disease prevention.
3. Advocating for child nutrition at various locations around the country.
4. Holding blood donation camps.
5. Monetary and infrastructural contributions towards the welfare of disabled soldiers.
6. Infrastructural contribution to the development of religious sites.
7. Partnering with state authorities and state social development programs to give rural entrepreneurs the opportunity to own low cost commercial vehicles, which could be used to develop home industries.
8. Carrying out soil testing and agricultural awareness programs to improve  farmers’ expertise.
9. Partnering with local universities to carry out research to modify logistics related regulations.

Anti-corruption, Public Policy, Anti-Competitive Behaviour

Doing what is right because it is the right thing to do

Dimo’s reputation for business ethics and transparency has built us a wealth of trust and confidence from our customers, our principles, our employees and local communities while helping us to create growing, long term value through our diverse operations.

Our Code of Business Conduct and Ethics communicates our policies relating to to anti-corruption, anti-competitive behaviour and our position in relation to public policy to our employees. The Code includes strict guidelines for our employees on conducting our business operations and the limits within which they should deal with external parties. We do not make any political contributions nor do we attempt to influence any public bodies. Our established approach has been to work in conjunction with regulatory and non-regulatory bodies to jointly engage with them in the execution of their social development programs. To this end, we hold memberships in local and international organizations that are engaged in the development of a variety of business domains.

The provisions of Our Code of Business Conduct are backed up by the provisions of our Whistle Blowing Policy that provides a process for lodging complaints relating to any alleged unethical business practices by our employees. This process is in place to bring to the attention of the management any untoward activities that might cause harm to the standards we have set for ourselves in the conduct of our business. Moreover, the monthly Employee Council meetings are also an open forum to bring to the attention of the management, any transgressions from the ethical guidelines spelt out in our codified policies. Further, as per our open door policy, any pertinent matters can also bedirectly brought to the attention of management up to the Chairman.

Our firm position on anti-corruption, anti-competitive behaviour and how we conduct ourselves with regard to public policy has been successful and no breach of our Code of Conduct has occurred.

Grievance Mechanisms for Impacts on Society

Our business is such that our Group operations can sometimes have adverse impacts on the livelihoods, rights and welfare of individuals who are not employed by us. We take such social and societal impacts very seriously as we are fully aware that we cannot function to our full potential without achieving community acceptance at all levels.

We know that delivering short and long term value to our shareholders would be an arduous task if the stability of our operations was threatened. In order to capture any potential community grievances and promptly provide solutions, we operate a Grievance Mechanism to bring such issues to the attention of our senior management.

Our internal mechanism puts the Business Unit Managers in charge of all our divisions and islandwide branches as the points of first contact with the communities that they operate within. Their responsibility is to understand community grievances, to communicate them to the senior management and involve themselves in the resolution of such issues.

Grievances can be communicated to senior management at our weekly meetings and also at the monthly Employee Council meetings. If a suitable resolution cannot be formulated at these forums the matter would be brought before the Group Management Committee which meets regularly and a solution would be agreed upon.

Critical issues would be brought to the attention of the Board of Directors for their intervention. No grievances have been recorded during this reporting period.

A sample of the community engagement programs organized by DIMO has been given below:

1. Blood Donation Camps
2. Dengue Prevention Lectures
3. Book Donations to school children
4. Health advisory programmes for children.
5. Career Guidance workshops for rural youth and the promotion of technical and vocational training.