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Diesel and Motor Engineering Company Ltd (Dimo) is planning to promote commercial vehicle sales in the North-East.

The opening of the land route to Jaffna and easing of the conflict would leverage the once lucrative North-East area for the commercial vehicles division of the company, according to Dimo Chairman S. Mendis.

"A company team has already visited Jaffna and we are planning to leverage the opportunities available there", Mr. Mendis said in the company's Annual Report 2001/2002.

Referring to profits for 2001/2002, Mr. Mendis said the vehicles division made the highest contribution. "Within this segment, the passenger vehicle business was the most successful. We remain the market-leader in the brand new luxury Sedan car category," he said.

The financial year 2001/02 was a difficult year for almost all sectors of business in Sri Lanka and the national economy faced a year of strife.

Against this backdrop the group's turnover was 31 percent less than in the previous year, when turnover was boosted by the sale of 500 buses to the state sector at very low margins.

Profits before tax were 68 percent less than in the previous year, the influencing factors being increased staff costs, finance costs, reduced service support income and poor performances from various segments notably construction machinery, commercial vehicles and lubricants," Mr. Mendis said.

He said within Dimo's non-core business categories, it had strong sales of forklift trucks distributed through the Construction Machinery Division and of MRI and CT scanners distributed through our Medical Equipment Division also fared well during the year.

"However, the company's two and half year old lubricant business with substantial investment has not provided any returns.

There are no indications to suggest any kind of turnaround too. As such we have decided to move out of this line of business. Some savings will be achieved with the termination of the lubricants business," he said.

The company plans to add the products of MRF, India's largest truck tyre manufacturer, to the Dimo range. MRF is a very popular truck tyre in Sri Lanka and business prospects in the year ahead look promising, Mr. Mendis said.

The business of marketing pre-owned passenger vehicles, which commenced towards the end of the financial year, shows potential that also augurs well for the performance of our core business, he said.

Management of working capital continues to be an area of challenge and focus for the Group.

Working Capital grew due to the business added to Dimo's portfolio.

The company has proposed a first and final dividend of 30 percent, against a total dividend of 40 percent in the previous year.

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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