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Access Engineering to move to automobile sector

Access Engineering Limited (AEL) which is on the verge of opening its ground breaking and much anticipated Initial Public Offering on 6th March 2012 made a foray into the automobile sector in the country via the acquisition of the majority stake of Sathosa Motors PLC (SMOT) from ITOCHU Corporation of Japan on 29th February 2012. AEL acquired 3,600,000 shares of SMOT at a price of Rs.235 per share on the Colombo Stock Exchange, thus gaining the controlling interest of the latter.

SMOT, incorporated on March 11, 1982, is a public limited liability company. However the roots of the company go back to 1962, where ISUZU agency was secured by the Co-Operative Wholesale Establishment in 1962.

SMOT is the franchise holder for 'Isuzu' brand of vehicles and spare parts (manufactured by M/s Isuzu Motors Ltd, Japan) in the Democratic Socialist Republic of Sri Lanka and the Republic of Maldives. The Isuzu range of vehicles consists of double cab pickup trucks, light duty and heavy duty commercial vehicles, luxury passenger coaches and special purpose vehicles such as fire trucks, logging trucks, dump trucks, water and fuel bowsers and various other types of vehicles required in building construction, distribution of goods etc. To date the company has a portfolio of over 100,000 ISUZU brand motor vehicles sold over the years. The customer portfolio of the company comprises of both private and state sector institutions.

In ?Brands Annual? compiled by 'Brand Finance' in April 2011, on the Most Valuable Brands in Sri Lanka for the year 2011, SMOT was ranked 88 with a brand rating of 'B'.

SMOT also holds the franchise for 'Opel' passenger cars and Opel spare parts, manufactured by Adam Opel AG of Germany and marketed by the General Motors Overseas Distributors Corporation. The Opel range of vehicles mainly comprises of passenger cars and jeep type vehicles.

The head office of SMOT is located at Vauxhall Street, Colombo 02 within which the new vehicle sales showroom, spare parts stores, sales office and, Opel and Isuzu repair workshop are located.

The company also has a spare parts outlet at Panchikawatte for the convenience of its customers. The main workshop of the company is located at Peliyagoda where the major portion of workshop repairs are carried out for all models of Isuzu trucks using modern and high tech equipment while providing technical advice to its valued clientele. The company also has an authorized dealer network of nearly 50 dealers Spread Island wide.

According to the provisional results of SMOT released to the Colombo Stock Exchange for the nine months ended 31st December 2011 the company has recorded a net turnover of Rs.1, 393 million , a 37.5% increase over the corresponding period.

The total gross profit for the same period has been Rs. 242 million, a 50% increase over the previous corresponding period. The company has recorded a profit after tax of Rs. 128 million, which is a staggering 125% increase over the corresponding period.

This eventually turns out to an earnings per share of Rs. 21.22 for the 9 months period ended 31st December 2011. The company does not have any significant non current liabilities except for a Retirement Benefit Obligation of approximately Rs. 21 million, thus has the ability to leverage on its equity base of approximately Rs.550 million for expansion purposes.

The net asset per share as at 31st December 2011 was Rs. 90.73, a 38% increase over the corresponding figure as at 31st December 2010.

 

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