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Vision & Strategy | ||||||||||||
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Business Performance | ||||||||||||
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Financial Review | ||||||||||||
Key Principals• BF Goodrich• Bhagat Forge Ltd. • Bimetal Bearings Ltd. • Blaupunkt Werke GmbH • Bosch Automotive Systems Corporation • Bosch Chassies Systems India Ltd. • Bosch Ltd. • Daimler AG • Daimler Regional Logistic Centre • Daimler South East Asia Ptd Ltd. • Eicher Dem (Eicher Motors Ltd.) • Fenner (India) Ltd. • Gabriel India Ltd. • India Pistons Ltd. • KLN Engineering Products (Pvt) Ltd. • Komatsu Forklift Asia Pte Ltd. • Luk India Pvt Ltd. • Michelin • MRF • Rane Brake Linings Ltd. • Rane Engine Valves Ltd. • Robert Bosch GmbH • Shardlow India Ltd. • Sri Bhavan Castings Ltd. • Tata Motors Ltd. • Victor Gaskets India Ltd. |
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| business performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Repair of Passenger and Commercial Vehicles, Sale of Vehicle Spare Parts, Accessories, Components and Tyres | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Industry Overview | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Industry overview for this segment is the same as the industry overview for the vehicle segment on pages 16 to 20. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operational Review | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Franchise Parts |
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| The Company offers a range of Commercial & Passenger vehicular aftermarket parts, under the brand names of Mercedes-Benz, TATA, Chrysler, Jeep, Bosch, Michelin, Komatsu, Mahindra & Mahindra, Bomag & Class. We also offer Engine Management Systems, Car Multimedia Systems, and Chassis Systems & Accessories. Turnover in this business sector has increased by 18% over the period under review. TATA Commercial vehicles, Light Commercial vehicles and passenger cars, that have recently been added to the existing vehicular parts range has contributed to the growth of this sector. The opportunity for future revenue growth is in the increased sale of genuine parts. To ensure the availability of genuine parts island-wide, the distribution network of the Company was de-centralised during the year for operational efficiencies and greater customer convenience. The enhanced distribution network, together with the appointment of 29 dealers and 67 retailers is bound to contribute much to our efforts to consolidate our position in this market. The appointment of these franchise dealers at key locations in Sri Lanka will further improve the Company’s market reach and will aid in providing a good service to our customers. Among the future plans for this sector are the launching of a Call Centre, introducing the TATA Marine Engines to the market, launching of service campaigns and the upgrading of the existing service facilities to handle services on the full range of TATA vehicles. The Company is expecting a higher growth from this sector in the ensuing year, propelled by the Government’s plan for the further reconstruction of the Eastern Region of Sri Lanka and development of road transportation infrastructure; such as the Colombo Circular Highway and the Southern Expressway. |
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Non-Franchise Parts |
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| The core business in this sector is the supply of spares & accessories to the commercial and passenger vehicular market under the brand name of ‘DIMO’ or co-brands of the original equipment manufacturers (OEM). The turnover growth which was 53% in 2006/07 had fallen to 14% in the year 2007/08 mainly caused by the pruning of un-profitable product lines. The Company conducted several events like garage campaigns and vehicle owner seminars, as well as several end-user sales promotions in the year. The successful completion of these key events is expected to accrue benefits in the form of improved brand loyalty for DIMO. In coming years, turnover growth is expected to receive a boost from the development of the Eastern Province through the Nagenahira Navodaya programme. The Company also plans to explore the Light Commercial Vehicles and Passenger Car spare parts market segments to consolidate its position in this sector and increase turnover growth. |
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Tyres |
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| DIMO supplies tyres to the passenger cars, commercial vehicles, construction and the agri-machinery sectors of the market. These sectors are served through the franchises held by Michelin, BF Goodrich and MRF brands. Over the years this business sector has continued to face intense competition from the availability of low priced imported and locally manufactured tyres. Recently the emergence of India and China as low cost tyre exporters and the entry of a new local manufacturer have further intensified competition in this market. This together with the low switching costs to consumers has ensured poor brand loyalty within this sector, with the exception of premium brands such as Michelin. As a result the turnover generated from the tyre sector has fallen by 10% during the year under review in comparison to the previous year. Responding to the challenges faced by the easy availability of low cost tyres, DIMO plans to enter the market for commercial tyres for light commercial vehicles in the coming year. This will enable the Company to gain an edge on cost competitiveness and increase turnover and the bottom line. |
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Tyre Retreading |
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| This has been the first full year of operations for the ‘Tyre Retreading’ business. However, this business faces a similar threat of customers changing over to low cost tyres imported from China. Here, the power of suppliers is high, given the few tread-rubber suppliers in the market. In the ensuing year the Company also plans to attract more fleet owners while focusing on increasing business from existing dealers. The Company also has plans to commence Retreading of radial tubeless truck tyres for the local market |
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Vehicle Service |
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| DIMO serves the passenger and commercial vehicles sector with state-of-the-art repair and service facilities. Turnover from this sector has grown 19% in the year due to the increase in the number of fleet owners and corporate clients. The operation of the 7 day a week workshop facility, introduction of the 24 hour customer assistance survey, the body-building service, ability to offer a ‘Total Solution’ to our customers and the expansion of the branch network have all contributed to the increased turnover seen this year. Furthermore, as planned and outlined in our last Annual Report, the implementation of the fleet owners club, full maintenance contracts for fleet owners and delivery of an Express service also has contributed to top line growth. The Company invested Rs. 45 mn in order to upgrade the workshop facilities in the year. However, we continue to face the challenge of retaining highly trained personnel and foresee this as a serious obstacle to providing a state-of-the-art service to our customers. In terms of growing our business, we see some potential in the increased demand for protected vehicles. Other areas of focus will be the provision of the ‘total solution’ concept under one roof, running a mobile service unit for greater customer convenience and providing running repairs for older vehicles. The Company has always and will always continue to adopt stringent environmental and pollution control and safety measures to ensure that operations comply with all statutory requirements and beyond. |
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