| Statement by the Chairman |
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I make no bones about the focal point of what we are reporting, because it is not common for a business to increase profits tenfold in a single year. And that is precisely what Dimo has achieved. The Company posted a profit before tax of Rs. 3,369 mn as against last year's figure of Rs. 306 mn. Similarly, the Company's after tax profit stood at Rs. 2,104 mn, up from Rs. 189 mn last year. Group profit before and after tax were Rs. 3,396 mn and Rs. 2,122 mn respectively.
To say that I am delighted with these results is to make a gross understatement. I am truly
ecstatic and so is everyone at Dimo. Nevertheless, it is not about basking in this glory.
On the contrary, the key factors that contributed to this success have also brought about
so much opportunity, that every corner of Dimo is a fresh hive of activity.
There were Two Main Factors that
Led to this Phenomenal Growth
The first was the reduction in interest rates. This made it easier for customers to finance their
purchases. The reduced interest rates also gave an additional impetus to the steadily increasing
economic activity in all the sectors that we serve. This was on top of the already buoyant
economic environment owing to the opening up of markets in the North and East of the
Country and other infrastructural development projects that were underway.
The second was the Government's decision to rationalise tariffs on imports, particularly,
those of passenger motor vehicles. Motor car registrations which had shrunk by 75% in 2009
bounced back dramatically. Likewise, new registrations of all other segments of motor vehicles
followed suit.
We were Fortunately Prepared to
Benefit from this New Scenario
This is the central lesson we would like to carry into the future; because the economic cycle will
always remain. Let me explain.
An examination of our results over the past ten years would demonstrate protracted challenge
punctuated with years of severe strife. Through all these years we systematically built on our
intellectual capital, in the belief that the tide would turn. I would like to draw your attention to
the diagram in the inner front cover which depicts our view on financial value creation, through
the dynamic interaction of our various forms of intellectual capital. It was as well a period
where profits were reinvested to develop and maintain all our physical facilities in peak
performing condition.
We have Adopted a New Structure
in Our Annual Report
This structure brings to focus our different forms of intellectual capital and how we develop
them. We have also reported on both sides of the coin concurrently.
What is the Other Side of
the Coin?
The term capital, be it financial capital or intellectual capital implies ownership. Yes, this is true
to a certain point; but not entirely so. Take financial capital for instance. Do we really own the
financial resources at hand? As explained in the section titled financial value creation appearing
on pages 18 to 32 we believe that we don't have the prerogative to sit on financial resources
unless we create wealth in a sustainable manner. It is this conviction that prompted us ten years
ago to adopt a management approach based on Economic Value Added (EVA).
Is It the same for Intellectual
Capacity?
If the same yardstick was to be applied to intellectual capital, it would be seen that ownership
plays little or no part at all. Instead trusteeship, stewardship and accountability come into play.
This leads me to reiterate our eight strategic imperatives:
- Creating financial value
- Refining the portfolio mix of our businesses continuously
- Earning the trust of customers so they keep coming back
- Nurturing people so they find it enjoyable and rewarding to work with us
- Having great relationships with best-of-breed business partners
- Playing by the rules
- Serving the community
- Being friendly towards the environment
We have in this Annual Report explained in detail how we live by these strategic imperatives.
You will see that they form a holistic picture and are based on years of tacit insights passed
down through generations. However, in the year under review we also commissioned an
independent third party to engage with our various stakeholders and elicit additional insights.
Thus, we are fine-tuning our act by understanding them even better and aligning our actions to
serve them comprehensively.
We have a Large Number of
Customers and Consumers
Spread Across Our Five Business
Segments
They comprise of individuals, businesses and the Government. However if one wonders who
consumes our products, we are probably touching lives of the majority of the population in
Sri Lanka. In service to them, in the ensuing months we will be opening a new Bosch Centre,
which will be followed by a new Mercedes-Benz Centre, and an TATA passenger car sales and
service facility. These projects represent a capital investment of over Rs. 1.0 bn. We will also be
investing in a new facility for sale of TATA commercial vehicles and spare parts.
Just Over a 1,000 People Work
at Dimo Now
Their knowledge and skills are constantly being honed with a comprehensive development
programme. These efforts were recognised by the National Human Resource Management
Awards in 2010. Dimo was one of the ten Gold Award Winners for best HR practices as well as
the category winner in the 'Building HR Capacity' category.
A list of the prestigious principals that we represent appears on page 57 to 58 of this Annual
Report. They represent the root of our value chain.
Youth are the Focal Point
of Our Community
Development Initiatives
Youth in different parts of the country, aspiring to make a career in one of the fields of
engineering that we are engaged in has always been our focal point. Our Dimo Automobile
Training School which has gained a world-class reputation, celebrated 21 years of service in the
year under review. We recently opened the second Dimo Automobile Training School in Jaffna.
We are also building a state-of-the-art technical training school at Sooriyawewa in Hambantota
at a cost of Rs. 100 mn. This is scheduled to open in July 2011.
We were One of the First
Companies to Report on Our
Carbon Footprint
This exercise is now in its third consecutive year. Our long-term goal is to become carbon
neutral. In the meantime, we are employing many measures to bring down our carbon footprint.
There is much Potential; and the
Outlook is Positive
Lower and stable interest rates, duty reductions, a strong GDP growth, and sector growth in
commerce, industry and construction during the past year provided Dimo the foundation
for a new phase of growth. A continuation of this regime will ensure good prospects for the
Company in the ensuing years.
Dimo will continue to develop its core business in automobiles and automobile parts and
services. At the same time it will invest significantly in growing its businesses in lighting
and power tools, construction, agricultural and material handling equipment and electro
mechanical and bio-medical equipment. The Company is on the verge of entering into leisurerelated
transport in view of the burgeoning tourism industry. The Company will continue to lay
emphasis on innovation and quality in the products and services it offers and in the aftercare
it provides.
Solidarity with the
People of Japan
I would like to use this opportunity to express my solidarity with the people of Japan.
The Company is an agent for several products from Japan and we have always had warm
relationships with the Japanese people. To them I say, our thoughts are with you at this moment
and we have no doubt that you will rise even stronger from one of nature's cruelest strokes.
Acknowledgements
To our customers, I say 'thank you' for your patronage and the relationships we have built.
Earning your trust means everything to us.
My warm thanks to our employees who 'drive' the Company with their commitment, dynamism
and flair. I am grateful to the vibrant Employees' Council for the close spirit of partnership that
has evolved.
I thank our principals for the encouragement and advice they have provided and the alliances
we have struck. We are touched by the faith you have placed in us and look forward to many
more years of collaboration.
In keeping with the Company's performance, the Board has recommended a generous
dividend of Rs. 61/- per share. This is unparalleled in the history of the Company. It is a way
of saying thank you to our shareholders who continue to retain faith in our philosophy and
business strategy.
I warmly thank my colleagues on the Board. We have established a solid and dynamic team
at Dimo and look forward to consolidating the new phase of growth the Company has
just entered.
A. Ranjith Pandithage
Chairman, Managing Director/Chief Executive Officer
Colombo
3rd June 2011
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