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ManageMent report
Business
PERFORMANCE
The Business Environment in 2009/10
It was a year that saw stabilisation and the beginnings of recovery after the
shocks that buffeted the Sri Lankan and world economies in 2008/09. The
Sri Lankan economy grew by 3.5% in real terms. Growth, tentative at first,
strengthened to a noteworthy 6.2% in the fourth quarter from a mere 1.6%
in the first quarter.
Sri Lanka continued to be impacted by the spill-over effects of the global
financial and economic crises, while domestically, the internal conflict which
ravaged the country for almost three decades reached a critical juncture
during the early part of the year.
Unfavourable domestic weather conditions that lowered agricultural output
were also behind the country’s lower growth rates of the first quarter.
However, growth has rebounded after the second quarter, driven by the end
of the war and the gradual recovery of the global economy. Looking forward,
the cessation of hostilities in the Northern and the Eastern provinces
presents an unprecedented opportunity for investment and growth in these
regions, with benefits that are bound to spill over into the entire country.
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ANNUAL REPORT 2009/10 DIESEL & MOTOR ENGINEERING PLC
The Transportation Sector
The reopening of the A9 Road in July has greatly facilitated the movement of
passengers and cargo to and from the Jaffna peninsula, which earlier could
only be reached by air or sea. Regular bus services commenced, connecting
Jaffna with Colombo, Kandy, Batticaloa and Trincomalee. Your Company, too,
has not been idle; in September we became the first automobile company to
open its own branch in Jaffna.
With the gradual reintegration of the Northern and the Eastern Provinces
with the rest of the country, there will be a strengthened demand for goods
and passenger transportation. To meet this emerging demand, an efficiently
formulated institutional arrangement is needed.
Infrastructure development and growth in industrial production are two key
drivers of commercial vehicle demand. The output of the industrial sector
grew by 4.2% in 2009 compared to 5.9% in 2008.
Public passenger transport, comprising railway and bus transport, accounts
for approximately 73% of all motorised passenger transport and serves as
the primary source of transport for the general public. Of this, bus transport
accounts for a 68% share, with state-owned bus services accounting for 23%
and private bus operators accounting for 45%. Nearly 99% of cargo moves
by road.
Passenger transport showed a moderate improvement in 2009, though the
quality and efficiency of operations remained subdued. A total of 199 new
buses were added to the SLTB fleet, while 90 buses were refurbished by end
2009. However, registration of new passenger buses decreased by 37.4% to
739 in 2009.
Vehicle Registration and Current Vehicle Population
Class of Vehicle Total
Vehicle
population
2005 2006 2007 2008 2009 2009
Motor Cars 17,283 27,578 22,603 20,237 5,762 387,210
Three Wheelers 41,085 64,466 43,068 44,804 37,364 443,895
Motor Cycles 130,696 156,626 182,508 155,952 135,421 1,896,021
Buses 2,069 3,346 2,637 1,180 739 81,789
Dual Purpose Vehicles 6,851 7,245 5,193 2,856 1,280 197,516
Goods Transport Vehicles 14,262 0,436 18,408 14,038 8,225 284,847
Land Vehicles 17,423 20,825 23,475 26,132 15,284 303,790
Total 229,669 300,522 297,892 265,199 204,075 3,595,068
Source: Department of Motor Traffic
Financial highlights 05 Operational highlights 06 Chairman & CEO's Review 10 Board of Directors 14 Group Management Committee 18