directors - Colombo Stock Exchange

ManageMent report
We continue to expand our dealer network and this improvement has
brought favourable results in the distribution business for the Company. It has
also helped to strengthen our position in the market against competition.
The Company will continue to expand the dealer network especially in the
growing markets such as the Eastern and the Northern Provinces to improve
results in the ensuing year.
The Company focused extensively on its revenue flows from vehicle parts &
sales during the year. Island wide service campaigns supplemented the sales
efforts to improve spare part sales.
Mercedes and Chrysler Parts
The effects of lower sales of Mercedes Benz vehicles during the recent
past were felt by a marginal drop in turnover. In order to reverse this trend,
a series of customer events and service campaigns are planned for the
ensuing year.
TATA Parts
Special promotional campaigns for TATA parts were conducted in eleven
districts, the main efforts being concentrated in the towns of Ampara,
Badulla, Hambantota, Kurunegala, Matale and Ratnapura. Our teams
visited all major garages where Tata vehicles are repaired. The focus
of the campaign was on briefing garage owners and mechanics about
new technology used in TATA vehicles. Additionally, presentations on the
advantages of using genuine parts were made to all fleet owners and garage
owners in these districts.
The setting-up of new branches and display points have resulted in
substantial bottom-line increases as customers find it more convenient to
purchase their requirements at these outlets.
The number of authorised dealers was increased from 40 to 53. The number
of other retailers (excluding authorised dealers) grew from 98 to 120.
Turnover of TATA parts sales and services grew by 12% (1.4% - 2008/09)
Bosch & OE Parts
The end-users of Bosch products are garages, workshops and service
stations. Dealers and distributors who purchase products in bulk are the
intermediaries between the Company and the end user. Major marketing
activities conducted during the last financial year included garage campaigns
in Anuradhapura, Colombo and suburbs, Galle, Kandy, Kurunegala, Matara,
Polonnaruwa and Puttalam.
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B u s i n e s s p e r F o r M a n C e
Vehicle parts and serVices
ANNUAL REPORT 2009/10 DIESEL & MOTOR ENGINEERING PLC
A pack-flap collection programme for end users (garages, workshops and
service stations), a foreign tour programme for dealers and street promotions
supplemented the sales efforts. The acquisition of new dealers and servicestation
customers improved the turnover of the business; a particularly high
performer was the range of filters designed to suit Indian vehicles. Turnover
of Bosch & OE parts increased by 6% (7% -2008/09).
New Products
Several new Original Equipment Manufacturer (OEM) product lines such as
new clutch plate systems, etc. were introduced during the course of the
year. Another important introduction was WD-40, which is a world renowned
general purpose water disperser.
Outlook
New and ongoing infrastructure developments such as road construction will
result in an increase in the running mileage of vehicles. This is expected to
increase the number of repairs made by vehicle owners, which will directly
impact on the automobile spare parts business.
The cessation of hostilities of the North and the East has increased the
potential sales territory by a significant area. Sales in the Northern Province
increased in the year under review; several OEM parts dealers were
appointed in the Eastern Province. Whilst the Company has a distribution
network to serve the Northern Province, initiatives will be taken to
strengthen the existing network. These initiatives coupled with the positive
economic outlook are expected to provide the acceleration for the growth of
the spare parts business.
Tyres
Dimo supplies tyres to the passenger-car, commercial-vehicle, construction
and agricultural-machinery market segments. The market segments are
served through the franchises we hold from Michelin, B.F. Goodrich and MRF.
The tyre market can be separated into two segments: the passenger-car
segment and the commercial-vehicle/bus segment.
Our performance in the passenger-car segment remained stagnant, with
sales similar to that of the previous year. In the truck and bus segments, by
comparison, we performed better than average for the industry.
Financial highlights 05 Operational highlights 06 Chairman & CEO's Review 10 Board of Directors 14 Group Management Committee 18