Financial Times

Associated Motorways Ltd (AMW), the Colombo firm dominating the automobile market, has expressed concern about the country returning to war and says the “currently evident fragile peace process needs to be fortified as early as possible.”

Ajita De Zoysa, AMW chairman, said in the company latest’s 2005-06 report the external economic pressures, such as high crude oil prices, lower export volumes due to the termination of the Multi Fibre agreement, etc will have a significant impact on the economy.

“Therefore an internal conflict would further aggravate the situation and would be disastrous to state the least.

The need of the hour is unity among all sections of society, so that we could collectively focus in achieving our country’s economic, social and other goals. I am confident that the new government would initiate the necessary pragmatic policies and lay down direction as a foundation in this common stand,” he said.

The group’s consolidated profitability rose to a phenomenal Rs 572 million, up 98 percent compared to the previous year. It was highest ever profit for the Group, which resulted in the earnings per share rising significantly to Rs 69.38. Zoysa said the government should also ensure a conducive tax environment, noting that “it is imperative that the government maintains an optimal balance between adequate tax collection and the required impetus for new investment and expansion of existing business.”

The company is developing its existing workshop operation at Kitulwatte Road with a state-of-the-art Multi storey building to handle repair work and lubricant services of Maruti, Nissan, Yamaha, and Piaggio customers. The project, is expected to cost Rs 350 million.

Deputy Chairman Tilak de Zoysa said the fact that group net profits of Rs 572 million was achieved despite difficult market conditions was most impressive.

“It is a worldwide trend that major motor vehicle distributors expand its existing business to provide leasing and related facilities to its customers. Currently approximately 60 percent of our customers obtain lease facilities to purchase motor cars from AMW. These facilities are now being provided by several Banks, Leasing and Finance Companies.

Therefore, given the availability of a captive market, it is viable for us to leverage this opportunity to derive several synergies. These include the integration of our motor division to provide an ideal ‘One –stop-shop’ to our potential customers with increased convenience and immediate accessibility to finance needs, within the same location.

It is also anticipated that satisfactory returns could be derived once commercial operations of this company commence during the second 2nd quarter of the financial year 2006/07,” he said.

Tilak de Zoysa also said Suzuki Motor Company in Japan and Maruti Udyog Limited are seriously evaluating the possibility of establishing an assembly plant in Sri Lanka to produce one or two of the most popular models.

“We have commenced preliminary negotiations with the authorities in pursuance of this project,” he adding that the group is also exploring the possibility of establishing a rubber based automotive parts manufacturing facility jointly with Indian and Pakistani investors to particularly take advantage of the Free Trade Agreement with India and Pakistan and also the concessionary duties extended by the European Union.