Financial Times

Mercedes "E" Class best seller for DIMO
Diesel & Motor Engineering Company (DIMO) has reported a sharp rise in profits, with the year's best selling car being the Mercedes Benz "E" Class, and has announced plans to rebuild tyres and make auto filters.

However, DIMO chairman and managing director A.R. Pandithage warned that last year's import tariff hike had adversely affected the market for cars. DIMO group profit after tax rose 77 percent to Rs 177 million in the financial year ended March 31, 2005 while group turnover increased 58 percent to Rs 7.6 billion.

The Hayleys conglomerate owns 28 percent of DIMO. Pandithage said in his annual report to shareholders that the year's best-seller was the Mercedes Benz "E" Class and that DIMO plans to introduce new Mercedes models - S, M, B, and CLS.

DIMO has done initial studies on an investment in commercial vehicle tyre rebuilding that will complement the present tyre business and plans to launch this manufacturing project in the latter half of 2005. DIMO now markets Michelin, BF Goodrich and MRF truck tyres.

Pandithage also said DIMO was considering another investment in a project to manufacture auto filters. But he said the general economic and regulatory climate is unfavourable going into 2005/06 financial year.

"Unfavourable exchange and interest rates plus a dire tariffs policy badly affecting the vehicle business are not desirable trends." The appreciation of the euro against the rupee and sharp increase in import tariffs adversely affected the passenger car market. However, he said the company remains optimistic of improving on last year's results.

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