DIMO Chairman and Managing Director Ranjith Pandithage addressing the media. Also present, DIMO Group CEO Gahanath Pandithage (left) and DIMO Director and Chief Marketing Officer Asanga Ranasinghe – Pic by Indraratna Balasuriya
- Move as part of efforts to reduce dependence on volatile motor vehicle business
- Medium to long-term goal is for agribusiness to contribute 50% of top and bottomline
- Invests over Rs. 400 million in aggressive foray into agri inputs such as crops protection products, specialised fertilisers and seeds with acquisition of 51% stake in PlantChem and Plant-Seeds
- DIMO Agri Techno Park set up in Dambulla to conduct research related to agri inputs such as seeds, crops and hybrid seeds
- Group pursues geographical diversification with operations and business in Myanmar, Maldives and East Africa
By Nisthar Cassim
Renowned for pioneering motor engineering excellence in Sri Lanka, DIMO is re-engineering itself to harness higher yet sustainable and responsible growth for the future with greater focus on agriculture.
The move is akin to going back to Sri Lanka’s roots and also to recapture former glory in agriculture, to which DIMO has already made a strong commitment.
It has invested over Rs. 400 million in acquiring 51% stake in PlantChem Ltd. and Plant-Seeds Ltd. last year. The aggressive yet well-measured foray into agriculture has been buttressed with some strategic initiatives. DIMO has partnered with Penergetic International AG, a world leader in sustainable agri solutions. It also opened the DIMO Agri Techno Park in Dambulla to conduct research related to agri inputs, such as seeds, crops and hybrid seeds with an investment of Rs. 68 million. It also introduced a self-propelled state-of-the-art forage harvesting machine by German giant CLAAS.
Following the investment in two specialist agri business companies, DIMO’s employee base in agriculture has increased by nearly 350% to 241 from 54 in the financial year ended on 31 March 2017. The headcount in agriculture now accounts for 14% of Group’s total.
At present, the agriculture sector, comprising sale of agri machinery, after services, specialised fertiliser, seeds, and agrochemicals, brings in Rs. 4.1 billion in revenue (up from Rs. 3.3 billion in FY18) accounting for 11% of DIMO’s Group total as against 8% in the previous year.
Greater involvement in agriculture has been one of DIMO’s long-cherished dreams. We decided to focus more on sustainable agriculture and food, given Sri Lanka’s potential. The world is also moving towards organic food....We want to be a responsible player in agri and food business with proper education and empowerment of farmers - DIMO Chairman and Managing Director Ranjith Pandithage
Last year (FY19) it generated Rs. 307 million in pre-tax profit – 10% of the Group’s segmental results up from Rs. 121 million in FY18 (4%), and Rs. 201 million in FY17. Together, both companies – PlantChem Ltd. and Plant-Seeds Ltd. – made a pre-tax profit of Rs. 87 million in FY19.
PlantChem revenue has grown to Rs. 772 million in FY19 from Rs. 88.6 million with after tax profit increasing from Rs. 7.7 million to Rs. 33.9 million. PlantSeeds’s revenue rose to Rs. 621.2 million from Rs. 62 million and after tax profit amount grew to Rs. 53 million from Rs. 5.6 million. Via PlantSeeds, DIMO is the biggest importer of watermelon seeds.
Started as an automobile company, DIMO’s focus was amplified by the fact that operations related to agriculture were identified as a separate business segment from FY18.
The greater focus on agriculture makes sense as DIMO’s core business of import and sale of motor vehicles has had turbulent times owing to inconsistent and exorbitant taxation policy and flood of shipments via the grey trade. Revenue from vehicle segment was down to Rs. 20.3 billion in FY19 from Rs. 26.5 billion in the previous year and Rs. 29.5 billion in FY17. The segment result was down to Rs. 968 million from Rs. 1.36 billion in FY18 and Rs. 1.7 billion in FY17.
Dream come true
Chairman and Managing Director Ranjith Pandithage told journalists recently that a greater involvement in agriculture has been one of DIMO’s long-cherished dreams. He recalled DIMO started with mechanisation of agriculture as well as launched the first paddy harvester in Sri Lanka from Germany.
“We decided to focus more on sustainable agriculture and food given Sri Lanka’s potential. The world is also moving towards organic food. With German and other superior technology we can address this need,” he added.
“We want to be a responsible player in agri and food business with proper education and empowerment of farmers,” Pandithage said, adding that DIMO will advocate wider use of organic fertiliser.
He said DIMO will help farmers to improve yield with new seeds, modern irrigation, value addition and find local and exports if required, innovative solutions to reduce post harvest wastage which is currently very high. “For those in agri business and animal feed business we will help with greater mechanisation, modernisation and automation which are a dire need,” Pandithage added.
DIMO Group CEO Gahanath Pandithage said the medium to long-term goal is to ensure the agriculture segment contributes to 50% of turnover, and bottom line 10%, reducing the motor vehicle business share from 70% at present. DIMO has 110 business units categorised into seven clusters:1. vehicles sales; 2. vehicles after services;3. construction and material handling equipment; 4. marketing and distribution; 5. agriculture; 6. electro mechanical, bio medical and marine engineering; and 7. special business and projects via DIMO Lanka Ltd.
Going global, starting from Myanmar, the Maldives, and East Africa
As part of geographical diversification, DIMO is also stepping up its focus globally. It has opened operations in Myanmar and the Maldives via fully owned subsidiary DIMO Lanka Company Ltd. More recently, it entered East Africa.
DIMO in FY18 invested Rs. 38.1 million in the subsidiary which acts as the investing arm of DIMO in Myanmar where it has an automobile workshop, vehicle dealership and a supply contract in the power engineering sector. In the Maldives, where it has invested Rs. 58 million DIMO has a facility for marine and general engineering repairs.
The Group has invested in the company as part of its expansion program in automobile repair and servicing business overseas. In FY19, a further Rs. 40 million was invested.
DIMO is also pursuing projects, especially in infrastructure development, such as wind power, substations, Colombo rehabilitation project in sewerage with L&T, etc. The company will further pursue establishing partnerships with global leaders such as DeWalt, Stanley, Black & Decker, STIHL, and Axalta.