United Motors Lanks PLC UML.N0000

UNITED MOTORS LANKA PLC (UML.N0000)

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Product Description

Stock Price as of - 2016-07-13


Close 89.5
Open 88.0
High 90.0
Trades 21
Change 2.5
Prv Close 87.0
Low 88.0
Volume 15596

Additional Information

Established

1989

Quoted Date

1989-12-05 (yyyy-mm-dd)

Financial Year Ends

31st March

secretaries

Ms.Rinoza M. Hisham

auditors

Messrs. KPMG Ford,Rhodes,Thornton & Company

registered office

100, Hyde Park Corner, Colombo 02.

chairman / chairperson

Wijesinha S.G.

ceo

Yatawara C.

website

www.unitedmoters.lk

telephone

4797200

isin

LK0183N00000

Issued Quantity

100900626

source / cse company link

http://www.cse.lk/company_info.do?id=262&symbol=UML.N0000

Sunil G. Wijesinha - MBA (SriJ), CEng (Uk), FCMA (Uk), CGMA (Uk) - Chairman - Non Executive Director (Independent)

United Motors Lanka PLC UML.N0000_24_Sunil.G. WijesinhaMr. Sunil Wijesinha is the Chairman of Watawala Plantations PLC, Unimo Enterprises Ltd., Orient Motor Company Ltd., UML Property Developments Ltd. and TVS Automotives (Pvt) Ltd.

Mr. Wijesinha is also a Director of BizEx Consulting (Pvt) Ltd., Siyapatha Finance PLC, National Institute of Business Management and TVS Lanka (Pvt) Ltd.

He was the former Chairman of NDB Bank PLC, Merchant Credit Ltd and Employees’ Trust Fund Board. He was also the Chairman and MD of Dankotuwa Porcelain PLC, Deputy Chairman of Sampath Bank PLC and Managing Director of Merchant Bank of Sri Lanka PLC. He was the former President of Japan Sri Lanka Technical and Cultural Association (JASTECA), Immediate Past Chairman of Employers’ Federation of Ceylon and immediate past President of the National Chamber of Commerce of Sri Lanka.

C. Yatawara - B.A. Econ., Lewis & Clark College, Oregon, (USA) - Group Chief Executive Officer/ Executive Director

United Motors Lanka PLC UML.N0000_C.Yatawara

Mr. Chanaka Yatawara is a Director of

  • Unimo Enterprises Ltd.,
  • Orient Motor Company Ltd.,
  • UML Property Developments Ltd.,
  • TVS Lanka (Pvt) Ltd.
  • TVS Automotives (Pvt) Ltd.

A.W. Atukorala - B.Sc (Leeds) Uk, MTT (North Carolina) USA, MBA - Non Executive Director (Independent)

United Motors Lanka PLC UML.N0000_25_A.W.AtukoralaMr. Ananda Atukorala serves as an Independent Non-Executive Director of Orient Finance PLC, Bartleet Finance PLC, UB Finance Ltd., Pragnya Tech Parks Lanka (Pvt) Ltd., Arni Holdings and Investments (Pvt) Ltd., Unawatuna Boutique Resort (Pvt) Ltd., Unimo Enterprises Ltd., TVS Lanka (Pvt) Ltd. and Credence Genomics Private Ltd.
Mr. Atukorala was a former Deputy General Manager, ANZ Grindlays Bank, Sri Lanka; Country Manager Sri Lanka, Mashreq Bank PSC, advisor to the Ministry of Policy Development & Implementation. He was also a Director of Union Bank PLC for a period of nine years and retired in 2012.
He had also served as a Member of the Technology Initiative for the Private Sector - an USAID sponsored project with the Ministry of Industrial Development. He was also a Working Committee Member - Commercial Banking Sector - Presidential Commission on Finance and Banking, Committee Member - Banker’s Club of Sri Lanka and a Former Director - Sri Lanka Banks Association (Guarantee) Ltd and Credit Information Bureau of Sri Lanka (CRIB).

A.C.M. Lafir - FCMA, ACA, MBA (Sri J) -Executive Director – Finance

United Motors Lanka PLC UML.N0000_25_A.C.M.LafirMr. Aashiq Lafir is a Fellow of the Chartered Institute of Management Accountants (CIMA-UK) and an Associate Member of the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka).

He also holds a Masters Degree in Business Administration from the Post Graduate Institute of Management of the University of Sri Jayawardenapura and has over 25 years of senior management experience in diverse business activities.

Mr. Lafir is a Director of Skills International (Pvt) Ltd.

R.H. Yaseen - Executive Director – (After Sales Service)

United Motors Lanka PLC UML.N0000_25_R.H.Yaseen

 

 

Mr. Ramesh Yaseen is a Director of Unimo Enterprises Limited.

He was a former Director of Readywear Industries Limited.

.

Mrs. A. H. Fernando - ACA, ACAM - Non Executive Director (Non- Independent)

United Motors Lanka PLC UML.N0000_26_A.H.FernandoMrs. Hiroshini Fernando, an Associate member of Institute of Chartered Accountants of Sri Lanka and Institute of Certified Management Accountants of Sri Lanka has over 20 years experience in the field of auditing, management consultancy, finance and administration.

Mrs. Fernando is an Executive Director of R I L Property (Pvt) Ltd and Readywear Industries Limited. She serves on the boards of Videowall (Pvt) Ltd and R I L Trust, which promotes computer literacy among under privileged schools around the country. She is also a Non Executive Director of Unimo Enterprises Limited, Orient Motor Company Limited and TVS Lanka (Pvt) Ltd.

M. Sawada - Non Executive Director (Independent)

United Motors Lanka PLC UML.N0000_26_M.Sawada

 

 

 

Mr. Masafumi Sawada is the General Manager of Asia & ASEAN A Department, Mitsubishi Motors Corporation, Japan

A. D. E. I. Perera - Non Executive Director (Independent)

United Motors Lanka PLC UML.N0000 - A D E I PereraMr. Eardley Perera is a Chartered Marketer and Graduate of the Chartered Institute of Marketing with a membership spanning over forty years. He has had extensive management training in Sweden, Netherlands, the UK, India, South Korea, the Philippines and Singapore.

His management experience of over four decades, include the Sales and Marketing, Commercial and General Management functions. He now serves as a Non-Executive Director in several public companies, viz. Janashakthi PLC, Janashakthi Insurance PLC, Keells Food Products PLC, Dunamis Capital PLC, Kelsey Development PLC and First Capital Holdings PLC.

He is also a Non-Executive Director of M & E (Private) Ltd, STING Consultants (Pvt) Ltd, MA’s Tropical Foods (Pvt) Ltd, Brand Finance Lanka (Pvt) Ltd, Janashakthi General Insurance Co. Ltd. and Premier Synthetic Leather Manufacturers (Pvt) Ltd. He is actively engaged in management consultancy and has had extensive experience as a lecturer on the CIM (UK) Courses and the MBA programme of the Postgraduate Institute of Management (PIM) of the University of Sri Jayewardanepura, where he now serves as a member of the Board of Study.

Professor K. A. M. K. Ranasinghe - BSc Eng (Hons), MASc(UBC), PhD(UBC), C Eng, Int PE, FIE(SL), FNAS(SL) - Non Executive Director (Independent)

United Motors Lanka PLC UML.N0000_27_ProfessorK.A.M.K.RanasingheProf. Malik Ranasinghe is a Senior Professor in Civil Engineering at the University of Moratuwa, Member of the University Grants Commission, Chartered Engineer and International Professional Engineer, Fellow of the Institution of Engineers, Sri Lanka, National Academy of Sciences, Sri Lanka, Institute of Project Managers, Sri Lanka and independent non-executive Director of Sampath Bank PLC, Access Engineering PLC, Textured Jersey Lanka PLC and Resus Energy PLC. He is the immediate past Vice-Chancellor of the University of Moratuwa, past Chairman of the Committee of Vice-Chancellors and Directors (CVCD) of Sri Lanka, former Council Member of the Association of Commonwealth Universities (ACU), former Fellow of the National University of Singapore and former Non- Executive Director of the Colombo Stock Exchange and Lanka IOC PLC.

Prof. Ranasinghe obtained his PhD in 1990 from the University of British Columbia, Vancouver, Canada as a Canadian Commonwealth Scholar. He was honoured with the Education Leadership Award 2013 at the 4th Asia’s Best B-School Awards, Singapore, the Award for Outstanding Contribution to Education at the World Education Congress 2012, India, the Most Outstanding Senior Researcher in Technology and related Sciences award in 2012 by the Committee of Vice-Chancellors and Directors (CVCD) of Sri Lanka, the Trinity Prize for Engineering in 2004 for outstanding contributions made to his chosen profession and the Sri Lanka Association for the Advancement of Science (SLAAS) General Research Committee Award for Outstanding Contribution to Sri Lankan Science in 1999.

Mrs. R.M. Hisham - ACIS (Uk), MBA (Sri J) - Company Secretary

United Motors Lanka PLC UML.N0000_27_R.M.Hisham

 

 

 

 

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Chairman's Message

United Motors PLC UML.N0000_12_Sunil G. WijesinhaTHE YEAR WAS CHALLENGING IN MORE WAYS THAN ONE

I take pleasure in welcoming you to the 26th annual general meeting and placing before you the audited financial statements for the financial year 2014/15. The year was challenging in more ways than one, but it also served to underscore the strong fundamentals inherent in the UML Group. The Group succeeded in holding its own despite being subjected to severe industry and policy pressures which were outside its control. As a result of these externally imposed constraints, the Group was unable to exploit several opportunities which presented themselves during the year, against a background that was otherwise unfavourable for the motor vehicle industry as a whole.

Economic Overview

The Sri Lankan economy recorded a GDP growth of 7.4% in 2014 in comparison to 7.2 % in 2013, although it was sharply down from the forecast 7.8 %. The growth was supported strongly by investment and consumption activities. The Services sector, which represents 57.6% of GDP, grew marginally in 2014, while Industry sector growth, bolstered by manufacturing and construction activity, accelerated to 11.4%, -enhancing its share in the national output to 32.3% in 2014. Beset by adverse weather conditions, the Agriculture sector, which represented 10.1% of GDP, contributed only marginally to real GDP growth. Inflation remained at low single digit levels throughout 2014. Further, exports grew at a healthy rate in 2014 supported by improved external demand along with a stable domestic macroeconomic environment. Meanwhile, the Sri Lankan Rupee remained relatively stable during 2014, supported by regular policy intervention, while the interest rates too remained low. Overall, the conditions were conducive for business activity. Growth continues to be dominated by domestic market activities - the four sectors of transport, construction, wholesale & retail trade, and banking, insurance & real estate, have contributed to half of all economic growth since the end of the war in 2009. These dynamic domestic market sectors are certainly beneficial to the UML Group. Yet, it remains to be seen whether this domestic economy-led growth, rather than export-led growth, can sustain higher rates of overall economic growth for Sri Lanka in the medium to longer-term.

According to the IMF, global growth in 2014 was lower than initially expected. Global crude oil prices edged lower in 2014. The dip in global oil prices are having an adverse impact on oil exporting nations, several of which are key export markets for Sri Lanka. As a result, while the drop in oil prices is beneficial for individuals and businesses in Sri Lanka, policymakers need to be mindful of the repercussions on oil revenue dependent countries and the knock effects on Sri Lanka’s exports.

Industry Performance

Casting a glance at the vehicle industry during the period under review, the number of new vehicles registered during 2014 increased by 31.5% to 429,556, following a decrease of 18% in the previous year. The increment could be largely attributed to the favourable interest rates on leasing facilities, the depreciation of the Japanese Yen against the Sri Lankan Rupee, the increased imports of hybrid vehicles to the market and the rise in the registration of motor cycles, according to the Central Bank of Sri Lanka. The number of cars registered increased by 36.6% while the registration of three-wheelers declined by 5.5% during 2014. There is a groundswell of support for greening businesses in Sri Lanka and around the world. Issues such as the use of renewable energy and energy efficient technology are growing in importance and have not escaped our attention. We have taken these trends on-board and are now proud to offer a portfolio of energy efficient automotive technology products and green cars for the environment-conscious customer. The industry has witnessed a massive increase in the import of hybrid vehicles as a result of the preferential duties granted for this category of vehicle

United Motors PLC UML.N0000_15_1

We applaud the government’s initiative to grant duty concessions to hybrid and electric cars, a policy which will have beneficial results for the environment. It is imperative that the duty structure remains consistent for a reasonable period of time so that importers and even users could make longer term plans. While we accept that the Government has to monitor and take corrective action if they notice unintended consequences of such policy changes, the Government could make better use of estimation models to forecast the impact of such policies before embarking on a policy change rather than making changes or reversing policies within a short time frame. Wider discussion with different stakeholders too would be greatly beneficial in making or changing policies.

At the time of writing this review, the medium-term policy framework of the government that came into power at the beginning of the year is unclear. The business community is operating in a climate of severe policy uncertainty as it awaits a clearer direction prior to pursuing further investment. With regard to our company, the uncertainty over the fate of some large infrastructure projects has reduced the demand for industrial vehicles, which has impacted our commercial vehicle segment in an adverse manner. The taxation measures introduced in the interim budget has indirectly affected the market for our products, especially the commercial vehicles.

United Motors PLC UML.N0000_14We believe that following the Parliamentary Elections, the situation is likely to stabilise, allowing the private sector to take a longer-term view. On the whole, the interim Government’s focus on reducing corruption and waste, and re-examining infrastructure projects to ensure transparency and cost efficiency, is welcome. More transparent and cleaner Government processes are bound to have a positive impact on foreign direct investments. Better relations with developed countries may

result in more economic activities being initiated in Sri Lanka by those countries. These will bring in substantial benefits to the economy and thereby to our business as well.

National economic growth depends on an efficient road, transport and logistics network, which in turn boosts growth across the country. Therefore, we are hopeful that the policies on infrastructure development will continue and projects that have been temporarily stalled will get back on track.

Our Performance

The Group suffered a setback during the financial year under review as a result of our inability to cater to the demand for our products as some manufacturers focused their attention on new development. As a result of these supply constraints, the company was unable to capitalise on the market potential. Although we forged new alliances to ensure an uninterrupted supply in the future, the new products will take time to accrue returns.

United Motors PLC UML.N0000_15The Group revenue was Rs. 10.5 Bn which was a decline of 4.5% compared to the previous year. Net profit after tax was Rs. 1.26 Bn for the year under review and was a decline of 21.5% compared to the previous year. However we are pleased to announce the declaration of a final dividend for 2014/15 of Rs. 4 per share.

In the annual report last year, I spoke about improving the performance of the Group’s underperforming subsidiaries and during the year under review, we disposed of the loss making TVS Auto Parts (Pvt) Ltd., as we realised that it was a business that didn’t fit well with our business model, and did not fulfil our profit expectations. At the same time, we managed to turnaround the loss making TVS Automotives (Pvt) Ltd. The new business model it is operating on now, and with the new business processes in place, we believe it will have a promising future.

During the year, we further focused on improving the performance of our joint venture company, TVS Lanka (Pvt) Ltd. A change of management and closer cooperation with Principals coupled with a new marketing strategy has resulted in the performance of the company improving substantially.

Our innovative customer service programme was sustained through this financial year too and delivered rich returns by way of enhanced customer care standards and greater customer satisfaction. We intend to develop and engage employees in an on-going manner, so that the Group becomes known as a centre of excellence in customer care. We continued to train and engage employees in improving quality and productivity, which culminated in the company being awarded the Bronze award at the National Productivity Awards, which is organised under the auspices of the then Ministry of Productivity Promotion. We are single-minded in our pursuit of improving productivity of our systems and processes, enhancing the quality of products and services and delivering superior customer service, which make up the key pillars of our business model.

Appreciation

I would like to conclude by expressing my gratitude and appreciation to our shareholders customers, suppliers, principals, joint venture partners and all the other stakeholders who worked closely with us over what was a difficult year. I thank the staff of UML who worked hard to battle the challenges during the year.

Finally, I place on record my special appreciation of the support and guidance provided by my colleagues on the Board, and to the GCEO Mr Chanaka Yatawara for being instrumental in harnessing the Group’s potential.

Sunil G. Wijesinha

Chairman

28 May 2015

During the year, we further focused on improving the performance of our joint venture company, TVS Lanka (Pvt) Ltd.

We are single-minded in our pursuit of improving productivity of our systems and processes.

Group Chief Executive Officer’s Review of Operations

United Motors PLC UML.N0000_16_C.Yatawara

THE GROUP RECORDED A PROFIT OF RS. 1.26 BN

The year under review brought with it new challenges as well as new opportunities to the UML group. Despite a challenging year, the Group recorded profits of Rs. 1.26 Bn in the financial year under review which, although a drop from the Rs. 1.6 billion profit recorded in 2013/14, still denotes an expansion in key business areas under challenging circumstances, can be considered as a satisfactory achievement.

The disadvantage for the UML Group during the year was the absence of a hybrid vehicle in our portfolio, in order to leverage on the booming hybrid vehicle market conditions arising out of lower duties applicable for the category. Unfortunately, none of the principals had a suitable product in their portfolio of vehicles. In addition, Perodua discontinued the Viva range of vehicles without supplying a successor at a time where the duties for the under 1000cc vehicles were reduced and resultant volumes grew exponentially. This affected potential growth opportunities. The government not issuing duty concessionary permits as done in previous years, further added to the challenges that were faced.

As a direct impact of the above, lower volumes led to Group turnover declining by 4.55% to Rs. 10.5 Bn. The Company made a net profit of Rs. 1.24 Bn during the financial year. The number of vehicles sold by the company increased from 1,833 units in 2013/14 to 2,126 in the current year, while Group vehicle sales excluding twowheeler and three-wheeler sales numbered 3,668, as compared to 4,401 in the previous year. 45,112 brand new vehicles were sold by the industry as compared to 36,064 units in 2013/14.

From a macro-economic point of view, lower interest rates, depreciation of the yen and reduction of duties for certain categories helped the industry deliver better volumes than expected.

New Challenges

The new Government as part of its interim budget proposals in the 1st quarter of 2015 proposed the levy of Super Gains Tax on Group of Companies /Company who he earned profits in excess of Rs. 2 billion in the financial year 2013/14. Your group could fall into this category, though the exact computation of this tax is still not known. We believe that this tax is not equitable with no marginal relief available and more importantly, it’s a retrospective tax where profits available for appropriation have already been distributed to shareholders and invested in assets.

The government’s decision to promote hybrid cars by lowering taxes on said vehicles propelled this segment, but the challenge for some brand new car importers was the fact that they did not have hybrid cars in their product portfolio to benefit from this situation. However, most used car importers were able to maximise on this opportunity. On the other hand, this creates an

OVERALL, THIS YEAR DEMONSTRATED THE COMPANY’S RESILIENCE AND FORESIGHT IN DIVERSIFYING INCOME SOURCES

WE WERE ABLE TO GAIN SIGNIFICANT CAPITAL GAIN BYDIVESTING PART OF STOCK MARKET PORTFOLIO

opportunity in 2015/16, as by then most brand new car importers would have included hybrid vehicles in their product portfolios after negotiations with the manufacturer. After sales service for the influx of hybrid cars offers another avenue to increase profits for UML Group, as the majority of used car importers are unable to offer this service, paving the way for companies which have workshops to offer professional after sales service and repair facilities.

Further, 15% reduction in duties for the small car segment from January 2015 will continue the growth momentum in this segment in the next financial year as well. It is expected that the Perodua group will start the export of the successor of Viva in the second quarter of 2015 and this will be a significant contribution to increase turnover and profits.

Two-wheeler Segment

This segment witnessed some unusual sales volumes during the year under review. The Government placed an order for approximately 250,000 two wheelers from two of the four main two wheeler importers in the country, of which around 110,000 units have been imported and distributed to Government officers. Mention is been made of this as the yearly sales volume for the entire industry is very close to the ordered quantity. Even though TVS was not among the two considered, it faired extremely well even with these constraints to end the year with a growth in both their top and bottom line.

United Motors LankaPLC (UML)

Income from duty free permits in the previous three years accounted for about 50% of profit in that period, and in the absence of such permits, the company had to rely on non-permit sales. The Company was able to win one of the biggest tenders floated by the government, and received the full order for 1,000 double cabs that benefited the 3rd and 4th quarters. In addition to this, we were able to maintain healthy margins throughout the year in passenger vehicles as well as the commercial vehicle segments. Overall, this year demonstrated the company’s resilience and foresight in diversifying income sources in order to offset loss of opportunities, thereby expanding our future income source potential.

United Motors PLC UML.N0000_18_2Following the improvement in the business of spare parts, workshop services and lubricants in the previous financial year, the Company has continued to grow these segments through further expansion in the new ten acre property in Ratmalana and in the outstations. Operating profits from the spare parts business decreased by 18% and profitability of workshop services recorded a 13% increase, while profits from the sale of lubricants increased by 1% during the year. Our strategy to leverage on after sales service tomaximise income generation opportunities has been successful in the first year of strategy execution with year workshop showing great potential and we will continue to add value to these services in the coming months. TVSL faired extremely well even with these constraints to end the year with a growth in both their top and bottom line.

An order 1,000 units of double cabs was secured 429,556 vehicles registered in 2014

Further, the company had already built a portfolio of marketable securities of blue chip companies for under a billion rupees by analysing the stock market, which held us in good stead, as we were able to gain a significant amount of capital gains by divesting part of this portfolio.

Mitsubishi Motors remains a valuable partner for growth of the company and despite our small size. Globally we remainone of Mitsubishi’s valued distributors for having high market share in the Japanesebrand new vehicle segment. The Japanese auto giant values the UML Group to the extent that they have taken our request for consideration in launching a high-end hybrid product for the Sri Lankan market. They have consented to the UML Group by offering the first Mitsubishi Plug-in Hybrid Electric Vehicle in Asia, making Sri Lanka the first South Asian country outside of Japan to launch this vehicle.

Unimo Enterprises Limited (UEL)

The fully-owned subsidiary Unimo is engaged in the local assembly of vehicles, retailing a line of Chinese vehicles, Yokohama tyres and the small car brand Perodua. Unimo usually contributes a substantial share of the Group’s bottom-line, butthis year it did not recordexpected profits. UEL’s main product line Perodua Viva, for which Unimo was the franchisee (under 1000 cc, small car, which falls into one of the lower tax rates), was discontinued by the manufacturer and as a result Unimo had to rely on other brands during the second half of the year. The successor to the product line is expected to reach Unimo showrooms only by mid-2015.

In order to minimize dependency on one main brand, the Company introduced a 1.8 ltrs automatic version of the MG (Morris Garage). This allows us to expand our product portfolio into a larger sedan category, in which we have not had a suitable product up to now.

The company was also successful in entering in to an agreement with a Chinese company, DFSK for assembly of mini vans, which has already commenced. Further, Unimo signed several agreements during the year with new principals to assemble a range of vehicles that will come into the market in mid-2015 and the benefits of which will be achieved in the next financial year. Moreover, the existing assembly plant underwent a major upgrade and expansion in the previous year and is now poised to operate at doubled capacity. We believe that locally assembled vehicles have a great opportunity for the group due to the lower taxes charged on these vehicles. Unimo hopes to launch five products this financial year which would come out of their assembly plant. In hindsight, although Unimo did not post major profits in the year under review, it was able to construct a platform for solid growth for the next financial year.

Orient Motor Company Limited (OMCL)

During the year under review, this subsidiary attempted to recover from a policy change brought about by the previous government during the latter part of the 2013/14 year, when duties were increased for vehicle specifications that Orient held in its portfolio. The product, DFSK, is a small Chinese truck that was specifically designed for the Sri Lankan terrain, is supported by higher load bearing capacity and more sophisticated features than rivals. Capturing 10% of the small truck market within a mere 20 months of market entry, the product was burdened with a large duty increase, as it is able to carry more weight than its rivals,even though it is similar in terms of size.

After the increase in duty, the company found it difficult to sell the product and although the future seemed bleak, a strategic decision was taken to reinvest in the brand and re-energise it during the current year by emphasising on its specific value propositions. As a result volumes have begun to move up gradually. The company’s profitability thus was eroded during the year, but at the same time we believe that the enhanced focus on brand building will accrue returns in the months ahead.

TVS Lanka (Pvt) Ltd (TVSL)

Spurred by a decision to be present in every market across the country, the company embarked on an aggressive network expansion drive during the year to grow volumes of its two-wheeler and three wheeler product portfolio. The company succeeded in growing new business by 60% despite being left out of the mega order for motorcycles, earmarked for government officers by the previous government. The company pursued a strategic expansion strategy for its three wheeler segment as well. Appointing cricketer Kumar Sangakkara as the brand ambassador for the three-wheeler brand had a positive impact. Major promotions along with a strong focus on sales and after sales channel development has delivered growth in both two and three wheeler segments during the year, which is very encouraging, with market share increasing for both products. The introduction of two new models in the motorcycle range and scooter range made the product portfolio more attractive as it variety catered to more segments of users.

TVS Automotives (Pvt) Ltd (TVSAP)

The Company represents the Fortune 500 company, Bharat Petroleum for lubricants, TVS Tyres and JK Tyres. Our persistence in resuscitating the company even during the previous financial year was sustained through the period under review. This Company holds potential in our view and we backed our belief by investing further to revive the company. A conscious decision was taken to leverage on the value proposition of the company to generate demand. We collaborated closely with the principals on aspects such as brand building and Promotons, and I am proud to state that the company is now on a profitable track. The company recorded Rs.16.7 Mn in profits this year as compared to Rs. 0.5 Mn profit earned in the 2013/14 year.

TVS Auto Parts (Pvt) Ltd

As the smallest business in the group that supplies parts for Indian vehicles in the local market, we have made an all-out effort to revive the company. Eventually, after much thought, we sold off this business entity during the year under review. Our strategy of consolidation and strengthening our existing portfolio will enable us to better respond to prevailing market trends and conditions.

Embedding Sustainability

Since its inception, United Motors has embraced sustainability for innovation and business growth, delivering stakeholder satisfaction by operating as an ethical and responsible corporate citizen. This annual report contains a detailed account of how we harness our strengths to deliver profitability for the company’s future in the long term. More significantly, we are proud to have connected economic, social and environmental challenges to achieve a sustainable ethos that pervades every aspect of our operations. We realise that to deliver on our economic pillar, we need to engage with the social and environmental pillars as well to achieve a sustainable future. This realisation has inspired us to rethink our role and engage with the stakeholder community in ways that enhance their lives for the better. Our ‘People,Planet and Profit’ approach to doing business forces us to see the big picture, to enlarge our vision and look beyond the narrow confines of profitability alone.

During the year under review, we sustained our unrelenting focus on reaching out to communities and understanding the challenges that the underprivileged communities face every single day. Education has been close to our heart and in 2014/15 too, we continued our unwavering commitment to identifying underprivileged schools that we could impact. We then carried out a needs assessment, so that our intervention would have the maximum impact on the quality of education the children receive. During the year, we supported four schools in three districts by way of scholarships and provided them with books. In fact during the year under review, the company granted the highest number of scholarships in its history. Some 475 children received Scholarshps from UML, which has served to ensure these children stay and learn in school, whilst simultaneously alleviating the financial burden for their families.

In our engagement with underprivileged schools on the education platform, we came across many instances where children complained of problems with their vision, but were unable to afford eye care. Moved by their plight, we carried out three eye clinics in three districts, where not only children, but their families too received check-ups by doctors, and were gifted free spectacles at the company’s initiative and expense. Our close engagement with communities has inspired us to adopt a fresh approach that creates a fairer society for every single human being whose lives we impact.

As a company we intend to contribute significantly to green initiatives. We are currently at initial stages of many initiatives which include awareness building, environment conservation, tree planting etc. As an initial step we have started in-house awareness campaigns and are monitoring consumption of natural resources to ascertain reduction in consumptions. We also hope to offer scholarships for school children who come up with innovative ideas for preserving the environment. We held art competitions on the theme of nurturing the environment and intend to increase awareness among the young in 2015/16 as well as hold an essay competition in the near future.

United Motors PLC UML.N0000_21_1Our people are passionate about sustainability and have created a thought-provoking video presentation that we share with schools and other institutions. The company intends to give a special brochure on environmental conservation along with every vehicle we sell. Moreover, the company has undertaken branding at many strategic and central locations in seven cities. The signboards are located at prominent sites and exhort passers-by to read and understand the thoughtful messages. The company is in the process of initiating a tree planting project with the Urban Development Authority, to plant as many as 3,000 trees in the dry zone.

Future Outlook

United Motors prides itself on its agility and will continue to ensure longevity by evolving and forging new partnerships to add diversity and depth to the Group. Our vision is to build a business portfolio that strikes a fine balance between import and assembly of different classes of vehicles. We intend to drive further local value addition in our assembly operations to showcase Sri Lanka’s potential for becoming a hub for car assembly. We are dedicated to our vision to be catalysts of change in the industry and the country, building networks to make sustainable change happen. We were able to deliver substantial profits under the challenging circumstances that prevailed. We enter 2015/16 with a new range of products which we did not possess during the last financial year under review and we expect an exciting year ahead, unless there come about further policy changes that will negatively impact the industry,

Appreciation

I would like to place on record my sincere gratitude to our Chairman Mr. Sunil Wijesinha and the Board of Directors for placing their trust in myself and my team for our ability to deliver results. The dynamic team at UML has stood shoulder to shoulder to see the company through a challenging year. The shareholders too have been eminently supportive and understanding of the challenges faced by the company during the year and we assure them that we are now ‘future-ready’ to deliver even more encouraging results in the next financial year.

C. Yatawara

Group Chief Executive

Officer/Executive Director

28 May 2015

Operational Highlights

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Financial Highlights

United Motors PLC UML.N0000_6

Economic Value Added Statement

United Motors Lanka PLC UML.N0000_49

Statements of Profit or Loss and other Comprehensive Income

United Motors Lanka PLC UML.N0000_118

Statements of Financial Position

United Motors Lanka PLC UML.N0000_119

Statements of Changes in equity

United Motors Lanka PLC UML.N0000_120United Motors Lanka PLC UML.N0000_121

Statements of Cash Flows

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Milestones

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Milestones - Continued

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