Associated Motorways PLC (AMW), now almost totally owned by the Al-Futtaim group of Dubai, has posted its first loss in ten years in the nine months ended December 31, 2008 with a negative bottom line of Rs.79 million, down from a profit of Rs.427.5 million during the full year ended March 31, 2008.

The company’s new Chairman, Mr. Tilak de Zoysa said that the high point of the nine-month period under review was the acquisition of the AMW group by Al-Futtaim with many years of trading experience in the automotive industry and the resulting technological know-how and marketing skills.

De Zoysa looked forward to the implementation of improved processes and superior strategies by Al-Futtaim in the AMW group enhancing efficiencies and enabling superior performance in the market.

He was sharply critical of the plethora of taxes, duties and levies charged on the import of motor vehicles saying that the result has been that government revenues from this sector have fallen sharply.

"It is obvious to those charged with increasing state revenues that they have effectively killed off what was previously a very significant contributor to the state coffers. The need now is to undo much of this in the current year," de Zoysa said.

He also urged government to look into streamlining and simplifying the process of approving applications for projects to assemble motor vehicles in Sri Lanka.

"The criteria for eligibility for tax exemptions, duty waivers and other related incentives should be eased so as to attract world renowned brands to invest in the industry in Sri Lanka," he said.

In addition to its motor business which took a hit during the period under review, de Zoysa said that AMW’s manufacturing arm had suffered severe setbacks due to high rubber prices at the beginning of the year. Thereafter, while rubber prices fell sharply, the effects of the global financial melt down had affected consumer sentiment worldwide.

"Presently, the position is unchanged. Rubber prices remain low, demand is also low and consequently, activity in the market is also low. As a result manufacturers are facing a great deal of hardship in making ends meet in the current environment," he said.

Group turnover during the nine months was down to Rs.6.5 billion from Rs.10.2 billion in the preceding 12 months and their costs also were proportionally higher than they should have been on greatly reduced turnover.

Consequently the results for the nine months had been severely affected by high cost levels.

De Zoysa also reported that the first six months of the current financial year had been ``dismal’’ although there was a great deal of optimism at present with the war ended.

On September 30, 2008, Ajita de Zoysa retired as Chairman of the company after 17 years at its helm. Tilak de Zoysa lauded his predecessor’s "strong and determined leadership" which had enabled AMW to achieve heights which seemed far beyond the company’s reach when he first took over as Chairman.

"The 9-month period which was completed on 31st December 2008 was one in which the group faced great challenges and the current year is not likely to be any different," de Zoysa said.

"The manner in which all segments of the group, its employees and the management team faced up to these challenges is a matter of pride for us all and gives me immense confidence for the future."

He concluded saying that undoubtedly the road ahead will be rough but they had the resolve and flexibility to guide the AMW group to the desired destination.

AMW has a stated capital of Rs.1.08 billion, a statutory reserve fund of Rs.4.5 million, other reserves of Rs.1.9 billion and retained profits of Rs.1.1 billion in its books.

Al-Futtaim Engineering LLC with 97.98% is the dominant owner of AMW with most other shareholders selling out under the mandatory offer made by Al-Futtaim after that company acquired 51.15% of AMW owned by the Associated Electrical Corporation and 20.02% held by JKH.