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Sri Lanka’s TATA, Benz agency net up 600-pct amid credit fired consumption

ECONOMYNEXT – Profits at Sri Lanka’s Diesel and Motor Engineering Plc (DIMO) grew 655 percent to 228 million rupees in the March 2015 quarter from a year earlier, interim accounts showed as car sales picked up in a credit fired consumption boom.

Dimo which holds agencies for India’s TATA and Germany’s Benz reported earnings of 25.73 rupees per share, for the quarter. The stock traded at 750 rupees, up 40 rupees.

Dimo said group revenues grew 43 percent to 8.2 billion rupees, cost of sales rose 47 percent to 6.8 billion rupees and gross profits rose 28 percent to 1.38 billion rupees.

Finance costs fell 14 percent to 102 million rupees.

Sri Lanka’s car sales have boomed amid historically low interest rates, while budget deficits expanded amid salary hikes to state workers and domestic borrowings also rose.

Sri Lanka’s vehicle registry data analysed by JB Securities, a Colombo-based equity research house showed that registration of TATA Ace, Sri Lanka’s best-selling mini truck rose to 952 units in March from 527 units a year earlier. Around 94 percent of all trucks are sold on credit.

Latest data showed rising levels of debt monetization or money printing, which keeps interest rates down against market fundamentals and generate bubbles and balance of payments pressure. (Colombo/Aug06/2015 – Update III)

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