CEAT Kelani to invest Rs 3 billion in Sri Lanka’s tyre industry over next two years

Unveils master plan to set up new Truck Bus Radial tyre plant, double production of radials and motorcycle tyres and grow exports

CEAT Kelani Holdings today announced an infusion of Rs 3 billion in new investments for the enhancement of manufacturing capacity, new product development and growth of exports, in a significant vote of confidence in the prospects for the India – Sri Lanka joint venture tyre manufacturing operation.

The investments, made up of internal funds and borrowings, will see the establishment of a state-of-the-art plant in Kelaniya for the manufacture of Truck Bus Radials (TBRs) and the expansion of the existing cutting-edge passenger car radial tyre plant at the same location, the company said.

New machinery already on the way from Europe, when commissioned circa June-July 2018 will commence the production of Truck Bus Radial Tyres. The Company also plans to double CEAT Kelani’s Passenger Car Radial (PCR), Van and SUV radial tyre production from a current 500,000 tyres a year to 850,000 a year, CEAT Kelani Holdings Chairman Mr Chanaka de Silva told media at a news conference in Colombo today. The company’s Motorcycle tyre manufacturing capacity, currently at 375,000 tyres a year, would also double as a result of the investment, Mr de Silva disclosed.

The first ever domestic production of Truck Bus Radials in Sri Lanka will lead to noteworthy import substitution, substantial saving of foreign exchange, the transfer of the latest international knowhow and technology for the manufacture of this category of tyre, and the launch of TBRs designed and built for local conditions, he said.

“This new investment is part of CEAT-Kelani’s Investment Master Plan in Sri Lanka, and is projected to generate a substantial increase in turnover over the next three years from Rs 10.5 billion in 2016-17, Mr de Silva added. The joint venture’s cumulative investment in Sri Lanka to date totals Rs 5 billion.

Mr Anant Goenka, Managing Director of CEAT Limited India, and CEAT Kelani Holdings Managing Director Mr Vijay Gambhire joined their fellow directors of the Joint Venture (one of the most successful ventures benefitting from the Indo-Lanka FTA), at the announcement of the new investments.

“CEAT India is happy with the progress of the Joint Venture in Sri Lanka, which completes 20 years this year,” Mr Goenka said. “Our focus now is on taking the extensive portfolio of Sri Lanka made tyres to the next level in terms of performance specifications and attributes, to keep pace with product developments in highly developed markets. CEAT India has already gone down this road, and CEAT Kelani enjoys the benefit of our technological knowhow and market experience,” Mr Goenka said.

CEAT Kelani Holdings Managing Director Mr Vijay Gambhire said: “The CEAT brand currently accounts for nearly half of Sri Lanka’s pneumatic tyre requirements and exports about a third of its production in Sri Lanka. Our market share in the Passenger Car Radials segment is steady at 32 per cent, and we enjoy a 51 per cent share of the market for Truck and Light Truck tyres.  The rapid ‘radialisation’ of the commercial tyre segment in Sri Lanka makes us confident that this is the ideal time to invest in expansion of production capabilities.”

With part of the investment for radials going into upgrading tyre building equipment and techniques, new tyre presses, upgrading of compound mixing technology and global-standard machinery and technology, CEAT will continue to enhance its capabilities in the manufacture of high-end premium radial tyres for the SUV and luxury vehicle segments, move up the value chain in the radial category and double market share in the segment, he said.

The company also plans to increase its focus on developing products based on functional and performance platforms such as fuel saving, long tyre life and premier performance, Mr Gambhire added.

In the motorcycle tyre segment, CEAT Kelani currently manufactures 33 sizes that fit the majority of popular models including high-performance superbikes. These tyres are manufactured at a state-of-the-art plant commissioned at the company’s Kelaniya complex in 2015. Part of the Rs 3 billion investment is intended to upgrade manufacturing technology for these tyres while doubling capacity.

CEAT Limited is the only tyre company in the world outside Japan, to receive the prestigious Deming Prize in 2017. The Deming Prize reinforces and consolidates CEAT’s reputation as high quality producer of tyres and enables the Company to gain preferred partner status for leading automobile companies in the world. One of the highest international awards for Total Quality Management (TQM), the Deming Prize recognises both individuals for their contributions to the field of TQM and businesses that have successfully implemented TQM. It was established in 1951 to honour W. Edwards Deming who contributed greatly to Japan’s adoption of statistical quality control after World War II.

CEAT Kelani’s manufacturing operations in Sri Lanka encompass the radial, commercial, motorcycle, three-wheeler and agricultural machinery segments. The brand accounts for market shares of 32 per cent in the radial segment, 51 per cent in the Truck/Light Truck category, 54 per cent in the 3-Wheeler segment, 23 per cent in the motorcycle segment and 72 per cent in the agricultural tyre category. CEAT Sri Lanka exports to 15 countries in South Asia, the Middle East, Africa and the Far East.