CEAT Kelani Holdings, which last week announced an infusion of Rs 3 billion in new investments over the next two years, announced that it will begin the first ever domestic production of Truck Bus Radials (TBRs) in Sri Lanka by July this year. Addressing a press conference last week, the company’s senior management said the new 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 TBRs and the expansion of the existing cutting-edge passenger car radial tyre plant at the same location.
“The new machinery is already on the way from Europe and when commissioned around June or July 2018, we will commence the production of Truck Bus Radial Tyres”, Chairman CEAT Kelani Holdings, Chanaka De Silva said.
Elaborating on the master plan, the Chairman said the new investment will set the stage for the firm to double Passenger Car Radial (PCR), Van and SUV radial tyre production from the current 500,000 tyres a year to 850,000 a year and double the company’s motorcycle tyre manufacturing capacity, currently at 375,000 tyres a year.
According to officials, the planned investment infusion for the enhancement of manufacturing capacity, new product development and growth of exports primarily indicates a significant vote of confidence in the prospects for the India – Sri Lanka joint venture tyre manufacturing operation.
“The new measures will lead to a noteworthy import substitution, substantial savings of foreign exchange, the transfer of the latest international know-how and technology for the manufacture of this category of tyre, and the launch of TBRs designed and built for local conditions,” the Chairman said.
He added that the 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 growing from Rs. 10.5 billion in 2016-17.
Meanwhile, Managing Director of CEAT Kelani Holdings, Vijay Gambhire said the rapid ‘radialisation’ of the commercial tyre segment in Sri Lanka makes the company confident that this is the ideal time to invest in expansion of production capabilities.
“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.
According to officials, 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,” Gambhire disclosed adding that the joint venture’s cumulative investment in Sri Lanka to date totals Rs. 5 billion.
According to him, 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. CEAT Sri Lanka exports to 15 countries in South Asia, the Middle East, Africa and the Far East.
“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 MD elaborated.
On the other hand, Managing Director of CEAT Limited India, Anant Goenka said CEAT India is happy with the progress of the Joint Venture in Sri Lanka, which completes 20 years this year.
“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,” Goenka added.
CEAT Kelani’s manufacturing operations in Sri Lanka encompass the radial, commercial, motorcycle, three-wheeler and agricultural machinery segments.
The brand claims to account for a market share of 54% in the 3-Wheeler segment, 23% in the motorcycle segment and 72% in the agricultural tyre category.