CEAT Kelani production surge boosts earnings of local rubber industry 

Increased production to meet local demand has enabled CEAT Kelani Holdings to increase its monthly purchases of natural rubber in the domestic market by as much as 35 per cent by September.

The company, which sources all of its natural rubber requirements locally, said in a media release that its purchases in September 2020 alone would reach 500 tonnes (500,000 kg), generating Rs. 150 million in revenue for Sri Lankan producers in areas such as Kegalle, Kalutara, Ratnapura and Monaragala. 

In the pre-pandemic months of December 2019 to February 2020, CEAT Kelani’s purchases of rubber averaged 366 tonnes a month, generating average monthly revenue of Rs. 107 million for local suppliers.

“One of the major reasons for CEAT Kelani’s existence in Sri Lanka is the availability of natural rubber, and we have always been focussed on maximising local value addition,” the company’s Managing Director Ravi Dadlani observed. “With our ramping up of production in response to the temporary import restrictions imposed by the government, our contribution to local natural rubber producers has increased sharply, by as much as 40 per cent in value terms in just seven months.”

Increased production of truck, bus, radial and two-wheeler tyres by CEAT, while supporting the government’s efforts to conserve foreign exchange through import substitution, would also help local industry achieve the ‘V’ shaped post-pandemic recovery that is expected of it, Mr. Dadlani said.

CEAT Kelani engages with a base of nearly 30 dealers for the purchase of natural RSS rubber and interacts with them on daily basis. Besides daily procurement transactions, the company imparts knowhow to the dealers to help them improve the quality of RSS grades. “We periodically audit dealers’ operations and help them maintain high quality standards,” Mr. Dadlani added. “As a result many of our dealers are now recognised as ‘CEAT approved NR dealers.’ This recognition not only helps them to be consistent suppliers to CEAT Kelani, it also helps them to establish themselves as quality suppliers of RSS grades to rest of the local industry.”

CEAT’s ramping up of production of truck and bus tyres since the start of the pandemic-linked lockdown has resulted in the company now producing 100 per cent of the segment’s requirements and enabled the government to make a saving of Rs.11 billion a year in foreign exchange. The company has also achieved an 85 per cent increase in the production of tyres for the ‘two-wheeler’ segment over the past three months; enabling a further saving of Rs. 350 million a year through import substitution.

CEAT Kelani can currently produce two million tyres annually across multiple categories, and an addition of a further 200,000 Car and Van Radial tyres is imminent with new machinery being installed, pending the arrival of foreign technologists to commission the additional capacity.

Pictures: The warehouse of a natural rubber supplier to CEAT (above) and CEAT Kelani representatives conducting training for rubber suppliers (below).