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SRI LANKA
Treadsdirect Enters an Open Market in Sri Lanka
Treadsdirect, known for its wide franchise network in India and in some international markets, entered the open market in Sri Lanka last year.
Roshan Fernando, Project Manager, Treadsdirect Lanka Ltd.
“Previously, we had a franchise network but it had not been very successful in the price-conscious Sri Lankan market, where customers demand all kinds of brands,” explained, Roshan Fernando, Project Manager, Treadedirect Lanka Ltd. Treadsdirect set up a production facility in Colombo in 1993 under a 50:50 joint venture with a local partner. Later, it shifted the plant to a new location, about 40 kms away from the capital, Colombo, to Dankotuwa Industrial Estate. It also became a wholly-owned subsidiary in 1999.
Treadsdirect only opened up in the Sri Lankan market last year and hopes for a rise in demand in the near future. “In the franchise system, our clients were bound by an agreement not to buy or sell tread of any other brand. But now they are free; not bound by any agreement. We now have 20-25 customers and we are focussing on them,” elaborated Roshan. Currently, the Dankotuwa unit manufactures 30 tonnes of tread per month. “We are hoping for better prospects in the next couple of years as demand may surge
with the end of the insurgency in the North. We are expecting the production to go up to 100 tonnes in the next two years,” Roshan added.
Treadsdirect exports one-third of its production. "We are exporting 10 tonnes of tread per month to Bangladesh. We may open-up the African market in the years to come depending on the management's decision," he said. Commenting on the local market, Roshan explained, “The domestic market is controlled by the tyre dealers, who collect the casings from the customer and give them to the retreader. The tyre dealers hold complete sway in the market. They favour the retreader that gives the best margins.”
Now, the tread manufacturer is focusing on quality and educating the customer to ask for quality and a better product. “That may break the hold of the tyre dealer in the market. Currently, tyres are only given to retreaders offering the bigger margins, but who often make compromises with quality,” Roshan said. Changes have been observed in customer preferences of late, as a few customers have started asking for quality products and are ready to pay the price for them.
“We have been educating the customers for some time and now the customer is directly coming to us instead of going to the tyre dealer. Therefore, the scenario should improve for the better in the next
few years,” believes Roshan.
Treadsdirect competes with local brands like Richard Pieris, AMW, 3Ks and Indian brand MRF in the Sri Lankan market. “We are a hi-end player and our quality is the best in this market,” he stressed.
With the continued hike in new tyre prices, retreaded tyres are getting popular in the price-conscious Sri Lankan market. “Previously, people did not want a retreaded tyre but as the tyre prices keep an upward trend, the customer prefers a retreaded tyre which is available in the market at a 1/3rd price of the new tyre,” Roshan said. Moreover, the retreading industry is facing another challenge as the radial tyre replaces bias- ply tyres in the Sri Lankan market. Radial tyres have started entering the Sri Lankan market and retreaders have to adapt themselves to retread the radials,” he said. The traditional hot process is also on the way out and it has been widely expected that the hot cure process will go out in the next 3-4 yrs. Treadsdirect is now gearing up to meet the challenge of radial tyres entering into the Sri Lankan market. The company launched ST 225 and 235 patterns for radial sometime back. The other popular patterns are ECH and JT for truck and LCV segment. “We are planning to launch some more radial patterns shortly,” Roshan informed.
Lanka Autolands Caters for Budget Sector
Lanka Autolands Co Pvt Ltd caters to the price-sensitive clientele in the Colombo market. The company’s retreading and tread making plant is located at the Colombo’s Homogama Industrial Estate. “We are retreading 2,500 tyres per month, 1,200 tyres by the hot cure process and about 1,300 tyres by cold cure,” informed plant manager, Upali Wimalagunaratna. He further added, “We also manufacture 35,000 kgs of camelback. We use about 12,000 kgs for ourselves and the rest sells in the open market.” Lanka Autolands also manufactures about 15,000 kgs of precure tread for its own consumption.
Lanka Autolands could increase production but is facing difficulty in collecting tyres as the market is controlled by the dealers and they prefer to send tyres to the retreaders that offer them the maximum cut. "Moreover, we are not getting payments on time. We are forced to do business on extended credit of at least 90 days or sometimes even more," said a concerned Upali. Lanka Autolands’ plant runs on Elgi and Rajmahaal machines. It has three autoclaves, two for seven tyres and one for four tyres.
The company also has a retreading plant in Matara, a city on the Southern Coast of Sri Lanka, 160 km from Colombo. It is one of the largest cities in Sri Lanka and was deeply affected by the Asian Tsunami in 2004. “We retread 600 truck tyres at the Matara plant. Tread is supplied drom the Homogama plant,” Upali said.
Treadsdirect compounding in Sri Lanka