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SRI LANKA
3K Holdings Eyeing Pan Sri Lanka Network
Mr H D K Silva, Joint Managing Director, 3K Holdings (Pvt) Ltd
The retreading industry is expanding in Sri Lanka as major players are further firming up their plans to either expand their existing capacities or setting up new plants. Interestingly, there is one major company 3K Holdings (Pvt) Ltd practising a franchise system in the Sri Lankan retreading industry and it has been quite successful and has grown consistently in the last six years. “We have two company owned plants including one in Momaragala in the South, which retreads around 1,000 tyres per month. We are headquartered at Homogama in the Western Province. The mother plant retreads 2,500 tyres in a month,” explained Mr H D K Silva, Joint Managing Director, 3K Holdings (Pvt) Ltd. He started his career with Richard Pieris and set up the venture along with a colleague, Mr L S Samararatne. The duo started their own retreading venture in 2005.
3K is the only one to introduce the franchise network in Sri Lanka, having three operational franchisees spread over the island country. 3K has a franchisee in the Southern Province at Weligama, retreading 1,300 tyres in a month, the Kurunegala plant in NW Province retreads 1,800 tyres per month , whilst the Anuradhapura plant in NC Province retreads 1,200 tyres monthly. “We are setting up another franchisee in the Central Province of Kandy. The new plant is likely to be functional in the next three months. It is likely to retread around 2,000 tyres per month,” revealed Silva.
3K Holdings claims to retread almost 10,000 tyres in a month between its own plants and through its growing franchisee network, along with the expected volume at the upcoming plant in Kandy.
The company is spreading its network province by province and the Central Province was missing till now. “With the opening up of the
Kandy unit in the Central Province, 3K Holdings should further increase its influence in an important tyre market,” added L S Samararatne, Joint MD of 3K Holdings. The Kandy market is estimated to be a more than 10,000 tyre per month market.
3K had another franchisee in Ampara in the Eastern Province. This franchisee has dropped out, though the plant is still operational. "We have withdrawn from the Ampara unit and it has been sold- off to the partner. We were facing logistics and transport problems," said Silva. Now the Ampara unit is using tread from some other brand. About 10 kms from the mother plant at Homogama, the company has a tread making facility – 3K Treads (Pvt) Ltd in a place called Wataraka Padukka in the Western Province. “We have a joint venture with a Kerala based Indian tread maker, Janata Polymers. We manufacture about 70 tonnes of tread every month for the consumption of our two units and franchisees,” Silvia stated. The company also has sufficient tread
making capacity to cater for the upcoming plant at K andy. Commenting on the evolving scenario in the country’s retreading industry, Silvia explained, “The Government has to come forward in the promotion of retreading as the share of retread tyre market is still small and there is lot of scope for increase.”
According to independent estimates, Sri Lanka’s retread tyre market is currently merely 1/6th of the new tyre market compared to about 1/3rd a decade back.
It is noted that the demand for new tyres is increasing with the size of the growing vehicle market in the countr y. The Indian tyre venture, CEAT is the only company manufacturing new tyres in Sri Lanka. “Obviously the importing of tyres is an available option and the country is losing a huge amount of foreign exchange by importing tyres. Instead, the government should promote the retreading industry in the country by offering incentives and duty concessions to reduce dependence on the import of new tyres,” stressed Silva.
Moreover, 3K is also facing a pricing problem in the dealer driven Sri Lankan retread market. “The margins have kept on shrinking in the retreading business over the last few years and the gap between the prices of new tyres and retread tyres is widening with tyre dealers controlling the fortunes of the retread industry at their will,” Samararatna said. The mid-level retreaders cannot increase the prices on their own as dealers may not give them tyres to retread.
3K Holdings is running its own plants and franchisee network on Indian machinery. The company has imported Indian plants either from Rajmahaal or Gemini. "We are quite satisfied with Rajmahaal,’ Silvia said.
3K plans to order one more plant from Rajmahaal for the upcoming
K andy unit.
The company is also planning to cater to the Northern Province market. "We also have plans to open a plant in Kilinochi to cater to the Northern Province market. We will give this serious thought after setting-up the franchisee unit in Kandy,” Silvia confided. 3K feels that the Northern market could still be catered by to by the Anuradhpura franchisee, which is about 150 kms from Jaffna, capital of the Northern Province.
“We are also looking at OTR as an opportunity as OTR tyres are highly- priced and are worth retreading. We are looking at it as a future growth opportunity,” Samararatna said.
Wijethunga Plans Plant in Colombo in 2012
The Sri Lankan retreading market is growing and retreaders are positively responding to it despite all the difficulties in the business. If the larger players are expanding by setting up new plants and hiking capacities in their existing units then mid level players are also following the same course. Galle- based Wijethunga Tyre Retreaders (Pvt) Ltd is finalising plans to set up a new plant in the capital Colombo. “We have already identified the plant location in Colombo for the proposed retreading unit,” confirmed Rangana Wijethunga of Wijethunga Tyre Retreaders (Pvt) Ltd.
The new plant will initially retread around 400 tyres per month. “It will have a 4 tyre Elgi Chamber and Elgi machinery. “The new plant is likely to be operational by 2012,” he added. Wijethunga travels all the way to Colombo to collect tyres for retreading. "We are planning to cater for the Colombo clientele from the upcoming plant in the capital,’ he concluded.
Wijethunga Tyre Retreaders has an existing retreading facility at Weligama, a small fishing town in Galle, about 120 km from Colombo. This existing plant retreads around 1,200 tyres per month. Wijethunga has remained at the current level of production for several years. “We have an Elgi plant installed with one 7 tyre chamber. We source around 8-10 tonnes of Treadsdirect tread every
Mr L S Samararatne.
28 Retreading Business