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SRI LANKA
3-4 tonnes of tread ever y month depending on the requirement.
It has been noted that low margins in the retreading industr y are hurting the small retreaders in the Sri Lankan market. The market leaders have the staying power, having huge retreading and tread making capacities, producing big volumes, while smaller players are no match in an already crowded domestic market. The market leaders can operate on low margins as they play the volume game and they have better control over pricing, producing their own tread. “Whereas, we have to source tread from outside, the price of which keeps on
increasing; low volumes make it difficult for us to survive in a low margin business. We cannot increase prices even if our quality is better in this tyre dealer controlled market. We are forced to survive on the whims of tyre dealers, extracting bigger margins from us,” complained Mohammed. Crown has a four tyre Elgi chamber, which could be adjustable to accommodate six tyres to produce around 20 tyres in a day. Crown retreads around 400 tyres ever y month.
Crown also has a tyre shop and has a largely loyal clientele. “We have a few good clients and we give them the best of quality. We
use Treadsdirect tread, which is regarded as the best in the Sri Lankan market. We make no compromises with the quality and that encourages our clients to stay with us despite price competition from the larger players.” Mohammed claimed. He further said, “The way the market leaders dominate the market, they are targeting the smaller players to wipe them out.”
month depending upon demand,” informed Rangana.
Wijethunga is likely to stick to Treadsdirect for machinery in the upcoming plant in Colombo. "We are satisfied with Treadsdirect equipment and tread, so we will have plant from Treadsdirect in the Colombo plant too", Rangana said. Galle is the capital city of Southern Province of Sri Lanka and while travelling from Colombo this correspondent saw the memorial for the people killed in the 2004 Tsunami that occurred in Indian Ocean. Galle reached the height of its development in the 18th century, during the Dutch colonial period. It has the longest bridge in Sri Lanka – Wakwella Bridge. It also has the world heritage site, the Galle Fort, the largest remaining fortress in Asia built by European occupiers.
It has been noted that mid-level players like Wijethunga are fighting on many fronts to remain afloat. "Credit is a major problem, we have to give away at least 60 days credit to get repeat orders," Rangana said. Moreover, tread prices keep an upward trend while margins are shrinking. “Margins are now as low as 10 per cent, plus, we have to travel 120 kms to Colombo to collect tyres,” he added.
Crown Focusing on Existing Clientele
The smaller players in Sri Lanka are struggling on many fronts due to low margins, market leaders playing with prices and poaching of the workforce in a tyre dealer controlled retreading market. “We are focussing on existing in the market, it is more a survival game for us at the moment,” stated Mr Mohammed Hillim of Kandy based Crown Tyre Retreaders. The picturesque town of Kandy is a good retreading market but in recent years more retreading factories have opened up in Sri Lanka, increasing the competition for the existing players. "Kandy is quite a big market. Some of the biggest tyre dealers are from Kandy and even Ceat’s top two tyre dealers are based in Kandy. Moreover, Kandy now has five retreading units, increasing competition in the Kandy market," said Mohammad. Another factory has been opened in Kandy recently and some of Crown’s factory workers have been lured by the owners of the new plant. Crown Retreading is a Treadsdirect client, sourcing around