Sri Lanka’s leading tyre manufacturer CEAT Kelani Holdings (CKH) has been assigned a National Long-Term rating of ‘AA+(lka)/Outlook Stable’ by Fitch Ratings for a fourth consecutive year, a rating Fitch said is supported by CEAT’s sustained leadership in the domestic pneumatic tyre manufacturing industry and the resilience of its financial profile.
In its announcement, Fitch Ratings said: “The Stable Outlook reflects Fitch’s belief in CKH’s ability to retain its market share despite increasing competition from imported tyres. It also indicates our expectation CKH will maintain adequate credit metrics and liquidity, even during periods of intensive investment.”
“We believe CKH is well-positioned to benefit from the potential lifting of a vehicle import ban in 2025 due to its strong brand and extensive distribution network,” the rating agency said, but disclosed that “Nonetheless, upside potential in medium- to long-term demand from such an event has not been factored into our rating case due to regulatory uncertainty.”
The AA+ credit rating is the second highest rating assigned by Fitch Ratings to reflect an entity’s ability to meet financial commitments. Key rating drivers for CEAT Kelani Holdings included a recovery in domestic tyre replacement amid a resumption in travel and improved fuel availability.
Commenting on the rating, CEAT Kelani Holdings Chairman Mr Chanaka De Silva said: “The four years in which CEAT Kelani has been rated AA+ represent some of the most tumultuous and challenging times for businesses in Sri Lanka, encompassing as they did, the global pandemic, the country’s economic crisis, the protests, the ousting of a president, and a highly-charged presidential election. There can be no better testament to the company’s strength than to receive an independent rating of this nature, as we prepare for a future of further growth.”
Fitch said it expects CEAT Kelani’s sales volume to rise 18 per cent in FY 2025, and by a compound annual growth rate (CAGR) of 10 per cent to FY 2028. However, the recovery pace could be constrained by consumer caution over discretionary spending, the agency advised, also noting that demand from the construction sector and government procurement, which previously contributed over 40 per cent of CKH’s revenue, have yet to return to pre-crisis levels.
The CEAT brand originated in Italy and is backed by extensive research and testing facilities in India and Germany. The largest domestic manufacturer of cross-ply and radial tyres in Sri Lanka, CEAT’s emergence as the top brand in the country’s tyre sector is the result of substantial investments over several years that have seen not just exponential increases in volumes but expansion of the product range, the deployment of new technology and quantum improvements in quality. The company’s manufacturing operations encompass pneumatic tyres in the radial (passenger cars, vans and SUVs), commercial (Bias-ply and radial), motorcycle, three-wheeler and agricultural vehicle segments.
CEAT Kelani Holdings currently manufactures half of Sri Lanka’s pneumatic tyre requirements, and exports about 20 per cent of its production to 16 countries. The joint venture’s cumulative investment in Sri Lanka over the past decade alone exceeds Rs 8.5 billion.
