Annual Report 2010-2011 - Colombo Stock Exchange

Sector Review - Tyre
The Tyre Sector of Richard Pieris Group which facilitates the
entire tyre retreading value chain is the pioneer and market
leader of tyre retreading in Sri Lanka. The tyres being re
used has indirectly contributed to the Country’s economy by
decreased transport costs and outflow of foreign exchange
on imported tyres. This also immensely helps the reduction in
damage to the environment. The tyre sector comprises three
companies, Richard Peiris Tyre Co, Ltd, Arpidag International
(Pvt) Ltd and Richard Peiris Rubber Compounds Ltd.
Richard Pieris Tyre Company is the established market leader
having the largest tyre distribution network in the Country.
Arpidag International (Pvt.) Ltd and Richard Pieris Rubber
Compounds Ltd are the supportive companies supplying
pre-cured tread, bonding gum, cement other related materials
and customized mixing facilities to the Tyre Company. Arpidag
International also has extended its services by supplying treads
and consumables to mini plants in the industry.
The whole rubber based industry in the Country including
our Company went through a challenging year due to
the fluctuations of rubber prices. The first half of the year
experienced comparatively low commodity prices compared
to the rubber prices in the second half which had a sharp
increase adversely affecting the entire rubber based industry.
However even though the entire tyre industry was affected by
a negative performance, Richard Pieris Tyre Company was
able to maintain a substantial profit for the year due to the
production and energy efficiencies minimizing overhead costs
and eliminating unproductive practices. The Sector also was
benefitted by the process consolidation which reduced the
production cost. The Company being more vigilant about the
future has helped to gain competitive advantage on the buying
process which contributed in sustaining the performance even
during a challenging period faced by the entire industry.
Tyre Sector Performances
Rs. Mn.
3,000
2,500
2,000
1,500
1,000
5,00
0
06/07 07/08 08/09 09/10 10/11
Net Turnover
Operating Profit
Rs. Mn.
350
Richard Pieris Tyre Company
Richard Peiris Tyre Company, the largest tyre retreader
in Asia, having a large dealer network with 1300 Dealers
Island wide, rebuilds more than 600,000 tyres per annum.
Its operations entail the retreading of tyres, in which it holds
a larger share of the local market, and trading, a business it
entered into a few years ago. Retreading still forms over 80%
of the company’s turnover. During the year under review it
increased its manufacturing capacity and enhanced its product
range, both in the retreading and trading product in order to
meet increased customer demand. The company’s retreading
turnover increased by 23% and trading turnover increased by
21%, increasing its share of the market.
The production capacity in the Kandy factory was increased
to cater the increased demand in the Central province.
Kurunagale factory capacity was also increased to meet the
demands from the Northern and Eastern markets. The overall
production capacity was enhanced in order to further increase
the market share.
300
250
200
150
100
50
0
Richard Pieris and Company PLC | Annual Report 2010/2011 22