Colombo – A Middle Eastern businessman with multiple holdings in Sri Lanka is venturing into the tire business, investing $75 million (€72 million) in the establishment of a tire factory on the island nation under the auspices of Rigid Tyre Corp. (Pvt.) Ltd.
The new plant, which will use technology licensed from Italy’s Marangoni Group, will have capacity for passenger and medium truck radials as well as OTR and two- and three-wheeler vehicle tires. Annual capacity was not disclosed, but the investor expects employment to be in the 3,000 range.
The Sri Lankan government, on 15 June 2016, approved a proposal to establish a 3-million-unit tire plant at Gonapola, in the country’s Horana district.
At the time, the Italian company told ERJ that it was planning to transfer technology to a Sri Lanka-based investor – Ceylon Steel Corporation – discussed as part of a possible joint venture in the passenger car tire sector.
Marangoni explained that after the suspension of its passenger car tire production in Europe in 2014, the company has begun talks to sell its “production plants” to Ceylon Steel Corp.
The company’s PCR production was mainly based in its plant in Anagni, Rome, which was closed down in 2013 as part of Marangoni’s pull-out of the passenger car tire segment.
The venture’s investor is Nandana Lokuwithana, chairman of Ceylon Steel Corp. and its member company MA Steel Lanka (Pvt.) Ltd., as well as chairman of Onyx Group, a diversified holding company in United Arab Emirates.
The investors plan a foundation-stone laying ceremony on 5 Jan at the plant’s site, a 100-acre plot in the BOI Industrial Zone, Wagawatta, Horana.
Rigid Tyres said its main business intention is to “capitalise on the European market” As such, all products sold there will be branded “Licensed by Marangoni.”
"It is an initiative with far-reaching benefits for the country and certainly can roll out many a profiting mile,” Rigid Tyres said, “be it the economy or forex, employment of skilled labor or professional development, value adding our natural resource, rubber or stretching out to investors the world over and beckoning them to Sri Lanka as an investor-friendly nation.”
The plant eventually also could house production capacity for conveyor belting and/or high-pressure hydraulic hose, the company said.