The stable outlook reflects a robust financial profile and confidence in the company’s ability to manage cost challenges and competitive pressures.
CEAT Kelani Holdings (CKH), the foremost tyre manufacturer in Sri Lanka, has successfully maintained its National Long-Term Rating of ‘AA+(lka)’ with a ‘Stable Outlook’ from Fitch Ratings for the sixth year in a row. This reaffirms the company’s enduring financial strength and its prominent position in the country’s pneumatic tyre manufacturing industry.
The ‘AA+(lka)’ rating, which ranks as the second-highest on Fitch’s scale, indicates a very strong ability to fulfill financial obligations. In confirming this rating, Fitch highlighted CKH’s established leadership within the domestic tyre manufacturing market and its resilient financial profile as significant advantages, while also acknowledging the company’s vulnerability to price fluctuations and stiff competition in a cyclical market.
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The Stable Outlook signifies Fitch’s belief that CKH will sustain its market leadership despite rising input costs and increasing competition from imported tyres. It also indicates the agency’s expectation that the company will uphold adequate credit metrics, even during times of reduced earnings and heightened investment needs.
In response to the latest rating, Mr. Chanaka De Silva, Chairman of CEAT Kelani Holdings, remarked, “A credit rating essentially reflects the confidence in an organization’s ability to make prudent decisions now while being financially prepared to achieve future goals. For CEAT Kelani, maintaining this rating through various cycles underscores our commitment to disciplined management, operational flexibility, and long-term investments that bolster our business strength. We are dedicated to creating a stronger, more competitive manufacturing enterprise that delivers sustainable value to all our stakeholders.”
Fitch anticipates that CKH will continue to lead the pneumatic tyre manufacturing sector in Sri Lanka, bolstered by its well-known brand and comprehensive dealer network. The agency noted that CKH’s responsive pricing strategies are likely to help mitigate market fluctuations and maintain market share in crucial segments. Additionally, planned enhancements to production facilities are expected to improve product quality, particularly in the radial tyre category, thereby strengthening the company’s competitive stance.
However, Fitch foresees that CKH may encounter short-term margin pressures due to increasing prices of both imported and locally sourced raw materials, alongside higher conversion costs driven by escalating energy prices. The agency emphasized that CKH’s strong financial profile, characterized by low leverage and solid liquidity, should offer a buffer against a challenging business environment.
CKH’s liquidity situation further bolsters its financial standing. Fitch projects that the company will maintain capital expenditures of around Rs. 700 million annually over the next four years, alongside growth capital expenditures of Rs. 2.5 billion in FY27 and Rs. 1.5 billion in FY28. As the leading tyre manufacturer in Sri Lanka, these new investments will reinforce CKH’s role as a vital contributor to the national economy and a reliable partner to the transport industry.
The CEAT brand, which originated in Italy, is supported by extensive research and testing facilities located in India and Germany. CEAT was recognized as Sri Lanka’s most valuable tyre brand by Brand Finance and was named the ‘Most Loved Tyre Brand’ in Sri Lanka for 2025 and 2026 by LMD.
Source: Financial Chronicle Biz English | Sri Lanka Business News.
