Exponential profit growth achieved in 2009-10 through internal change management initiatives at CEAT Sri Lanka has won the India-Sri Lanka joint venture tyre manufacturer the approbation of its parent company, the RPG Group, one of India's largest industrial conglomerates.
In a remarkable riposte to the global economic downturn, the company increased its profit after tax by more than five times to Rs 532 million, a whopping 419 per cent growth in the year ending 31st March 2010. CEAT Sri Lanka also achieved a 25 per cent increase in sales to Rs 5.4 billion by penetrating new export markets in a period where revenue from domestic sales grew by 10 per cent.
In sharp contrast, export sales grew by a hefty 96 per cent over the previous year. One of the most noteworthy achievements of 2009-10 was CEAT Sri Lanka's success in capturing new export markets and the development of new private brand customers, the company said. This success has been carried into the current financial year, during which CEAT tyres made in Sri Lanka have penetrated markets like Egypt, Syria, Cambodia, Nigeria, Singapore, Dubai and Vietnam.
Production volumes grew by a noteworthy 31.6 per cent and factory costs were pruned by 25 per cent, enabling CEAT Sri Lanka to increase its operating profit to 17 per cent of net sales in a performance built on an amalgamation of manufacturing excellence, sales and marketing strategy and supply chain efficiency, the company's Managing Director Randeep Narang said.
"It was truly a team effort that encompassed every aspect of our operation, and demanded enhanced efficiencies from all departments," he said. "This achievement of a five-fold growth in the bottom line at a time when the market did not grow, is entirely attributable to change management initiatives. The external environment did not contribute."
In acknowledgement of CEAT Sri Lanka's feat, the Managing Director of CEAT Ltd., India Mr. Paras K. Chowdhary, President Tyre Sector - RPG Enterprises, who was in Sri Lanka this week presented the company with a special trophy of appreciation.
Commenting on this performance, Mr. Chowdhary said: "The vision and dynamism of the new management team and the degree of innovation evident in the change management initiatives undertaken are clearly the drivers of growth achieved by our joint venture in Sri Lanka. Very few manufacturing companies can claim a five-fold growth in a year of global recession."
"It has been my mantra in life that what looks impossible is definitely not so," he said. "The growth that our joint venture in Sri Lanka has achieved in very challenging circumstances is a case study on how businesses can beat the external environment through internal initiatives. I congratulate the management team of CEAT Sri Lanka for this growth, and the solid platform that has been built to enable the company to face competition and market dynamics in the future."
Elaborating on some of performance strategies adopted internally, Mr. Narang said: "The formation of cross-functional teams mandated to reduce waste and cost, structured weekly and monthly reviews involving staff at all levels, and routing all procurement through a newly created Central Procurement Cell were among the changes that contributed to our stellar results."
In the area of sales & marketing, new products and significant quality improvements to the company's radial tyre range, combined with new sponsorships of sports including cricket, football and motor racing, innovative dealer loyalty programmes and the launch of new designs and packaging in the year reviewed helped counter the effects of the recession on the domestic market, he said.
Sri Lanka's leading pneumatic tyre manufacturer, CEAT Kelani International Tyres (Pvt) Ltd., is a joint venture between RPG Group of India and Kelani Tyre - Sri Lanka. The RPG Group of India, whose annual turnover exceeds US$ 4.5 billion, comprises of more than sixteen companies managing diverse business interests in the areas of Power, Tyre, Infrastructure, IT, Retail, Entertainment, Carbon Black and Specialty. CEAT Kelani International Tyres (Pvt) Ltd., has three manufacturing units in Sri Lanka manufacturing truck, light truck, radial, motorcycle, three-wheeler and agricultural tyres and a total workforce of 900 employees.
source - www.dailymirror.lk
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